1 Abstract—Brazil presents a remarkable potential for the development of renewable energies. Besides large-scale hydro plants, the wind power plants, small hydros and cogeneration from sugarcane bagasse are the mainstream options. These sources have increased their participation in the country’s energy matrix due to their attractive characteristic such as smaller environmental impact and lower construction periods (in general less than 3 years), which is suitable in a context of an uncertain load growth, since it offers an attractive option and mitigates the associated risks. The development of these resources requires the availability of a transmission system sufficiently robust in order to allow the flow of the electricity produced by these resources. Because these plants are distributed geographically over a large (dispersed) area, their connection to the transmission grid is complex. In order to turn feasible the connection of these plants, a complex and integrated technical and regulatory scheme of planning and pricing of transmission-distribution networks was developed. The objective of this work is to present and discuss the technical and regulatory questions associated to the connection of renewables in the Brazilian power system and what has been proposed to address these issues. Index Terms— Power system economics, transmission cost allocation, transmission expansion planning. I. INTRODUCTION otivated by the need to curb emissions of greenhouse gases that cause global warming, renewable energy has recently emerged as a generation option for many countries, in order to provide clean energy development [1]. Wind power has been the prime low carbon source for several continental European countries, especially Denmark, Germany, and Spain. In North America, although federal authorities both in the United States and in Canada have been less proactive in the reduction of greenhouse gas emissions [2,3], several state and provincial administrations have taken steps to increase the diffusion of wind power and other renewable generation technologies. In the case of South America, the strong presence of hydropower has relieved the pressure to develop new renewable energy sources. However, the region has a The authors are with PSR, Rio de Janeiro, RJ Brazil (e-mail: luiz@psr- inc.com; fernando@psr-inc.com; chabar@psr-inc.com; mauricio@psr-inc.com; mario@psr-inc.com). significant potential for wind power, small hydros (installed capacity up to 30 MW) and cogeneration (cogen) from bagasse (sugarcane, rice, elephant grass, etc), which naturally enables the development of renewable energy in a larger scale. Brazil provides a good example of this diversity. Its power system is the largest in Latin America, with an installed capacity of 105 GW. Almost 90% of the energy produced comes from hydroelectric plants; the remaining generation mix includes natural gas, coal, nuclear and oil. Distributed generation from renewable energies [4] – mostly bioelectricity (co-generation from ethanol production, which uses the sugarcane bagasse as fuel [5]), small hydro and wind power – have emerged as new sources, with hundreds of MW under construction and can complement the development of standard technologies (large hydros and fossil fuel plants) in a sustainable energy strategy for the country. The introduction of renewable generation into the country’s bulk power system is expected to grow considerably in the near future. The level of commitment to renewables offers benefits such as new generation resources, fuel diversification, and greenhouse gas reductions, and also presents significant new challenges to transmission power system planning and pricing that need to be properly addressed. Because the renewables are distributed geographically over a large (dispersed) area, their connection to the transmission grid is complex and involves the simultaneous planning of a connection scheme at the high- voltage (bulk) and the low voltage (distribution) networks [6- 9]. In August 2008 Brazil carried out a major generation auction to foster the development of cogen from sugarcane bagasse. The objective was to take advantage of the heavy investments in the ethanol industry that are going on to stimulate ethanol producers to install more efficient boilers and sell the surplus power to the grid 1 . Long-term energy contracts were offered in a multi-product dynamic energy auction. Because candidate generators involved hundreds of plants located in a geographically dispersed area over two states of the country, a comprehensive review of the planning 1 Because the investment cost for selling this incremental capacity is just the incremental cost of installing a more efficient boiler, this energy is in general very competitive. Incorporating Large-Scale Renewable to the Transmission Grid: Technical and Regulatory Issues Fernando Porrua, Student Member, IEEE, R. Chabar, Luiz M. Thomé, Luiz A. Barroso, Senior Member, IEEE, Mario Pereira, Member, IEEE M