MP 998 approved in the Senate does not impact GD

MP 998 (Provisional Measure 998/2020), approved in the Senate on Thursday night (4), does not impact the DG (distributed generation) segment in Brazil. This is what experts in the electrical sector say.

Professionals and investors in the photovoltaic market woke up wondering whether the approval of this provisional measure affects the discussion about REN 482, the so-called “Sun Taxation”. The answer is no.

The discussion about updating REN 482 is still being processed at ANEEL (National Electric Energy Agency). Furthermore, there is a discussion about the creation of a legal framework for distributed generation being processed in the Brazilian Legislature through bills.

MP 998 was approved in the form of a conversion bill that came from the Chamber of Deputies (PLV 42/2020). If it was not voted on by February 9th, the provisional measure would lose its validity. Now the text goes to President Jair Bolsonaro for sanction.

According to Bernardo Marangon, specialist in ACL (Free Contracting Environment – Free Market) at Exata Energia, the approval of MP 998 should not affect GD.

“MP 998 was created with the aim of reducing tariffs for end consumers, mainly due to the impacts that will be felt due to the pandemic, using R&D (Research and Development) resources”, he explains.

“Another concern was to reduce the increase in tariffs for distributors in the north of the country, which were managed by Eletrobrás and are currently owned by the private sector. In this case, other consumers will have to bear this cost. In short, for DG, which grows in times of high energy costs, this increase should be a little lower than predicted without the MP”, he concludes.

Josiane Palomino, director of Generator Management and Distributed Generation at Comerc Energia, a company specialized in energy management, the base text of MP 998 does not deal with DG.

“GD projects, for now, will continue to be supported by REN 482. We will indeed have a change with regard to centralized generation, with a change in the deadline for requesting new grants with the right to a discount on TUSD-TUST (12 months from the publication of the law and no longer from 1/9/20), which expands the window for requesting centralized generation grant requests with the right to discounts in the current rule and, consequently, offers more breathing room for the market of centralized generation”, explains the specialist.

When it was issued in September 2020, this provisional measure ended government subsidies for the production of solar, wind and biomass energy. However, the text of PLV 42/2020 extends subsidies for 12 months after the publication of the law.

Furthermore, it allows incentives for energy generation from renewable sources in public buildings that use energy efficiency resources.

Cove 3

The proposal approved by the Senate also allows the creation of an additional tariff to cover the costs related to the Angra 3 electricity commercialization contract.

The text also determines that the granting of authorization for the exploration of the nuclear plant is the exclusive responsibility of a state-owned company, and allows, in the event of privatization, that a new concession be granted for extended contracts.

Angra 3 is being built on Itaorna beach, in Angra dos Reis (RJ). According to the federal government, the plant has 67.1% of civil works already carried out.

Senator Jean Paul Prates stated that the MP is a set of legislative amendments, a “patchwork quilt, with different themes that do not speak to each other, a list of urgent problems, with a lot of disconnected things”. He further stated that “the increases have already occurred and resources are being taken away from science and technology; there has already been help for the electricity sector, several companies have already been privatized”.

R&D Resources for CDE

If sanctioned by the president, MP 998 will transfer to the CDE (Energy Development Account), between 2021 and 2025, 30% of the resources that electricity concessionaires are required to invest in R&D (research and development) and efficiency programs energy.

Furthermore, concessionaires and licensees of the public electricity distribution service will also be able to apply research and development resources to technologies for storing clean energy.

Currently, there is R$ 3.4 billion unused in R&D and energy efficiency projects, which could be directed to the CDE. Loans granted to distributors amount to approximately R$ 15.3 billion.