Distributed generation has been gaining increasing ground in Brazil as a smart, economical and sustainable alternative to traditional centralized energy generation.
In this model, consumers can produce their own electricity (usually from renewable sources, such as solar photovoltaic) and use this energy in the same location or share it with other units.
In recent years, technological advancements, reduced installation costs, and growing interest in cleaner solutions have driven the growth of DG across the country.
To accompany this evolution, Law 14.300/2022 was enacted, which established the new Legal Framework for Distributed Generation.
This legislation brought greater legal certainty, defined clear rules for credit offsetting, and created a more stable environment for consumers and investors.
In this article, you'll understand what distributed generation is, its main types, the impacts of the law, and the countless benefits this model brings to those seeking to save money, generate clean energy, and actively participate in Brazil's energy transition. Keep reading!
What is distributed generation?
DG (distributed generation) is a model of electricity production in which the consumer also becomes a generator, producing their own energy from renewable sources, such as solar photovoltaic, the most widely used in Brazil.
Unlike centralized generation (distant plants that send energy through long transmission networks), in DG the plant is installed close to the place of consumption, such as on the roof of a house or business.
This proximity allows the excess energy generated to be injected into the electricity grid, generating energy credits that can be deducted from future bills.
In addition to providing savings, the model contributes to the decentralization of the electricity sector, makes the system more efficient, and strengthens the country's clean and sustainable energy matrix.
What are the types of distributed generation?
Brazilian legislation provides for different ways to adopt distributed generation, allowing residential, commercial, industrial or rural consumers to benefit from their own energy even when they are unable to generate it at the point of consumption.
See below the main modalities recognized by ANEEL:
Generation close to the load
In this model, the consumer unit and the generating plant are located at the same physical address. This is the most common type of DG: solar panels installed on the roof of a home, business, or farm directly supply that property.
When generation exceeds consumption at the moment, the surplus is sent to the distributor's electricity grid and turns into credits, valid for 60 months, which can be used in periods of lower generation (e.g., at night or on cloudy days).
shared generation
Here, several consumers come together through a consortium or cooperative to share the energy generated by a single plant, generally installed in a different location from the consumer units.
This modality is ideal for those who do not have the physical space to install a system (such as apartment dwellers or businesses in urban centers).
Each participant receives a share of the energy credits, proportional to their share in the project. The entire operation must take place within the same concession area as the distributor.
Remote self-consumption
Allows an individual or legal entity to use the energy generated at an address other than the one where it is being consumed.
For example: a company can install a solar plant on rural land and deduct the credits from the urban matrix invoice, as long as both points are in the same concession area.
This modality is widely used by companies with multiple branches, rural producers and investors who want to generate energy in regions with greater solar availability or cheaper land.
Projects with multiple consumer units
Applicable to horizontal or vertical condominiums, residential or commercial, this modality allows a single plant to supply several consumer units within the same development, with different CNPJ or CPF numbers.
The system is installed in a common area (such as the roof of a building or land for collective use) and the credits generated are shared among the condominium owners, according to percentages defined in the contract or assembly.
It is an efficient way to bring the benefits of GD to residents and entrepreneurs who share the same physical space.
What has changed with the legal framework for distributed generation?
A Law No. 14.300 / 2022, known as the Legal Framework for Distributed Generation, was sanctioned to establish clear, stable and long-term guidelines for the growth of DG in Brazil.
Before that, the sector was governed by regulatory resolutions from ANEEL (especially REN 482/2012) which left the market vulnerable to frequent regulatory changes.
Among the main advances of the new law, the following stand out:
- Legal security for consumers and investors, with transparent rules and extended validity;
- Creation of the Electric Energy Compensation System (SCEE) with new criteria for calculating and deducting credits;
- Gradual transition to TUSD Fio B payment, which represents the costs of using the electricity grid;
- Encouraging the formation of energy communities, such as consortia and cooperatives;
- Clearly defined deadlines for implementing new rules, for example, anyone who requested access by January 7, 2023, remains in the full compensation model until 2045.
What are the advantages of distributed energy generation?
Distributed generation goes far beyond saving on electricity bills. It directly contributes to the modernization of the Brazilian electricity sector, stimulates the energy transition, promotes consumer autonomy, and positively impacts the economy and the environment.
Below, we highlight the main benefits of the model:
Loss reduction
Around 7% to 15% of the energy generated in Brazil is lost on the way between power plants and consumption points, mainly due to the extension of the electrical grid.
DG solves this problem by generating energy close to the load, which reduces technical losses and alleviates overload on transmission and distribution networks, making the system more efficient and reliable.
Expansion of investments
The decentralization of electricity generation creates opportunities for a variety of business profiles: equipment manufacturers, integrators, distributors, O&M companies, and fintechs specializing in financing.
Since 2012, distributed generation has already generated more than R$60 billion in investments in Brazil, with a strong growth trend in the coming years.
This is a sector with high potential for returns and local value generation.
Expansion of the energy matrix
Distributed generation contributes to making the Brazilian electricity matrix more diversified, decentralized and resilient.
Instead of relying exclusively on large hydroelectric or thermoelectric plants, the country now has thousands of small generators distributed geographically, which reduces the risk of blackouts, increases energy security, and favors system stability even during critical periods of drought or overload.
Clean energy
More than 99% of distributed generation in Brazil uses renewable sources, especially solar photovoltaic.
By adopting this model, the consumer actively contributes to reducing greenhouse gas emissions, avoiding the need to activate thermoelectric plants, which are polluting and more expensive.
In other words, it is a choice that combines economy with environmental responsibility and the fight against climate change.
Job creation
The solar energy sector generates one of the highest number of jobs per megawatt installed. DG encourages local hiring at various stages of the process, from manufacturing and logistics to design, installation, maintenance, and technical training.
According to ABSOLAR, the photovoltaic sector is already responsible for more than 780 thousand jobs in Brazil, a good part of which are linked to distributed generation.
This directly impacts regional development and the economy of small and medium-sized cities.
What sources can be used in distributed energy generation?
Distributed generation can be implemented with different renewable and clean sources, as long as they meet the technical and regulatory criteria established by ANEEL. Below, we list the main ones:
Photovoltaic Solar Energy
It is the most used source in Brazil for Distributed Generation and represents more than 99% of connections.
It uses solar radiation to generate electricity through photovoltaic panels. It can be installed on rooftops, the ground, or on roofs, offering high modularity and low maintenance.
wind energy
Although less common in the distributed model (due to space requirements and wind constancy), it is viable on rural properties or projects with good wind conditions. It requires careful technical evaluation to ensure a return.
Biomass and Biogas
Plants that use organic, agricultural or sewage waste to generate electricity or heat.
They are especially useful in rural and agro-industrial regions, promoting energy recovery from waste.
Small Hydroelectric Power Plants (PCHs) and Hydroelectric Generating Plants (CGHs)
These represent larger solutions, with limited installed capacity to qualify for DG. They are recommended for projects in areas with water potential and environmental viability.
Qualified cogeneration
Systems that simultaneously generate electrical and thermal energy from a single source, such as natural gas, biomass or biogas.
When optimized, they are highly energy efficient and can be used in industries and hospitals, for example.
The use of each source depends on variables such as: installation location, consumption profile, project scale, local regulations and economic viability.
In all cases, it is essential to have certified equipment and reliable suppliers.
Conclusion
Distributed generation is a paradigm shift.
With it, the consumer stops being just a tariff payer and becomes a protagonist in the production and management of their own energy.
In addition to direct savings on electricity bills, DG boosts regional development, encourages the use of clean sources, reduces losses in the electrical system, and generates thousands of skilled jobs in Brazil.
And with the regulations brought in by Law 14.300, the sector gains even more predictability to grow in a solid and professional manner.
Whether for homes, businesses, or investors, the time to understand (and participate in) this energy transformation is now.
And Canal Solar is here to guide you every step of the way.
Comments
Comments are moderated before publication.Comments should be respectful and contribute to a healthy debate. Offensive comments may be removed. The opinions expressed here are those of the authors and do not necessarily reflect the views of the author. Canal Solar.