Mariana Londres – Solar energy: the incentive ends and the electricity bill of the new user will increase

With the Senate failing to approve PL 2703/22 before revoking it, the current incentives for micro and mini renewable electricity generators will expire on January 6. This means that the producer/consumer who has invested in their own renewable electricity generation and is not connected to the distribution grid until next week, will lose their current exemptions and distribution charges, making their production their own and distributed generation (GD) less attractive to the small consumer.

The solar energy sector is still trying to turn the tables, trying to convince the elected government of the need to extend the benefits. One of the alternatives would be the approval of the PL after the suspension, with a device that fills the gap that will remain in the legislation between January 7 and the possible approval of the extension of the benefits.

The debate on renewable energy subsidies raging in Congress has pitted opposing sides:

(1) distributors and consumer associations; (2) the industry investing in solar and wind energy.

In the midst of all this, regardless of who wins the legislative battles, there is the weakest link in this chain, in general who always loses, the small consumerboth in the captive market (the vast majority of the population, connected to the electricity grid and unable to invest in their own renewable generation), and in the small producer/consumer of solar energy, which has invested to install solar panels in the home and, even with the current subsidies, which he says should be maintained, see a small reduction in electricity bills.

What is being discussed? I showed here that PL 2703/22, already approved in the House and not approved in the Senate, which extends the benefits of solar energy until the middle of next year, could increase the electricity bills of all consumers who do not produce energy until the 2045, if it was approved. Small solar consumers do not agree with the extinction of benefits for the small consumer, but rather that there is a different treatment between the small producer/consumer and the sustainable energy company.

“With the lack of regulation and the differentiation of the final consumer from the company, they ended up all being thrown into the same treatment, without differentiation, which can make the installation of PV projects for the final consumer impractical,” says Eduardo Alvernaz, a small consumer/producer of solar energy. He has invested BRL 12,000 in solar panels to reduce tariffs and still pays an electricity bill that he considers high.

Alvernaz is critical of the subsidies given to companies, distributed generation solar parks, small hydroelectric plants, which, according to him, use an expensive distribution structure, without paying anything, which is also the argument of the distributors.

Energy specialist, Professor Célio Bermanncoordinator of the energy governance research group at USP’s Institute of Energy and the Environment, disagrees that subsidies are the bad guys in electricity bill prices, but taxes and levies on electricity bills ‘electricity.

“What are called subsidies are tools so that the cost of insertion and transmission into the network generated by the small consumer is not subject to taxation, from the point of view of captive consumers there is no consequence in taking these tools into account. Our tariff is high for at least 30 years due to the incredible introduction of taxes and fees on the consumer’s bill, this is what needs to be reviewed, PL 2703/22 timidly tried to maintain the current framework of incentives for 18 months penalized because it has access only to the physical, and not financial, accounting of what is entered on the network”, he explains.

What the distributors say

  • The impact of the advantage granted to the few generates costs for other consumers of around R$ 138 billion by 2045, if the PL were approved.
  • The subsidies were important, but there is no reason to extend them. The extension of the deadline for Distributed Generation is, in fact, a transfer of income in which the poorest consumer pays the subsidy granted to the consumer with the highest income, capable of investing in the production of energy through solar panels.
  • The argument that ANEEL is late in regulating law 14.300/22 is fallacious.

What the solar energy industry says

  • PL 2.703/2022 is a step forward in consumer law guarantees and an important step towards maintaining the application of Law 14.300/2022 and the agreement that gave rise to the legal framework for the sector.
  • The law set deadlines and commitments for each party for its full regulation by Aneel and implementation by concessionaires and electricity distribution companies. However, they have not been satisfied with numerous obstacles, delays, losses and difficulties for Brazilian consumers.
  • PL 2703/2022 also warns about the lack of transparency of the accounts presented by Aneel and sheds light on the possibility of protecting the revenues and profits of distributors.
  • Recent studies point out that the growth of its own solar energy generation is expected to bring more than R$ 86.2 billion of systemic benefits in the electricity sector for Brazilian society over the next decade. As a result, distributed generation will reduce the electricity bill for all consumers, including those who do not have their own solar system, by 5.6% by 2031.

What consumer associations, large and small, say

  • By extending subsidies to distributed generation projects, this PL guarantees the extension and increase of a billion-dollar income transfer from the poorest to the richest.
  • From an environmental point of view there is nothing to fear: solar energy is already extremely competitive in the country, indeed, PL represents a threat to the environment.
  • The installation of 1,500 MW of small hydroelectric plants in the Midwest region could compromise the dynamics of the Pantanal ecosystem.

What university experts say

  • The cost of the investment, already very high for a residential consumer, to install panels for self-consumption and possibly insert the surplus, has been decreasing since Resolution 482/2012 and according to the scale. But, according to the opinion of a group of researchers, the regulatory aspects are still to be defined.
  • The cost does not yet allow low or middle income families to have access to their own production.
  • The only way to reduce costs is to develop domestic technology for manufacturing boards and inverters.
  • It is necessary that the distributors have more transparency, they have a monopoly on the information on the energy introduced by the small producer and they can market this energy from the small producer, this must be reviewed, they must provide this information and redistribute any profit to the producer.
  • Today, large wind farms and large solar producers, which are not small producers, can, through regulation, define a difference in the treatment of incentives for this type of production. We agree with the distributors’ statement that failure to pay commissions could unbalance the system.
  • What is not clear and needs to be discussed is the loss of revenue DG generates for the distributors.
  • In Germany, the generation of clean energy fed into the grid was remunerated three times the thermoelectric energy, favoring the DG and at the same time the production of decarbonised energy. This should also be done in Brazil, not just the cost, but the decarbonization. Brazil needs to foster energetic communities, in low-income communities, and not by large business groups.

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