Back to tariff flags and the importance of distributed generation in Brazil

Brazil has the second most expensive residential electricity tariff in the world, according to the International Energy Agency
De volta às bandeiras tarifárias e a importância da geração distribuída no Brasil

The Brazilian electrical matrix is predominantly clean and mostly water-based. However, we continue to emit an excessive amount of carbon into the atmosphere with the generation of electrical energy – the main reason is the constant activation of thermal plants. Just a small positive fluctuation in consumption, or a worsening water situation to put pressure on our reservoirs ever lower, so that the thermal park comes into operation and, consequently, red or yellow tariff flags return to Brazilians' electricity bills. The resource of raising funds to pay for more expensive thermal plants and signaling to the consumer that it is time to save energy should be an exception. But even in times of pandemic, with the population pressured by an unstable economic situation and family consumption leveraged by the forced adoption of home-office and distance learning, these flags appear again. Although ANEEL (National Electric Energy Agency) announced that there would be no extra charges in 2020, it was resumed in December, with Order 3,364/2020, at its maximum value: R$ 6.24 for every 100 kWh consumed. In January and February of this year, the agency defined a yellow flag. It must be borne in mind that the flags do not solve the problem, they only treat the symptoms that worsen year after year. Our matrix is considered clean due to the strong presence of hydroelectric plants, but the impacts of global warming (which fossil energy sources help to worsen) have already been felt in our rainfall regimes. For years, the reservoirs of Brazilian plants have been unable to recover. Therefore, “emergency” energy generation using fossil fuels becomes almost routine, going against the grain of the global energy transition and increasing tariffs for consumers. It is worth remembering that Brazil has the second most expensive residential electricity tariff in the world, according to International Energy Agency. De volta às bandeiras tarifárias e a importância da geração distribuída no Brasil The return of the red flag in December was justified by the return of electricity consumption rates to levels prior to the start of the pandemic, at the same time that water generation is compromised due to low reservoir levels. When there is this negative combination of factors, the government authorizes the activation of thermoelectric plants that use the most diverse fuels, such as natural gas, diesel oil or coal, based on the operating costs of these plants. In addition, energy imports are also freed up. Both measures aim to maintain the supply and security of the system. The situation becomes more dramatic if we consider that we are in the humid period, which runs from December to April and is characterized by the highest incidence of rain. Even at this time of year there are thermoelectric plants activated, generating around 14 GW, and at the same time we are importing 2.2 GW of power from Argentina. If thermoelectric plants should be for emergency use, it is worth asking why are they being used so much? In general, thermoelectric plants already have a much higher price than hydroelectric or renewable plants, but plants activated sporadically, to meet specific needs, are even more expensive. Some plants, therefore, operate entirely or partially for base generation – that is, in constant operation. Its high costs, as well as the environmental impact, are shared among all Brazilians. When installing a new gas thermal plant, it is also necessary to contract the gas, which means a “take-or-pay” of 60% required by the gas producer/transporter. This is because there are few gas pipelines still crossing the country and we still depend on imports of Bolivian natural gas, priced in dollars. The value of the gas, added to the MWh cost of the thermoelectric plant, results in a high bill to be covered by Brazilians through their electricity bill. The environmental impact of generating energy using fossil fuels is an aggravating factor that makes the bill even heavier. Other reasons for Brazil to increasingly use thermal plants is the interruption in investments in hydroelectric plants with large reservoirs. The installation of large hydroelectric plants causes socio-environmental impacts in the region where they are located. Environmental and social concerns are extremely important in many ways, but when considering a systemic view, it is important to consider that the absence of hydroelectric plants also has an impact. It is necessary to evaluate negative effects such as the increase in greenhouse gas emissions and the increase in electricity bills for Brazilians. There is no way to change the past, but there is still time to encourage alternatives and solutions that could alleviate the situation in the short term. Distributed generation with renewable sources is a good example: DG has shown significant growth in recent years. There are more than 400 thousand connections and almost 5 GW of installed power. However, within the Brazilian electrical system, DG still represents only 0.5%, a share that could be much greater. Brazil has a great opportunity to include part of its 85 million consumers in low voltage in this modality, so that more people can produce part of their own energy in a decentralized way, injecting any surplus into the grid through the SCEE (System of Energy Compensation). Electricity). The growth of distributed generation can prevent this year and the next from being marked by consequential red flags or, even worse, by the threat of regionalized rationing. The blackout in Amapá could have been less serious if the state had a significant insertion of distributed generation. The same applies to the blackouts that recently occurred in Roraima and Rondônia, which had less repercussions, but were equally serious for the citizens who were left without energy. Combined with occasional regional blackouts, there is also the problem of 8.5 million Brazilians who still do not have access to electricity, almost condemned to live as if they were in the 19th century, and who could benefit from microgeneration and minigeneration, whether it is integrated into the grid or off-grid. The Brazilian electrical system is quite complex and has some structural problems. There is no simple or definitive solution. The stabilization of the sector, with the effective application of the concepts of “tariff reasonableness” and “energy security”, involves network expansion, energy transition, market opening, privatization of perpetually deficient companies, tax reform in the sector, and an end to burdensome charges. , many of them focused on fossil fuels and, mainly, political will to face everything with a medium and long term plan. Distributed generation, although not the solution to all problems, helps to solve some – and brings numerous benefits. Therefore, it is important to guarantee the conditions for its development. In this sense, it is important to draw attention to proposals that represent a threat to the growth of GD, such as some versions proposed for the review of Normative Resolution 482/2012, which regulates the modality. The process of updating the standard is still ongoing and the dialogue is moving towards more balanced options; however, there continues to be pressure from concessionaires and distributors to end distributed generation in its current form. There are several contradictions in the stance of important players in the electricity sector. Some companies have even taken a stand against the current energy compensation system, arguing that it harms the remaining consumers (who do not have their own energy generation systems); at the same time, these same companies created an operational and commercial structure to explore DG and make money from it, using funds allocated to energy efficiency programs. It makes no sense to pressure public opinion with a speech refractory to distributed generation and, simultaneously, invest in the sector seeking financial return. Proinfa (Incentive Program for Alternative Clean Energy Sources), created by Law 10,438/2002, was a fundamental milestone in increasing the participation of alternative renewable sources (small hydroelectric plants, wind farms, biogas and biomass) in the production of electrical energy , as well as the publication of resolution 482, which regulated microgeneration and minigeneration of energy with all renewable sources, improved by REN no. 687/2015. It's time to take it a step further. The incidence of tariff flags, the hydrological crisis that increases year after year and, sometimes, misinterpretations that confuse incentives with subsidies are a warning sign for society to reflect on what it really wants for the Brazilian electricity sector. Do we want to have the record for the highest fares in the world? Moving against the energy transition? Reduce the percentage of renewable energy in our electrical matrix? Certainly, no Brazilian wants this. With the review of the standard underway, the Federal Government and the National Congress have an excellent opportunity to stimulate distributed generation with renewable sources, voting and approving one of the several bills favorable to DG (distributed generation) being processed in the Chamber . In particular, we highlight the CBEE (Brazilian Electric Energy Code), which has an entire chapter dedicated to the modality, ensuring regulatory stability, enabling a reasonable transition process, maintaining the acquired right of “prosumers” and fairly remunerating all sector players. This CBEE chapter was prepared by a multidisciplinary group of experts from the electricity sector, who considered the positive attributes of distributed generation and sought consensus between all approach perspectives.

Evidently, the Brazilian Electric Energy Code initiative has the support of ABGD (Brazilian Association of Distributed Generation), the largest association in the sector in Brazil, in addition to several other entities representing this segment. Currently, we have more than 400 thousand “prosumers”, people and companies from all social classes and consumption profiles, who contribute to the development of the market and to the diversification of the Brazilian electrical matrix – and, consequently, contribute to the reduction of incidence of tariff flags. The more energy from DG is injected into the grid, in theory, the less water from the reservoirs needs to be used to supply the electrical system. We hope that Brazil will definitively enter the 21st century and use its rich energy potential, assuming global leadership in the hydro and non-hydro renewable energy sector, leading the energy transition and setting an example to the world, demonstrating that the consumer, or Better yet, the “prosumer” and the citizen must be the center of actions.

Picture of Carlos Evangelista
Carlos Evangelista
President and co-founder of ABGD (Brazilian Association of Distributed Generation). Senior executive with extensive experience in multinational services and equipment with high added value. Great knowledge in the renewable energy sector, especially photovoltaic solar sources.

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