Home Business Solar energy production at home brings controversy in Brazil

Solar energy production at home brings controversy in Brazil

There is an ongoing discussion at the National Electric Energy Agency (ANEEL) that, by 2020, these domestic generators will pay higher tariffs

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Countries around the world have created incentives for consumers to generate their own energy at home, usually through solar panels. The growth of this system, however, has created a global scuffle, in which energy distributors try to overturn benefits offered to consumers to install the equipment in homes. This fight arrived in Brazil.

There is an ongoing discussion at the National Electric Energy Agency (ANEEL) that, by 2020, these domestic generators will pay higher tariffs. As in other parts of the world, the issue is the subject of a fierce battle between energy distributors and the renewable energy industry, especially solar.

On the one hand, the distributors defend the end of the subsidies for domestic generators, claiming that other energy consumers are bearing their costs. Already the proponents of the modality affirm that, besides the environmental benefits, the generation of energy in the own place of consumption also produces savings to light account, due to the reduction of new investments in transmission lines.

The system – called distributed generation – increased rapidly in Brazil, especially from 2015, when Aneel defined that consumers capable of generating energy at home would receive discounts in the electricity bill. The measure made it economically advantageous to install the generators because the initial investment made to buy the equipment is compensated over the years. It works like this: if a house consumes 300 kWh in the month and installs solar panels on the roof that generate 200 kWh, the residence only you will pay for the 100 kWh you did not generate.

The change leveraged the system. In 2015, there were 1,823 generating units, with a power of 17 thousand kW. Since then, the park has grown almost 20 times. In July there were 33.3 thousand generators, with 403 thousand kW. Photovoltaic solar energy accounts for about 77% of the total, according to a survey by Safira Energia. The proposal of the distributors, which is under discussion in Aneel, is to limit the economics of these generators.

The discount today is made on the entire account of light, which has several components: fee to pay the energy generated in itself, to compensate the distributors’ expenses with their networks, to remunerate investments in transmission, pay social charges. The distributors want the discount of the generators to be made only on the energy tariff, and not on the other rates – including that of the distributor itself.

In practice, this proposal would reduce the domestic generation economy by up to 62%. Nelson Leite, president of Abradee (distributors’ association), the accelerated growth of distributed generation and the fall in prices of renewable energy (which reduces the initial investment) show that subsidies are not necessary. “It’s a matter of tariff justice, because they do not pay for the use of the network, and the others pay without knowing.” Those who do not have the condition to install these systems are precisely the poorest.”

This subsidy is in fact transferred to the account of other consumers, but, at a first moment, who is in charge of the discounts is the distributor itself – hence the companies’ resistance to the model, according to Claudio Sales, president of the Instituto Acende Brasil. The problem is that these subsidy transfers are slow to occur: they can only be made on tariff revisions, which occur on average every four years.

There is also a concern of the distributors in relation to the accelerated growth of this market. The potential is enormous: in an extreme scenario, the generation of solar energy in roofs of residences throughout the country could reach 286 GWh per year. This amounts to almost half of Brazil’s annual generation, according to data from 2016 of EPE (public agency responsible for studies in the electricity sector). “It is clear that [this scenario] would be unfeasible, but it shows that there is enormous potential, but today [domestic generators] represent a negligible share, not even 1%,” says Rodrigo Sauaia, president of Absolar photovoltaic).

For him, an increase in tariffs would discourage the market because it takes longer than the initial investment takes to pay. Sauaia also criticizes the distributors and says they are only thinking about their own financial health. “The discussion can not be focused on maintaining the profitability of a small group of companies,” he says. According to Guilherme Susteras, a partner in Sun Mobi, a company in the sector, the increase in tariffs would cause the market to freeze for two years, a period in which hardly any small and medium-sized companies (such as his) would survive.

“Distributors are pushing to avoid a transition to a new market that is irreversible,” he says. The distributors say they do not want to stop the market or the advance of clean sources, only to end the subsidies. “This is not going to break small businesses, it will only decrease their profitability. This is an apocalyptic speech of the solar photovoltaic sector,” says Nelson Leite of Abradee.

For Claudio Sales, the subsidies were important to leverage the market at first, but they are unsustainable. “It’s about time to review this regulation.” Aneel’s technical area proposed a transition model, where, for example, the current scenario was maintained for a few years and the benefits were reduced over time.

The proposal, however, was only a kick-off for the series of consultations and public hearings that will be held in the coming months. Any change will come into effect only from 2020. The first public consultation on the topic was closed in June. In this second half, Aneel is expected to prepare a new impact study and open a round of discussions. The final debate will not be finalized until the end of 2019.