1. Distributed Generation in Brazil: Assessing the Institutional and Market Design Barriers Preventing Renewables Small-scale Generation Deployment
Clarice Ferraz
Energy Economics Group
Federal University of Rio de Janeiro
Brazil

2. Presentation outline Introduction
The evolution of the regulation of micro and mini DG
Where do we extend?
Non integrated support schemes – mismatches between regulator andenergy policy - Institutional lock-in
Economic crisis setback
Conclusions – Instutional path dependence and lock in

3. Electric Power Sector Brazil (%) - 2013
Electricity generation: 570 TWh
Electrical capacity: 126 GW
Electricity generation: TWh
Electrical capacity: GW
Source: World Energy Outlook 2015

4. Latin America faces its known fragility:
High level of external economic dependencies
Reliance on the primary sector (mining and energy sectors) and lack of economic diversification
High socio-economic inequality caused by high level of income disparity
Lack of long-term planning and investments
Lack of trust and vision for the region and countries despite regional integration require liable cooperation and partnership
Source: WEC Report 2017

5. Renewables Growth around the world and in Brazil – opposite directions

6. Three Trends of the Grid Edge Transformation
Source: WEF Report 2017

7. The Future of Electricity
Source: WEF Report 2017

8. Brazilian GD regulatory framework 2 steps: 2012 to 2015
2012
2015
Capacity cap
100 kW (micro); 1 MW (mini)
75 kW (micro); 5 MW (mini)
Compensation period
36 months
60 months
Business models
self-consumption; remote self-consumption
self-consumption; remote self- consumption; condominiums; consortiums/cooperatives
Treatment of Net Excess Generation (NEG)
No compensation
Utility territory caps
Not apply

9. Lack of coordination in the evolution of regulatory framework
The regulatory framework evolved in phase with urban consumption profiles
However the tax struture, up to 30% – determinant for the economic viability of the PV system installation – did not follow
Exemption of the highest tax (ICMS ≈ 20%) stopped at the 1 MW limit stablished in 2012, while the limit of the classification as DG was expanded up to 5 MW
Moreover, it constinued to be applied only at the same consumption unit while the new framework includes condominiuns, consortiuns and cooperatives.

10. PV systems: Distribution by consumers type

11. Micro and Mini Generation systems
COGEN, 2017

12. Mismatch between DG regulatory framework and energy policy
PV started growing thanks to grid parity (attained even before DG was regulated). However, it is the large scale generation that is growing
Although the regulatory framework has positively evolved, the incentives did not follow
The funding and financing schemes continue to be thought for a sector with centralized dispatch and predominant largescale generation facilities
The financing schemes did not evolve with the regulatory changes. There are no credits lines for small DG generation.

13. As a result... Evolution of installed PV capacity
Centralized generation is growing faster thanks to policy support
The expansion won´t attain the projected amount.
2017: 1/3 is in retard
2018: only 1/3 is actually being developed

14. Small DG expansion setbacks
The country's current economic situation affects negatively the pace of acceleration of energy installed capacity expansion. Government support is more than ever necessary small. Small DG has been negleted.
In May, the regulator (Aneel) reduced micro and mini- energy projections by According to Aneel's calculations, 886,000 consumers will receive credits from distributed generation systems by By 2015, the agency's projection was That the number reached 1.23 million

15. The Future of Electricity
With regard to small DG expansion, Brazil is moving in the opposite direction of what has been proned, ex:
WEF Recommendations :
Source: WEF Report 2017

16. Conclusions
In order to accelerate small DG pace of diffusion, taking profit from its natural resources advantages and the associated energy efficiency gains typically associated with the small DG systems adoption, brazilian policymakers must design an institutional framework where these systems can coexist with the traditional large scale plants.
The inadequate institutional framework is preventing small DG systems adoption. Besides the worldwide fall in PV systems prices, Brazilian projections are being revised to reveal a slower pace of diffusion than that was expected a couple of years ago.

17. Thank you for attention!