Do you know what the National Interconnected System is?

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Brazil has large territorial dimensions. As a consequence, there are also significant hydrological differences between the various regions in the country, with periods of drought and rainfall not coinciding. To take advantage of this diversity and minimize the risks of supply failures, the national electrical system is interconnected, that is: it has transmission lines that allow energy exchanges between the several regions throughout the country.  

This establishes a permanent flow of electricity between the regions, as a kind of exchange, ensuring that those with better river affluence and higher levels of water storage in the reservoirs, generate and send energy to those undergoing drier periods.

But for this interconnected system to work in an efficient and optimized manner, the National System Operator (NSO) was created, which coordinates and expedites the entire operation of the reservoirs in a centralized manner, aiming to produce energy at the lowest possible cost with maximum security of supply for the whole country.

In the interconnected system, the owners of plants subject to centralized expedition do not decide individually when and how much to generate in their ventures. And to guarantee the fulfillment of the energy sale commitments assumed by each agent, the Brazilian government created the Energy Reallocation Mechanism (ERM) which, in general terms, promotes energy transfers from the plants that generated above the physical guarantee to those that generated below, so that at the end of these exchanges, each plant will have allocated to itself an energy proportional to its Physical Guarantee in the commercialization process.

Consequently, the cash flow of each concessionaire from energy sales contracts depends on the energy produced jointly by the system and not on the energy generated by each plant on its own. A true teamwork, fully interconnected.