Promoting enhanced flexibility through digital solutions, artificial intelligence and regulatory changes

As variable renewable energy sources have increased their contribution to the electricity mix of Brazil and other countries, the need for flexibility and capacity in power systems has renewed interest in hydropower. At the same time, concerns related to social and environmental impacts of hydropower have hindered expansion. The electrification of the economy and the greater frequency of water scarcity events will all contribute to the challenge of increasing power system flexibility. Given the current barriers for incentivisation within the Brazilian regulatory framework, this paper proposes alternative mechanisms capable of adequately remunerating resources that promote operational flexibility. A series of simulations were used to calculate the benefits of digital solutions that were then compared to costs for an informed feasibility analysis. The study demonstrates that benefits exceed costs and further proposes regulatory changes that both recognize and incentivize the investments in digital solutions, such as the one deployed at the Teles Pires hydro scheme in Brazil.