The Latin American country may see unprecedented growth for PV systems not exceeding 5 MW in size during this decade, according to Brazil’s state-run Empresa de Pesquisa Energetica (EPE) agency. New rules now under discussion in the parliament may further boost this market segment and lead, eventually, to another 30 GW of installed solar power.
September 9, 2021
From pv magazine Latam
Brazil may reach an installed PV capacity of 26 GW for distributed generation PV systems – which in the country includes all installations not exceeding 5 MW in size under the net metering regime – by the end of this decade.
This is one of the main conclusions of a report from the state-run Empresa de Pesquisa Energetica (EPE) agency, in which it simulated five growth scenarios for solar distributed generation which predicts between 23 and 42 GW of new capacity may be deployed by 2030. In the reference scenario, EPE projects 26 GW installed in 2031, including the 6 GW that are currently online. In other words, the most probable scenario is that DG will add approximately 20 GW of capacity in ten years.
EPE also expects that centralized solar power plants, which are all solar parks exceeding 5 MW in size, will reach a cumulative capacity of 8.4 GW by 2030, from around 3.8 GW, currently. These figures, however, do not include unsubsidized large scale PV projects under power purchase agreements that, according to a recent report from Brazilian consultancy Greener, are becoming increasingly important in the Brazilian energy market.
According to the energy regulator, Aneel, there are 24.7 GW of centralized solar plants under development in Brazil and, of these, 23.3 GW are outside the auction mechanism.
The Brazilian Chamber of Deputies has recently approved bill 5829/19, which creates the new regulatory framework for distributed generation. The law is now being discussed by the senate and the expectation is that the law will be promulgated in 2021, giving more predictability and legal certainty for the sector. The project began to be discussed in 2019 and, after many negotiations, the current version was reached with general consensus – the approval was almost unanimous, with 476 votes in favor and three against. “There was a lot of negotiation, a lot of dialogue, we all had to give in a little but, with this, we reached a consensus,” Rodrigo Sauaia, CEO of Brazilian solar energy association ABSOLAR, told pv magazine.
One of the scenarios outlined by EPE was based on the changes in the compensation system for the country’s net metering scheme brought by the bill. In this projection, distributed generation would reach 36 GW of capacity in 2031, and solar would represent 90% of this capacity. This scenario, however, has some differences in relation to the text that was approved in the House of Representatives.
According to PL 5829, distributed generation systems already installed, or those that have a grid-connection approval issued within the 12 months following the enactment of the law, will remain under current regulations until December 31, 2045. That is, they will continue to discount the energy credits of their systems in all the installments that make up the energy tariff.
For new consumers with distributed generation, the part of the tariff that remunerates distributors will begin to be paid (it cannot be compensated with credits) gradually, until its entirety, in 2029. The so-called package B, which remunerates services and assets of the distributors, corresponds to approximately 17% of the energy tariff. Consumers with distributed generation will have to pay 15% of this tariff from 2023; 30% from 2024; 45% from 2025; 60% from 2026; 75% from 2027; and 90% from 2028.
Distributed generation of up to 30 MW
The possibility of electricity companies contracting power from the owners of distributed generation (DG) systems – which encompass systems up to 30 MW in size – would boost the new ‘large DG’ segment. At the end of August, Aneel closed a public consultation on the contract model for energy distributors to contract the auxiliary services of distributed generation plants of up to 30 MW.
In theory, distributors could contract energy from distributed generation since 2015. But only in 2018 were specific pricing criteria defined for each source. The contractual model remained to be defined and must be announced by Aneel based on the contributions received during the public hearing. “Now the game has started,” said Sauaia.
Brazilian energy firm Copel (Companhia Paranaense de Energia), which operates in the southern state of Paraná, has already been authorized for a pilot project in which it can contract distributed generation to test the operation of micro grids. With the publication of the reference contract model, more distributors will be able to join it and publish their own tenders. “It is not a mandatory purchase, but we know that distributors in the southern and southeastern regions are studying it carefully,” said Sauaia.
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