Regional Electricity Markets Interconnections, Phase 1 : Identification of Issues for the Development of Regional Power Markets in South America
The report builds on a study carried out by the Regional Power Integration Commission in South America, which estimated the potential benefits of regional interconnections. Such benefits come from optimized loading of units, exports of hydro energy that would not be dispatched in an isolated system (particularly in years of high hydrological conditions), global optimization of reservoirs' regulating capacity, and capacity reserve sharing. The interconnection benefits were established by evaluating the difference of the aggregate operational costs of the systems, when each country operates independently, and when they are integrated over selected power corridors. The study concluded that potential cost savings in most of the cases, exceed the cost of realizing the interconnections: cost savings (from energy generation only) would cover the annuity of investments for lines connecting Argentina and Brazil; Peru, Ecuador, Colombia, and Venezuela; Brazil and Uruguay; and, Chile and Peru. However, interconnections require compliance with prerequisites on contractual, economic, and regulatory matters, not in place in the region; thus, to facilitate discussions to foster a higher degree of energy interchange, the study aimed at the identification, comparison, and critical analysis of technical, institutional, and regulatory issues restricting regional interconnections.