How to ensure affordable and secure generation in a power market: The Brazilian experience

The objective of this work is to discuss the challenges of conciliating generation system expansion and environmental constraints under a cost-effective framework. The Brazilian power system employs a smart auction-based mechanism to contract new capacity that was originally developed to allow direct competition between different technologies but slowly has been adjusted to introduce different auctions for different technologies. We discuss the pros and cons of this approach and suggest an alternative way of leveling the playing field between different technologies in a procurement process in order to achieve a transparent and efficient way to secure generation expansion.