New commercial arrangements and business models in electricity distribution systems: The case of Brazil

The purpose of this article is to explore some business models suitable for medium- and low-voltage electricity consumers and analyze the risks and opportunities associated with the diffusion of distributed generation. The approach considers demand response mechanisms that contribute to mitigating commercial risks and overcoming the operational challenges arising from large-scale integration of distributed generation. In particular, the study assesses new application opportunities for distributed generation of renewable energy and examines related measures to mitigate possible market risks associated with the intermittency characteristics of this type of sources. This research has a global perspective but focuses on the case of Brazil. The article proposes four business models to address the issues of small consumers (residential and commercial) as part of the demand response program established in the country. Two of these models are found adequate to reflect the current electricity market, but the existing regulations may require some modifications before the other two could be applied. However, these latter models can be applied to more mature markets. Moreover, the article describes a demand response pilot program that is already in operation, which could serve as a platform to preprocess the proposed business models. •Load demand reduction is one of the DR mechanisms applicable to Brazil.•A first DR pilot project set unveiled potential application to small consumers.•Small solar and wind power condominiums play a key role in DR business models.•Business models of VPPs can reduce operational costs in remote (islanded) systems.