Economic feasibility of distributed generation for Brazilian households: influence of the new legal framework

Abstract

The number of distributed generation systems has grown exponentially in Brazil since its first regulation. However, with the approval of a new legal framework, consumers began to pay for using the electricity distribution system, resulting in a direct impact on the electricity market. Thus, the objective of this work is to evaluate the influence of such a new regulation on the economic feasibility of distributed generation systems for residential facilities, which are the most representative consumers. For this purpose, the approved energy tariffs for the utilities are analyzed in detail, as well as the impact on the cash flow of systems installed in the vacancy period of the law. Five distinct scenarios are assessed, considering econometric parameters and a thorough comparison with traditional fixed-income investments available in Brazil. The study shows that there is no common pattern for the adoption of electricity tariffs, while the new regulation varies according to the tariff type in the regions most impacted in the country. Even with the decrease in attractiveness, one can state that the systems are still viable in all the analyzed scenarios, even without a smooth transition between the regulations. Finally, it is strongly recommended that new systems are installed as soon as possible associated with proper energy management in consumer units, while prioritizing energy consumption during peak generation periods.