Summary/Abstract |
Hydroelectricity provides approximately 65% of Brazil's power generating capacity, making the country vulnerable to droughts, which are becoming increasingly frequent. Current energy law and policy responses to the problem rely on a sectorial approach and prioritise energy security and market regulation. Brazil has opted to increase energy security levels during periods of hydrological variability with national grid interconnection and thermal plants backup. Additionally, Brazil has created the Energy Reallocation Mechanism (MRE) to manage the generators’ financial impacts in times of insufficient water. This policy, however, was unable to avoid the high financial exposure of generators in the spot market during the severe droughts experienced in the period 2012–2016.
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