Type III Power Plants vs. Distributed Mills: Understand the differences and the ONS cuts.

Two weekends ago, the ONS (National Electric System Operator) activated, for the first time, an emergency plan to reduce generation from power plants classified as Type III.

The decision caught the market's attention and raised questions about which projects would be affected. Initially, some market participants associated the cuts with distributed micro and mini-generation (MMGD).

With the clarification that the measure only involved Type III plants, another question arose: what differentiates these plants from MMGD plants, since both are connected to the distributors' networks?

Despite this similarity, the two modalities play different roles within the electricity sector and follow distinct operating rules.

What are the main differences?

While Type III power plants act as agents for energy generation and trading, serving consumers in the Free Market or distributors, distributed generation (DG) systems are installed by consumers who aim to reduce their electricity bill through energy credit compensation.

The Type III power plant group mainly includes small hydroelectric plants (PCHs) and biomass plants that sell energy in the regulated and free markets and are generally connected to the medium or high voltage networks of local distributors.

The MMGD category includes residential systems, small businesses, industries, rural properties, condominiums, and shared and remote generation projects.

Another important difference lies in the size of the projects. Although there is no power limit that characterizes a plant as Type III, these projects typically have a capacity greater than that of distributed generation plants, depending on the source and the region where they are installed.

The MMGD legislation establishes power limits of up to 75 kW for microgeneration, and in the case of non-dispatchable sources, such as solar and wind, the limit is 3 MW, while dispatchable sources, such as hydroelectric and biomass, can reach 5 MW.

In summary, while Type III power plants are part of the electricity sector's generation structure and may be subject to operational actions determined by the ONS (National System Operator), distributed generation (DG) systems are geared towards self-consumption and, to date, have not participated in the emergency power cut plan implemented by the operator.

Although the ONS (National System Operator) does not directly control these power plants, the generation forecast data and daily monitoring of Type III power plants integrated into distribution networks must be consolidated and forwarded to the ONS by local distribution concessionaires, aiming at the correct load forecasting of substations.

Can MMGD systems be cut?

This is one of the most frequently asked questions after the operation was announced. The official response from the ONS (National System Operator) is that the emergency plan activated did not target the MMGD (Distribution Mill) systems.

The cuts exclusively involved plants classified as Type III and were carried out through 12 distributors, which concentrate about 80% of these plants in the country.

They were: Celesc, Cemig, Neoenergia Coelba, Copel, CPFL Paulista, EDP Espírito Santo, Neoenergia Elektro, Energisa Mato Grosso, Energisa Mato Grosso do Sul, Equatorial Goiás, Neoenergia Pernambuco and RGE.

However, although the emergency operation exclusively affected power plants classified as Type III, the possibility of restrictions on distributed generation (DG) became part of the regulatory agenda of the electricity sector through Public Consultation No. 009/2026. ANEEL.

The initiative, based on Technical Note No. 148/2025, was launched to discuss measures capable of increasing operational flexibility and strengthening the security of distribution networks in the face of the accelerated growth of distributed generation in the country.

Among the proposals presented is the possibility of physically or logically cutting off the generation of distributed generation systems in specific situations that could compromise the safety and reliability of the electrical system, in case other operational alternatives are exhausted.

The topic has generated debate in the sector because it directly involves consumers and companies that have invested in their own generation systems. Even so, it is important to highlight that currently there is no regulatory authorization for the ONS (National System Operator) or distributors to carry out cuts in distributed generation (DG) in the same manner as the emergency operation applied to Type III power plants.

Contributions to the Public Consultation were received until June 8th. With this deadline now passed, it will be up to the technical area of... ANEEL Analyze the feedback submitted by industry representatives and prepare a consolidated technical note with recommendations to be submitted to the Agency's Board. To date, there is no definitive decision or new regulation published on the matter.

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