After a quarter of a century since Brazil started its power sector reform, there are a number of lessons learned and best practices to inform the policy debate across Latin America. Given large amounts of hydro resources, and the imperfections in the mechanism for system expansion and the scheme adopted to induce efficient contracting Brazil engaged in a second wave of reforms in 2004. This process resulted in the incorporation of the obligation for every load in the system to have a contract to back that power, with the contracts obligated as the result of auctions. The criterion for contracting at auction is the smallest tariff with standardized contracts. Terms range from 5 to 30 years. Brazil has expanded its installed capacity almost two-fold from 91 GW in 2005 to 158 GW in 2017.

“Samba” auctions, a model for Latin America