Juliana Oliveira

ANEELANEELANEELANEEL The regulatory body initiated an inspection process involving 51 energy distributors, seeking to identify irregularities in micro and mini-distributed generation systems, focusing specifically on clandestine expansions and measurement inconsistencies. Distributors, such as Cemig, Neoenergia, and Energisa, have adopted more sophisticated inspection methods, including the use of satellite and drone imagery, in addition to on-site inspections, to identify discrepancies between the approved and actually installed power. This new approach demonstrates that the era of growth with low supervision has come to an end, giving way to an environment of greater technical rigor and regulatory governance. Irregular expansion occurs when the owner of the consumer unit makes technical changes to the generation system without notifying or obtaining authorization from the distributor. According to Article 4, §1, of REN No. 1.000/2021, distributors have a duty to guarantee the provision of adequate service, including continuity, safety, and regularity. When they identify systems that are out of specification, they have regulatory backing to interrupt the connection until they are brought into compliance. Paragraph 2 of the same article imposes on the concessionaire the duty to promote the "expansion and improvement of the service," which includes monitoring irregular expansions and demanding technical adjustments. Article 4: The distributor is responsible for providing adequate service to the consumer and other users and for the information necessary to defend individual, collective, or diffuse interests. Paragraph 1: Adequate service is that which satisfies the conditions of regularity, continuity, efficiency, safety, timeliness, generality, courtesy in its provision, and reasonable tariffs. Article 4: REN 1.000/21 determines that the distributor must act continuously to prevent irregular uses of electricity (Article 589). When there are indications of irregularity, the distributor follows a protocol to prove and characterize the infraction (Article 590). Article 590 of REN 1.000/2021: In the event of evidence of irregular procedure, the distributor must take the necessary steps for its accurate characterization, compiling a set of evidence through the following procedures: I - issue the Occurrence and Inspection Report – TOI, in a specific form, prepared according to the instructions of the ANEELII - to request metrological verification or expertise, at its discretion or when requested by the consumer; III - to prepare a technical evaluation report when a violation of the meter or other measuring equipment is found, containing technical information and a description of the physical conditions of its parts, pieces and devices, except when metrological expertise is requested as per item II; IV - to evaluate the consumption history and electrical quantities; and V - to implement, when deemed necessary: a) monitoring measurement, with records in mass memory for at least 15 consecutive days; and b) visual resources, such as photographs and videos. (BRAZIL, 2021). Thus, based on art. 590 of REN 1.000/2021 the distributor can: 1. 1. Issue a TOI (Term of Occurrence and Inspection) formalizing the suspicion; 2. Request a metrological inspection of the meter; 3. Prepare a detailed technical report if there is a violation in the measuring equipment; 4. Evaluate the unit's consumption and generation history; 5. Install monitoring metering with continuous recording; 6. Use visual evidence such as photos and videos (including site visits, satellite imagery, or drone footage). These actions constitute a body of evidence that can be used to prove the irregularity to the consumer. According to §2 of Art. 590, the increase in load or generation without the distributor's authorization that causes a defect in the metering system is considered an irregular procedure: Art. 590. § 2. An increase in load or generation without the distributor's authorization that causes a defect in the metering system is considered an irregular procedure, which must be proven by the distributor. (BRAZIL, 2021). § 2. Current status includes the modernity of techniques, equipment and facilities, and their maintenance, improvement and expansion of the service. Similarly, Module 3 of PRODIST (Electrical Energy Distribution Procedures) establishes that any technical alteration that implies a variation in installed power or a change in connection parameters must undergo a new access analysis and project update. In accordance with paragraph 2 of article... 590 of REN 1.000/2021, the characterization of the irregular procedure requires that the increase in load or generation without the distributor's authorization causes a defect in the metering system, a circumstance that must be technically proven by the concessionaire. As a rule, significant changes to the generation system must be communicated to the distributor in advance. However, to characterize an administrative irregularity, it is necessary to prove that the alteration impacted the power supplied to the grid, the metering system, or the technical connection parameters. Among the most common practices observed in the market related to unauthorized expansion are: a) increasing the number of photovoltaic modules; b) replacing inverters with higher-power equipment; c) expanding installed capacity without updating the project; d) altering the approved nominal power, among others. In practice, this is a clandestine increase in generation capacity, a phenomenon that the market often refers to as: "irregular overpower" or "unapproved expansion". This behavior generates significant distortions in the energy compensation system. When a system generates more energy than the authorized power, the credits injected into the grid may exceed the originally approved parameters, compromising the integrity of billing and the technical balance of the distribution network. 4. The tightening of regulationsANEEL The rapid growth of distributed generation has led to ANEELto intensify oversight of irregularities in the sector. Unregulated expansion is not just an individual compliance problem; it generates significant systemic impacts. Among them: 1) Tariff distortions: Irregular generation can artificially increase the volume of compensated credits, increasing indirect costs for the system; 2) Operational risks: The increase in power injected into the grid without planning can affect energy quality, grid stability, and distribution capacity; 3) Legal uncertainty: Institutional investors, funds, and distributed generation operators depend on regulatory predictability, and when irregularities become recurrent, the investment environment tends to deteriorate. Detailed information on the measures taken to combat irregularities in distributed generation (DG) systems connected to the electricity grid. This initiative is part of a process that began in 2025, which assesses the need for an emergency audit of distributed generation, given evidence of illegal expansions and measurement failures. According to industry analyses, oversight focuses primarily on two critical points: 1) inconsistencies in metering systems; and 2) power increases without formal authorization. This move indicates a significant shift in the agency's regulatory stance. In the early years of distributed generation, the regulatory focus was on stimulating the expansion of solar energy. Now, the regulatory focus shifts to: a) system governance; b) technical control of the network; and c) integrity of energy compensation. 5. Legal consequences of unauthorized expansion: The unauthorized expansion of photovoltaic systems can lead to various legal and regulatory consequences. Regulations governing the electricity sector require consumers to notify the distributor of any and all changes to the power plant project, under penalty of incurring the sanctions stipulated in article [article number would be inserted here]. 655-F of REN 1.000/2021: Art. 655-F. In the event of evidence suggesting the irregular receipt of benefits associated with the SCEE (Special System for Electricity Distribution), the distributor must take steps to accurately characterize this, compiling a set of evidence that proves the irregular receipt of the benefit. (BRAZIL, 2021). Therefore, the penalties for Power Increase Without the Distributor's Authorization, which may be applied cumulatively, are: 1. Loss of Tariff Benefits: The consumer unit may lose its classification in GD I (art. 655-O, §3º REN 1.000/2021); 2. Suspension or review of energy compensation: The distributor may require the regularization of the system or suspend the accounting of credits generated above the approved power (art. 655-F REN 1.000/21); 3. Billing Review: The distributor may review the billing of the consumer unit, disregarding the active energy injected into the Electric Energy Compensation System (SCEE) and the benefits received during the period in which the irregularity was found (art. 655-D, § 7th REN 1.000/2021); 4. Refund of amounts received, adjusted for inflation (IPCA), within 36 billing cycles (art. 655-F REN 1.000/2021); 5. Suspension of Power Supply: In cases of imminent risk to safety, the distributor may immediately suspend the supply of electricity (Art. 353 REN 1.000/2021)10; 6. Administrative fines: Depending on the case, penalties stipulated in the regulations may be applied.ANEEL. To facilitate understanding, I present a table of the penalties that may be applied and their legal basis: Art. 655-F. In the event of evidence suggesting the irregular receipt of benefits associated with the SCEE (Special System for Electricity Distribution), the distributor must take steps to accurately characterize this, compiling a set of evidence that proves the irregular receipt of the benefit. §2. If irregular receipt of benefits associated with the SCEE is detected, the distributor must take the following measures: I - disregard the active energy injected by the consumer unit with distributed microgeneration or minigeneration into the SCEE and benefits received in the billings from the date of detection, until the situation is regularized; and II - review the billing of the consumer units unduly benefited, disregarding the active energy injected by the consumer unit with distributed microgeneration or minigeneration into the SCEE and benefits received during the period in which the irregularity was detected, applying the following parameters: a) the amounts to be received or returned must be monetarily updated by the National Consumer Price Index – IPCA; b) the deadlines for collection or return are up to 36 billing cycles; and c) the collection may be paid in installments at the distributor's discretion, in accordance with art. 344. Art. 353. The distributor must immediately suspend the supply of electricity when a technical or safety deficiency is detected in the installations of the consumer and other users, which poses an imminent risk of damage to people, property, or the operation of the electrical system. The distributor may also require technical adjustments to the expansion, including the submission of a new electrical project, an updated access permit, and the replacement of equipment. In more serious situations, the system may be temporarily suspended until the necessary corrections are made. 6. The regularization and technical defense procedure: strategic steps. Once an irregularity has been identified, inaction is not an option. It is crucial to adopt a proactive regularization procedure to mitigate damages and avoid the most severe penalties. The following steps are recommended: 1. Technical and Documentary Diagnosis: Hire a qualified professional to conduct a complete survey of the system, comparing the installed power (inverters and modules) with what is stated in the approved project, descriptive report, and original ART/RRT (Technical Responsibility Certificate/Technical Responsibility Report). 2. Formal Communication to the Distributor: Submit a new quote request for the connection expansion, stating your intention to regularize the expansion. This act demonstrates good faith and is the first step in avoiding being accused of fraud. 3. Preparation of a New Project and ART/RRT: Submit a new technical project to the distributor that covers the entirety of the installed capacity, accompanied by the respective Technical Responsibility Annotation (ART) or Technical Responsibility Registration (RRT). 4. Presentation of Technical/Legal Defense: The preparation of a qualified technical and legal defense, conducted by a professional with experience in the regulation of the electricity sector, is essential to assess the legality of the assessment and identify any inconsistencies in the technical or methodological criteria used by the concessionaire. 7. Legal defense strategies in cases of infraction notices and TOI (Terms of Irregularity Occurrence): The legal analysis of several administrative processes demonstrates that many of these notices present significant technical and legal weaknesses. In many situations, the penalties applied by distributors do not observe the principles governing administrative sanctioning law, nor do they present sufficient evidentiary basis to support burdensome measures such as retroactive rebilling or suspension of regulatory rights. In this context, specialized legal practice in the electricity sector has identified a consistent set of defense arguments capable of challenging and, in many cases, overturning penalties applied in administrative proceedings involving distributed generation. The analysis of Notices of Violation and Terms of Occurrence and Inspection (TOI) presented in inspection procedures involving distributed generation reveals the recurrence of certain inconsistencies, such as the absence of reliable technical evidence, the use of presumptive methodologies to characterize the irregularity, and conceptual confusion between installed capacity and energy actually injected into the grid. Based on the systematization of these practical experiences in regulatory litigation in the electricity sector, it is possible to identify a consistent set of defensive legal arguments applicable to Notices of Violation and Terms of Occurrence and Inspection (TOI) related to the irregular expansion of distributed generation systems. 7.1 Lack of typicality of the imputed conduct One of the main lines of defense consists of analyzing the administrative typicality of the conduct imputed by the distributor. Although the Regulatory ResolutionANEELAlthough Decree No. 1.000/2021 establishes procedures for access to the electricity grid, metering, and billing, the regulation does not clearly and autonomously institute a specific type of infraction called "unauthorized generation expansion." The application of administrative penalties requires the precise subsumption of conduct to a previously established normative provision, in accordance with the principle of strict legality foreseen in article [article number]. Article 5, II, of the Federal Constitution. Thus, when the distributor alleges irregularity without demonstrating which regulatory provision was actually violated, a clear legal weakness arises in the administrative action. 7.2 Lack of credible technical evidence of irregularity Another recurring argument in administrative defenses involves the absence of robust technical evidence proving the alleged increase in power. In many cases, distributors base their conclusions on mathematical estimates of maximum generation; visual analysis of installed equipment; and assumptions about the system's generation capacity. However, administrative sanctions require clear and demonstrable technical justification, as determined by article [article number]. 50 of Law No. 9.784/1999.11 To technically characterize an irregular expansion, it would be necessary to demonstrate, for example: effective alteration of the AC power of the system; modification of inverters or protection equipment; increase in the power effectively made available to the grid; record of energy injection exceeding the approved limit. In the absence of such technical evidence, the citation tends to lack adequate justification. 7.3 Weakness of the presumptive methodology used by distributors Another recurring weakness in the assessments lies in the use of presumptive methodologies to characterize the irregularity. Some distributors use calculation models based on estimates of theoretical generation, obtained by multiplying the registered power by fixed factors of capacity and operating time. This methodology, however, has evident technical limitations. Photovoltaic generation depends on highly dynamic variables, such as: solar irradiance; ambient temperature; orientation and tilt of the modules; equipment efficiency; unit consumption patterns, etc. Therefore, exceeding estimated generation values does not, in itself, constitute proof of irregular expansion of the system. Using theoretical parameters as evidence for sanctions can represent an undue reversal of the burden of proof, transferring to the consumer the obligation to demonstrate that they did not commit the infraction. 7.4. Technical distinction between DC power, AC power and generated energy. Another aspect frequently overlooked in administrative proceedings concerns the distinction between different technical quantities involved in photovoltaic systems. In simplified terms, it is necessary to differentiate between: • DC power (capacity of photovoltaic modules); • AC power (output capacity of inverters); • energy generated or injected into the grid (measured in kWh). 11 Art. 50. Administrative acts must be justified, indicating the facts and legal grounds, when: Simply increasing the number of photovoltaic modules does not necessarily imply an increase in the AC power available to the electrical grid, as the system output may remain limited by the inverters and protection devices installed. Thus, to characterize an irregular expansion, it would be necessary to prove that there was an effective increase in the power delivered to the grid or a relevant change in the connection point. The absence of this technical demonstration compromises the validity of the citation. 7.5. Violation of the principles of good faith and legitimate expectation. Another argument frequently used in administrative defenses involves the application of the principles of objective good faith and the protection of legitimate expectations. In many cases, consumers hire specialized companies for the installation and eventual expansion of photovoltaic systems, operating in a transparent and documented manner. When the distributor allows the system to operate normally for a long period and only later applies retroactive penalties, there may be a violation of the consumer's legitimate trust, especially when there was no prior inspection or notification of irregularities. These principles are recognized in Brazilian administrative law and are based on article... 2nd of Law No. 9.784/1999.12 7.6. Impossibility of broad retroactive rebilling Another point frequently questioned in defenses concerns the extent of the rebilling applied by distributors. In many cases, the calculation statements presented by the utility companies fully revise the energy compensated to the consumer unit over several years. However, even if the existence of irregularities were admitted—a hypothesis that must be proven—any rebilling should observe criteria of proportionality and individualization of the damage. This means that any difference should only apply to the portion of the power supposedly increased, and not to the total energy compensated by the system. 7.7. Burden of proof on the distributor 12 Art. 2. The Public Administration shall obey, among others, the principles of legality, purpose, motivation, reasonableness, proportionality, morality, full defense, adversarial process, legal certainty, public interest, and efficiency. Within the context of the administrative sanctioning process, the burden of proving the occurrence of the infraction rests with the administration itself that applies the penalty. Therefore, it is up to the distributor to demonstrate, in a clear and verifiable manner: 1. 1. Which equipment was changed; 2. When did the alleged expansion occur; 3. What technical impact did this change have on the network? 4. What was the effective period of the irregularity? Without the presentation of this evidence, the charges may be considered legally unsustainable. 7.8. Change in regulatory positioning ofANEEL Regarding Zero Grid/Grid Zero systems: The “Zero Grid” system — also called “Grid Zero” — consists of a photovoltaic power plant intended exclusively for local self-consumption, with electronic blocking of injection into the distributor's grid. Because it does not export energy, it does not participate in the Electric Energy Compensation System (SCEE) provided for in Law No. 14.300/2022, and therefore did not qualify as microgeneration or distributed minigeneration (MMGD) for the purposes of homologation in the SISGD system, according to the understanding of the [relevant authority/organization]. ANEEL in effect until mid-2024. A ANEEL The following interpretations regarding Zero Grid systems have been made over time: a) Official Letter No. 149/2022 – SRD/ANEEL In formal response to Banco do Nordeste, the ANEEL It was expressly clarified that "Zero Grid" systems are not considered micro or mini-distributed generation, precisely because they do not inject energy into the grid, and therefore are not subject to approval by the distributor or the... ANEELThe document literally states: “Given that Zero Grid systems do not inject energy into the grid, they do not participate in the Electric Energy Compensation System and, consequently, do not qualify as micro or mini-distributed generation, under the terms of Law No. 14.300/2022.” Furthermore, the same document acknowledges that such systems can be freely implemented, requiring only notification to the local distributor for safety and electrical integration purposes, without the need for authorization or prior approval: “Provided that the installed capacity is less than or equal to 5 MW, the Zero Grid system is characterized as a reduced-capacity generating plant (...). Reduced-capacity generating plants do not require authorization from the granting authority to be implemented.” This understanding consolidated, between 2022 and 2023, the guideline that the use of Zero Grid systems did not depend on any formal approval to operate within the regulations of the law. ANEELb) Official Letter No. 188/2024 – STD/ANEEL Only in May 2024 ANEEL The agency partially revised its previous position, now recognizing that grid-connected Zero Grid photovoltaic systems could be classified as distributed microgeneration (DMM), provided they cumulatively meet the criteria of Law No. 14.300/2022 and Normative Resolution No. 1.000/2021. However, this interpretation was new, applicable from that date, and not retroactive—the official document itself does not revoke or invalidate the previous understanding, but only complements it in light of the changes brought about by REN No. 1.098/2024: “In the case of 'zero grid' systems that (...) are connected to the distribution network through consumer units, the characteristics of these systems cause them to fall within the definitions of distributed microgeneration and distributed minigeneration (...).” Therefore, until the publication of this document, there was no formal obligation for registration, homologation, or prior authorization of Zero Grid systems with the agency. ANEEL or to the distributor, provided there was no injection of energy. c) Official Letter No. 416/2024 – STD/ANEEL Back in November 2024, in response to a query from ABRADEE, the ANEEL The new vision was consolidated: the “Grid Zero” system could be considered micro or mini-distributed generation, provided it complied with the requirements of article 655-C of REN No. 1.000/2021. However, the same official document reaffirms that the essential characteristic of this model is the absence of energy injection, and that, in the event of any minimal injection, the distributor should only guide technical adjustments, and not apply sanctions or automatic exclusions: “For MMGD systems that do not inject into the grid, any injection into the distribution network will not be offset against electricity consumption or accounted for as a credit (...).” Thus, from 2024 onwards, ANEEL It has come to be recognized that certain grid-connected Zero Grid systems can be classified as micro or mini-distributed generation, depending on their technical configuration and the method of connection to the electrical grid. In this sense, it is important to verify when the Zero Grid system was connected and whether there was formal communication via email or another communication channel with the Distributor. The regulatory debate on the expansion of photovoltaic systems highlights a typical challenge of the contemporary electricity sector: balancing the accelerated expansion of distributed generation with the need to preserve the technical security of the grid and the integrity of the energy compensation system. 8. Final Considerations The increase in inspections of distributed generation systems indicates a natural trend of regulatory maturation in the Brazilian electricity sector. However, the application of administrative penalties must always observe the fundamental principles of administrative law, especially legality, proportionality, motivation, and legal certainty. In this context, careful technical and legal analysis of the inspection reports reveals that many fines for alleged irregular expansion may present relevant inconsistencies, opening space for the presentation of effective administrative defenses. Administrative defense must ensure full observance of the principles of adversarial proceedings and the right to a full defense, including its technical aspects. The consolidation of these legal strategies contributes not only to the protection of consumers and investors in distributed generation, but also to strengthening legal certainty and regulatory predictability in the Brazilian electricity sector.

Juliana Oliveira

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Unauthorized expansion of solar systems: what the regulations say and how to defend yourself.