Ana Karina Souza, Laura Souza, Lair Loureiro and Rafaela Falavina

On 08/18/2021, Bill No. 5,829/19 was approved by the House of Representatives, which aims to establish the regulatory framework for distributed minigeneration and microgeneration and the Electric Energy Compensation System (SCEE) in Brazil. The approved bill is a result of a joint effort of agents of the power sector, members of the house of representatives and regulatory entities with the scope of increasing legal certainty of the distributed generation sector in Brazil, and has been submitted to the analysis and deliberation of the Senate.

According to the approved bill, energy consumers, individuals or legal entities and their respective consumer units may join the SCEE:

• with distributed microgeneration or minigeneration with local or remote generation;
• members of multiple consumer units;
• with shared generation or shared generation members; and
• characterized as remote self-consumption.

The units participating in the SCEE will be subject to the tariff rules established by the National Electric Energy Agency (ANEEL) for the consumer units with microgeneration or minigeneration distributed after December 31, 2045, when existing on the date of publication of the law or if they file an access request to the distribution system within 12 months of the publication of the law. Projects requesting access between the 13th and 18th month of validity of the law will be inserted in the transition rules until 2031, while projects requesting access from the 19th month of validity of the law will be inserted in the transition rules until 2029.

After the transitional periods indicated by law, the participating consumer unit participating in the SCEE will be charged by the tariff modality stipulated by ANEEL for its respective consumption class. The charge will focus on the active consumed power from the distribution network and on the use or demand of all tariff components not associated with the cost of energy, and all the benefits to the electrical system provided by distributed microgeneration and  minigeneration plants should be reduced from the charged amounts.

After 12 months from the date of publication of the law, the Energy Development Account (CDE) will temporarily bear the costs of the tariff components not associated with the cost of energy incident and not remunerated by the generating consumer units on the electricity compensated by the consumer units participating in the SCEE.

The National Council for Energy Policy (CNPE) will have six months from the publication of the law to define the guidelines for the calculation of the costs and benefits of distributed microgeneration and minigeneration. ANEEL, in its turn, will use the guidelines established by the CNPE to calculate the benefits of distributed generation for the National Interconnected System (SIN). This calculation will be completed by regulation to be enacted by ANEEL within 18 months of the date of publication of the law and will consider all the benefits of distributed microgeneration and minigeneration for the electrical system, comprising the components of generation, electrical losses, transmission and distribution.

After the transition periods, the units participating in the SCEE will be subject to the tariff rules established by ANEEL for the consumer units with distributed microgeneration or minigeneration.

ANEEL must establish a standard form for the access request for distributed microgeneration and minigeneration, which must be filed with the competent electric power distribution concessionaire,  and the concessionaire will not be able to request additional documents to those indicated in such standardized form. In other words, ANEEL will unify the connection criteria for distributed generation projects, ending the currently decentralized analysis made by each electric power distribution concessionaires, individually.

The bill also establishes that those interested in implementing distributed minigeneration projects must submit a performance guarantee in amounts ranging from 2.5% of the investment value (for generating units with installed power greater than 500 kW and less than 1,000 kW) to 5% of the investment value (for generation units with installed power greater than or equal to 1,000 kW), being exempted from this obligation distributed microgeneration or minigeneration units  explored under consortium, cooperative and multiple consumer units structures.

In addition, distributed minigeneration projects will be considered electricity generation infrastructure projects, being able to benefit from the Special Incentive Regime for Infrastructure Development (Reidi). They will also be included in the list of projects that are able to constitute an Infrastructure Investment Fund (FIP-IE) and Investment Fund in Participation in Intensive Economic Production in Research, Development and Innovation (FIP-PD&I), and are therefore considered priority projects that provide relevant environmental and social benefits to Brazil.

Specifically in relation to distribution companies, their excess amounts of electricity, depending on the market variation resulting from the option of consumers for the distributed microgeneration and minigeneration regime, will be considered as an involuntary contractual exposure, thus reducing the risk of overload in the distribution system caused by energy overlap caused by consumers.

The bill also establishes the Social Renewable Energy Program, intended for investments in the installation of photovoltaic systems and other renewable sources, in the shared local or remote modality, for the benefit of consumers of the Low Income Residential Subclass, whose financial resources will come from the Energy Efficiency Program, from complementary resources,  or from the portion of other revenues from the activities carried out by electricity distribution companies converted to tariff affordability.

Even though still depending on resolution of the Senate, the approval of the bill by the House of Representatives represents an important milestone in the consolidation and modernization of the regulatory structure of distributed generation activities in Brazil, including in relation to legal certainty matters. These factors, as long as they are effectively implemented in the final text of the bill to be converted into federal law, can operate as an important investment vector in the sector and expand the participation of the solar source in the Brazilian energy matrix.