Photovoltaic power plant on the roof of a residential building. Photo: Andre Nery

In October, Brazilian regulators began reviewing the rules of a benefits program for consumers to install their own equipment in their homes or offices to generate energy for their own consumption.

The discussion is being led by the National Electricity Agency (Aneel), which has proposed a timetable to do away with these benefits by 2030. According to Aneel, the program created in 2012 has already fulfilled its role, which was to allow for the development of the industry and reduce the cost of equipment used to generate one’s own electricity.

</p> <p>Furthermore, Aneel says that the subsidies given to consumers who generate their own power are funded by the rest of the Brazilian population, which has faced successive increases in <a href="https://brazilian.report/money/2019/08/02/petrobras-privatizations-brazil-changing-energy-landscape/">electricity bills</a> in recent years. Between 2014 and 2017, the average increase in Brazilian electricity tariffs was 31.5 percent.</p> <h2>Generating power at home</h2> <p>Today, around 100,000 homes and companies generate their own energy in Brazil, a number much lower than those seen in China, India, Germany, the U.S., and Australia, for example. Over 90 percent of these consumers in Brazil use solar panels to generate their own power.</p> <p>Absolar, the Brazilian association involving the industry of generating solar power, disagrees with the changes proposed by Aneel. According to the association, the number of people generating their own electricity in Brazil is too low to justify cutting these benefits. Furthermore, it says that ending the incentive program will delay the development of the industry in the country.</p> <p>Of all the electricity consumed in Brazil, a little over 1 percent comes from the sun. For the means of comparison, wind power already makes up almost 10 percent of the national demand, while hydroelectric power is well ahead with around 70 percent.</p> <p>“This discussion is coming at the wrong time, as Brazil has barely begun to develop home generation [of electricity],&#8221; said Absolar president Rodrigo Sauaia.</p> <p>Aneel&#8217;s proposal has even upset President Jair Bolsonaro. During a tour of official visits to countries around Asia, Mr. Bolsonaro was asked by journalists about the changes and argued that Brazilians should be able to generate their own electricity without being taxed for it.</p> <h2>How it works</h2> <p>The subject is a controversial one, and the possibility of changes in generating one&#8217;s own energy has been lampooned on social media, where Twitter users have joked that Aneel is trying to tax sunlight.</p> <p>However, the discussion is not that simple.</p> <p>A person who generates their own electricity at home with a solar panel doesn&#8217;t have anywhere to store this energy. It is sent to the power grid and the consumer then has the right to be compensated for this with electricity that also comes from the grid.</p> <p>This means that consumers essentially use the power grid as a battery but don&#8217;t pay what is due to use this service. In reality, the cost is distributed among Brazil&#8217;s other consumers.</p> <p>Aneel&#8217;s proposal is to scrap this benefit and force those who produce their own electricity to pay whenever they use power from the grid. The energy which is generated and consumed immediately, however, will not have this charge.</p> <p>According to Aneel, these benefits would cost BRL 23 billion over the next 15 years if maintained. The agency&#8217;s director-general, André Pepitone, argued that &#8220;consumers who use the power grid should pay the cost.&#8221;</p> <p>The proposal is being discussed and a final decision is set to be made until the end of this year. The changes, if approved, will take effect in 2020, but there will be a transition period to remove the entire benefit by 2030.

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MoneyNov 01, 2019

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