Energy sector jurists analyze text of PL 5829

Collaborated Henrique Hein 

Lawyers from the photovoltaic energy sector, heard by Canal Solar, gave their legal assessments on the new replacement text for PL 5829, which aims to create the Legal Framework for GD (distributed generation) in Brazil. The document should be voted on next Tuesday (17) and sanctioned by President Jair Bolsonaro (no party) in 2021.

According to Frederico Boschin, a lawyer specializing in regulation of the electricity sector, the first point that draws attention is the inspection process in relation to credits – which, apparently, will require a lot of attention from the market in terms of the distributors' billing procedures. .

“It is already complex to understand this for those who work in the sector, imagine for the consumer who has a photovoltaic system at home and will need to monitor all credit billing metrics for at least 10 years”, he said.

Regarding the idea of maintaining the acquired right until 2045, the expert believes that this is great for the segment, because it guarantees the entire life cycle of the assets. However, this could result in an acceleration of the segment.

“Consequently, it will have an inflationary impact on the equipment, precisely due to a sum of market conditions, that is, the rise in the dollar, the pandemic, high freight, the race for access opinions until this period. So, a year after the publication of the PL, turned into law, this could bring a big rush that could have an effect on the cost of products”, explained Boschin.

Still at this point, the lawyer said that it will be a challenge for the supply chain, in relation to meeting these new demands for inverters, panels and fixing systems.

“Anyway, PL 5829 makes great progress in terms of reducing bureaucracy and creating a new frontier of more advanced business models regarding the type of energy sharing,” he highlighted.

According to Pedro Dante, partner in the energy and infrastructure area at Lefosse Advogados, the consensus between the associations, MME (Ministry of Mines and Energy) and leaders in Congress to approve the new proposal is a big step towards pacifying the issue.

“The great security of the proposed regulations is the existence of a transition between the current regime and the new energy compensation criteria, which is essential for the predictability of all investment made in the distributed generation segment”, he highlighted.

The expert also pointed out that the new DG rules will come into force one year after the law is sanctioned, and a transition period of six years is foreseen for systems installed after the new legal framework comes into force to pay in full for all tariff components not associated with the cost of electricity.

“Among them, the use of the distribution network, and all benefits to the electrical system provided by micro and mini-generation plants must be deducted, which must be calculated by ANEEL (National Electric Energy Agency) according to guidelines previously defined by the CNPE (National Council of Energy Policy)”, reported Dante.

Referring to article 15 of the text, which defines, precisely, this issue of tariff rules being established by ANEEL, Frederico Boschin commented that this again pushes a problem forward, as it actually puts it back on customers' exposure.

“As of this date, there would be a possibility that is given, by the proposal, which leaves open what the standards would be. It seems to me that there will be a discussion up front about these conditions. For now, the problem has been resolved, but it suggests that from 2045 onwards we will perhaps have a new rule”, he added.

Associations

In the assessment of Tássio Barboza, deputy secretary of technical matters INEL (National Institute of Clean Energy), the text of PL 5829 managed to advance, while maintaining the foundations of the previous one, guaranteeing predictability for new investors and the right preserved for current ones.

“In addition, the PL is full of technical innovations, such as forecast payment of generation TUSD, improvements in the calculation of availability costs, among others. GD players have a lot to celebrate. But, only after approval, of course”, he reinforced.

According to Carlos Evangelista, president of ABGD (Brazilian Association of Distributed Generation), the new version of the document will help maintain consumer safety, giving them enough time to return their investments.

“On the other hand, we managed to achieve an interesting formula for consumers who choose DG, which will maintain the growth trajectory of distributed generation”, he highlighted.

Heber Galarce, president of INEL (National Institute of Clean Energy) and director of Government Relations at ABGD, also commented on the matter and emphasized that the document contains measures that will help expand clean energy matrices in the country.

“Brazil needs laws that provide growth in this sector, in line with the demands imposed by the fight against climate change”, he concluded.

Read more: Sector professionals discuss the new PL 5829 proposal

In turn, Rodrigo Sauaia, president of ABSOLAR (Brazilian Association of Photovoltaic Solar Energy), explains that the new replacement text for PL 5829 provides for the accounts meeting to be held in two stages.

In the first, there will be a period of six months for the CNPE (National Energy Policy Council) to establish the guidelines for holding the accounts meeting.

In the second period, ANEEL will be responsible for carrying out a study on the valuation of GD in Brazil. To do so, the entity will have a period of 18 months after the date of publication of the document in the Official Gazette of the Union.

“What will happen is that whoever enters between the 13th and 18th month will have a different transition rule, with a longer investment amortization period, of eight and not six years,” he said.

“For this investor, the transition rule will be valid for the first six years, while, in the last two years, they will continue to pay TUSD (Distribution System Usage Tariff) Fio B on the energy credit when making compensation. Only after that will it be possible to enter into the account meeting rule”, pointed out the executive.

Sauaia also highlights that the eight-year period for amortization aims to ensure greater legal certainty for investors who will not have as much clarity as to what the new rules will be like.

“From the 18th month onwards, the account will be published and clear to everyone, so that investors will be able to make their investments already knowing what compensation conditions they will be in after the transition period”, he concluded.

New text alleviates water crisis

In ABSOLAR's view, the new proposal comes to alleviate the water crisis and help reduce the electricity bills of all Brazilians.

“PL 5,829 will strengthen the diversity and security of Brazil's electrical supply, further relieving pressure on water resources, reducing dependence on fossil thermoelectric plants and energy imports, in addition to strengthening the economic recovery, attracting new investments, generating new jobs, income and opportunities for citizens”, highlighted Bárbara Rubim, vice-president of distributed generation at the entity.

For the executive, the legal framework is a priority in the current scenario, as it accelerates socioeconomic development, in line with the fight against climate change in the country. With this, it contributes to the energy transition at a time of water recession and less use of fossil thermoelectric plants, which are more expensive and polluting.

“With approval, Brazil will take another step forward in the construction of a positive, stable and balanced law, which reinforces society’s confidence in a cleaner and renewable future, with more freedom, prosperity and sustainability”, he concluded.