EN 
PT_BR 
Amid discussions on proposed amendments to REN 482 (Normative Resolution No. 482) from ANEEL (National Electric Energy Agency) the document “Distributed Micro and Minigeneration: Questions and Answers”, published by the Ministry of Economy, gained prominence.
The request of Solar Channel, specialist in electricity markets Bernardo Marangon, director of Exact Energy and teacher on the course Market, Regulation and Business Models in Solar Energy – ACR and ACL (Free Market) pondered the questions and answers presented by ME technicians.
See the expert's considerations below.
Does the change in REN 482 compromise the advancement of solar energy in Brazil?
TRUE. Solar energy has much greater growth potential in the decentralized market through DG (distributed generation) than through GC (centralized generation).
The example of the auction presented in the original document from the Ministry of Economy is misleading, as currently centralized generation entrepreneurs seek auctions with the aim of having a regulatory stamp to facilitate the connection process and lock in the system usage tariff, the highest being part of the energy traded in the free energy market, whose energy is incentivized at 50% (in this context there is a discount on the connection cost of the customer who consumes this energy).
Is the government against solar sources?
FALSE. O President Jair Bolsonaro has already expressed support for the distributed generation initiative. Members of the Senate and Chamber of Deputies have also expressed themselves in favor of the GD.
What we see is a movement by some government blocks, including the Ministry of Economy, showing themselves to be contrary, presenting their theses with arguments based on the elimination of subsidies, which are not correctly proven.
Once again, we highlight that the auction price cannot be taken as a reference, as most of the energy from the projects will be traded through the free energy market.
The statement presented by the Ministry of Economy related to “arbitration” is mistaken, as the business presents a series of risks, namely risk of customer default, risk of the area where the project will be installed, construction risk, performance risk, connection risk and regulatory risk (with emphasis), given that the draft evolution proposal for REN 482 considers changing the rule for projects in operation.
Are distributors the only ones benefiting from the new rules?
FALSE. In reality, the new rule allows the maintenance of the option of passing on to the consumer the responsibility for bearing the inefficiencies of the Brazilian electrical system.
In fact, the Ministry of Economy is correct in stating that the increase in distributed generation can generate costs for those who do not generate their own energy.
However, it must be highlighted that the problem is not caused by distributed generation itself, but by the current tariff model, which is flawed and does not capture the benefits that distributed generation provides for the electrical system.
Are they trying to “tax the Sun?”
TRUE. Perhaps the expression is not the one that best describes what happens, but in a way it is correct, as the proposal impedes the growth of distributed generation.
The word subsidy is used very often, however incorrectly. The current tariff model does not capture the benefits of optimizing the use of distribution assets.
There are a series of initiatives to improve the sector, one of which is the hourly energy price, which will certainly advance to the distributors' tariff.
Executing this model is complex due to technological limitations, but it would be the fairest way to charge customers and pay generators.
In the study of the fictitious subsidy presented by the document from the Ministry of Economy, the benefit of distributed generation is not considered, which can avoid network expansion investments, in addition to avoiding the use of more expensive sources, generating a benefit for all customers, the which is not included in the R$ 34 billion account.
Do the changes to REN 482 eliminate all incentives for distributed micro and mini-generation?
TRUE. It is interesting how the response given by the Ministry of Economy to this item corroborates the previous argument and response.
It turns out that only high voltage (AT) and medium voltage (MT) customers have a difference in tariffs during off-peak and peak times.
Even more interesting, the peak time between 6 pm and 8 pm is no longer the period of greatest demand on the electrical system, which is currently in the early afternoon.
First point, low voltage (LV) customers are not covered by this system. Second point, peak and off-peak times were created mainly due to the limitations of the distribution network, that is, most of the price difference at these levels is in the TUSD component (Tariff for Use of the Distribution System), which in proposed new rule will not be considered.
Third point, the solar source, the most relevant in the distributed generation market, does not generate during the old peak hours, but generates more energy precisely at the system's new peak hours.
Fourth point, peak hours are only 3 hours a day and only on weekdays, greatly reducing the volume of energy.
Will those who have already made the investment lose money?
TRUE. Investing in energy assets has a long-term return. Changing the rule for those already in operation has a relevant impact and should not occur.
For new entrants, they forget the amount that has already been invested in the development of projects, which will be lost, as in this new context the investment becomes unfeasible.
And the most important thing is the impact generated on entrepreneurs and workers in this new market, who invested financial resources and their most precious asset: time. This change will certainly have a devastating impact on jobs and businesses.
The government wants to kill innovation. Distributed micro and mini-generation is the future, and there is no point fighting against it
FALSE. The first statement of the Ministry of Economy’s response: “We believe that the free market is guided by innovation and the main incentive for this to occur is profit” it's fantastic.
We completely agree, as the electricity sector has had the same structure for over a hundred years. However, transmission and distribution businesses have a natural monopoly, requiring high regulation.
Therefore, the viability of distributed generation, which naturally uses the distribution network, depends on the advancement of regulation, whose role is to give the right economic signal for the evolution of the system.
We are also against subsidies, as what is at stake is the inefficiency of the tariff model in capturing the benefits that GD delivers to the system. The generation time is essential to capture this benefit.
Distributed micro and mini-generation represents a small share of the market, this is not the time to change subsidies
TRUE. Firstly, note that we cannot say that there is a subsidy, given that the tariff structure is inefficient.
The R$ 34 billion will certainly be used to build new transmission lines to bring power from distant places to the load.
The transmission line built to transport energy from Belo Monte, for example, had a total investment of approximately R$ 9 billion, with R$ 5.2 billion financed by BNDES (National Development Bank).
The permitted annual revenue was approximately R$ 1 billion until 2035, which equates to a cost of R$ 16 billion (real terms), not counting the cost of credit encouraged by BNDES.
The vast majority of projects approved at auction are located in the Northeast, which requires the construction of transmission lines to transport this energy to the largest consumption centers (South and Southeast regions) – we highlight this as a flaw in the document published by the Ministry of Economy.
Whoever is in favor of Brazil cannot be in favor of subsidies from the poorest to the richest
FALSE. Once again, there is a contradiction in the Ministry of Economy's speech. The model defended by the Ministry of Economy strongly favors large corporations and large projects, in which wealth is not distributed but rather concentrated.
The electricity sector is undergoing a major transformation and the presence of all types of investors is very important, whether large, medium or small.
The subsidy view is mistaken, given that we are unable to capture the benefit that GD delivers to the system in the current tariff structure.
ANEEL needs to be careful, as if the service that the network provides for distributed generation becomes too expensive, it will force migration to systems with batteries, which can really impact the revenue of distributors and impact the electrical system, which in this context becomes obsolete.
The distributed generation sector allowed decentralized investment in the expansion of generation, which is fundamental for a country that could suffer supply risks with the growth of the economy in the coming years.
The creation of new jobs and the distribution of wealth based on distributed generation are very relevant and a mistaken change to the rules puts these benefits to society at risk.
We are sure that the decentralized investment model generates more revenue for the government, as centralized investments seek tax optimizations and in most cases rely on subsidized financing (here, yes, there are subsidies!) by development banks.
We advocate a deeper discussion of the tariff structure and how we can capture the benefits that distributed generation provides to the electrical system.
To do this, we need a much broader view of the sector and a discussion at a much deeper technical level.
The analyzes carried out to date have been very superficial and it is necessary to be aware of statements that are made without a more solid knowledge base.
