Brazil expands demand response program to ease grid strain

Brazilian power grid operator ONS contracted for 344 megawatts of demand response flexibility in its Aug. 6 availability auction, an increase of 50% from the previous, 2025 auction, as the country expands the use of flexible load reductions as an alternative to secure stability.

Twelve companies will participate in the new phase of the program, ONS said in a statement.

The program pays large energy consumers who temporarily reduce demand during peak hours when required by ONS, the Brazilian large energy consumers organization Abrace said in a separate statement. As a result, the need for more polluting and expensive thermoelectric plants is reduced, it added.

"The growth of the mechanism shows that demand response flexibility has moved beyond the pilot stage and is playing an increasingly important role in Brazil's power system reliability," Abrace President Paulo Pedrosa said.

The transaction was made at a 49.23% discount to the ceiling price established in the auction, with winning offers in a 23.375-39.000 reais/MW range, according to ONS.

Market participants say the program could reduce upward pressure on prices, especially during periods of relatively low hydropower supply. Platts' assessment of conventional power delivered in Brazil's Southeast/Central-West electricity subsystem was 179 reais/MWh on Aug. 5, up from 178 reais the previous day. Platts is a part of S&P Global Energy.

About 67% of contracted demand response is located in the Southeast-Midwestern subsystem, while the Northeastern subsystem accounts for 29% and the Southern subsystem for 4%.

Metallurgical company Ferbasa won the largest contract from ONS at 100 MW, followed by steelmaker Gerdau, with 89 MW across four units.

"The auction's results show that there is technical capability, space and interest from the industry to make this a permanent program in the Brazilian electric sector," Pedrosa said.