On the regulation of solar distributed generation in Brazil: A look at both sides

Abstract

In the last few years, a considerable growth of rooftop photovoltaic systems has been experienced in Brazil, and according to the Ten-Years Energy Plan, developed by the Brazilian Energy Research Company, it is expected to increase even more in the coming years. As a result, the Brazilian Regulatory Agency (ANEEL) has been actively working in the sector, acting to smooth the impacts on Distribution Companies (DisCos) and prosumers. The two major negative impacts of the current Distributed Generation (DG) regulation in Brazil are the cross-subsidy for consumers to prosumers (i) since non-PV owners subsidize network costs that prosumers avoid paying, and the “death spiral” (ii) in which a DisCo lost a considerable share of the market continuously. To overcome these issues, the Brazilian government approved Law 14300, which includes a new compensation scheme for energy injected into the grid. In this way, the main objective of this paper is to conduct a technical-economic analysis of photovoltaic systems with this new structure by considering the impact on both sides: new investors in DG and DisCos. The analysis is compared against the previous regulation and the results proved a detriment to economic viability for prosumers as the amount paid in the Net-Metering Scheme increases, reducing the interest in the investment and the economic impact on the DisCos. On the other hand, when the amount paid in the Net-Metering Scheme gets reduced, it increases the interest of consumers to invest in DG and the DisCo's market losses. The present work quantifies these statements and indicates the appropriated regulation, which is in between these two extremes.