Brazilian Tax Agreement 68/2022: Effects for Distributed Generation

ICMS Agreement 68/2022: know its effects for DG

Text extends the period of validity of tax benefits and incentives that granted ICMS exemption

Author: Einar Tribuci

May 26, 2022

Opinion

ICMS Agreement 68/2022: know its effects for the GDConvênio extends the period of validity of the benefits and tax incentives that granted ICMS exemption

On May 13, 2022, the ICMS Agreement nº. 68/2022, extending the period of validity of the tax benefits and incentives that granted exemption from ICMS (Tax on Operations related to the Circulation of Goods and Provision of Services), and which affect the tax benefits granted to micro and mini-generation distributed in the States Minas Gerais, Rio de Janeiro and Espírito Santo.

Unlike what was provided for in the ICMS Agreement no. 16/2015, the domestic legislation of the aforementioned States, by incorporating the provisions of the aforementioned Agreement, ended up expanding the scope of the exemption granted, but which would end at the end of this year.

To better understand the effects of ICMS Agreement no. 68/2022 in the exemptions for shared generation, undertakings of multiple consumer units and power plants of more than 1 MW, it is important to carry out a brief historical contextualization, approaching from the ICMS Agreement no. 16/2015 to date, with the publication of ICMS Agreement no. 68/2022.

Historical context

As is known, one of the main normative instruments known by the DG sector (distributed generation) is the ICMS Agreement nº. 16/2015, which authorizes the signatory States to grant ICMS exemption on electric energy injected into the distribution network and subsequently consumed, by the same consumer unit, provided that it is limited to installed power less than or equal to 1 MW.

One of the pioneer states in the development of the DG sector, the State of Minas Gerais published State Law nº. 22,549/2017, granting exemption from ICMS more broadly than that established in the above Agreement, reaching power plants generating by photovoltaic solar source with a power greater than 1MW and equal to or less than 5MW, as well as including the modalities of shared generation and projects with multiple consumer units.

Also in mid-2017, in order to correct a distortion known as the “ICMS tax war”, consisting of the granting of tax benefits and incentives for this tax without the proper approval of CONFAZ (National Council for Finance Policy), the Complementary Law was published. no. 160/2017, determining the reinstitution of irregular tax benefits and establishing terms for validity according to their classification, which was later incorporated by ICMS Agreement no. 190/2017.

After establishing the deadlines, the States of Rio de Janeiro and Espírito Santo, through, respectively, State Laws No. 8,922/2020 and 11,253/2021, adhered to the tax benefit granted by the State of Minas Gerais, establishing the validity until December 2022.

Finally, the deadlines that were once established by Complementary Law no. 160/2017 were extended to December 31, 2032 through Complementary Law no. 186/2021 and currently incorporated by ICMS Agreement no. 68/2022.

Technique used by the states of Rio De Janeiro and Espírito Santo

By establishing the terms of validity of the tax benefits that were in effect and that were granted in absentia of the CONFAZ authorization, ICMS Agreement nº. 190/2017 provided for the possibility for another State to adhere to the provisions granted by another entity of the federation, provided they were from the same region, being able to be in force at most, within the same deadlines and under the same conditions as the act adhered to.

Despite having been internalized through adhesion to the tax benefit granted by the States of Minas Gerais, it is not enough for this State to carry out the extension of its tax benefit so that the validity of the other States - Rio de Janeiro and Espírito Santo - can be extended, there is a need for each of these federation units to enact internal laws determining the extension until December 31, 2032, as provided by ICMS Agreement no. 68/2022.

It is worth remembering that the provisions of CONFAZ are only authoritative, that is, they do not oblige States to incorporate the provisions into their domestic legislation. Thus, if it is in the interest of the fiscal policy of the mentioned States to maintain the benefits granted, it is essential to enact a law to extend the period of validity.

Provisions of ICMS Agreement No. 68/2022

In addition to unifying the terms of validity of the tax benefits granted for December 31, 2032, ICMS Agreement nº. 68/2022 also provides for the reduction of these benefits as of January 1, 2029, by 20% (twenty percent) per year, as provided for in Complementary Law no. 186/2021.

In other words, from January 1, 2029 until December 31, 2032, the ICMS exemption granted by the States of Minas Gerais, Rio de Janeiro and Espírito Santo, if extended, will be reduced by 20% (twenty percent ) per year, becoming from that date, partial exemptions, as shown in the table below:

ICMS exemption (%) Periods

100% Until December 31, 2028

80% From January 1, 2029 to December 31, 2029

60% From January 1, 2030 to December 31, 2030

40% From January 1, 2031 to December 31, 2031

20% From January 1, 2032 to December 31, 2032

Therefore, with the enactment of Complementary Law no. 186/2021 and now with ICMS Agreement no. 68/2022, the exemptions granted by some States that until then would expire at the end of this year, will probably be extended until December 31, 2032, and the sector should pay attention to the forecast of the reduction of the exemption from 2029, taking into account given the relevance of taxes in the percentage of return on investments in DG projects.

Source: CanalSolar

The perfect time to invest in renewables in Brazil

The perfect timing to invest in renewables in Brazil | Overview of the sector

​published on 17th Feburary 2022

A global trend, the investment in renewable energy sources has increased exponentially in Brazil in recent years, especially after ANEEL resolution 482. Since April 17, 2012, when ANEEL Normative Resolution No. 482/2012 entered into force, Brazilian consumers can generate their own electricity from renewable sources or qualified cogeneration and even supply the surplus to the distribution network in their locality. This is the micro and mini distributed generation of electricity, innovations that can combine financial savings, social and environmental awareness and self-sustainability.

A survey by Bloomberg New Energy Finance points out that Brazil is expected to attract US$300 billion in infrastructure investments in the energy sector by 2040, which results will be an increase by 189% of its current capacity. Of this total, 90% will come from renewable sources: small and large hydroelectric plants, wind, solar and biomass capture. Many industries are already adapting to this scenario in order to reduce operating costs and generate the least possible environmental impact.

Still according to Bloomberg New Energy Finance, Brazil, the second largest economy in the Americas, is expected to double its current installed capacity from 157 GW to 316 GW until 2040. Low-carbon energy sources currently represent 84% of installed capacity, and hydropower, with a total of 102 GW is by far the biggest contributor. Although hydropower will remain a critical source until 2040, with 111 GW in operation, other technologies may take the lead in terms of growth: solar energy is forecasted to grow by 116 GW of installed capacity and wind energy by 16 GW. An average of nearly 6 GW of renewable energy capacity will be added per year until 2040, more than doubling the share of non-hydro renewables to nearly 50% of installed capacity. In addition, another 52 GW of batteries and flexible capacity will be installed by 2050.

The survey also shows that most of the large-scale PV investment will be made before 2035. Small-Scale PV dominates investment prospects from the mid-2020s to 2040, when $77 billion of investment from homes and businesses helps install more than 100 GW of capacity across the country.

Renewable energy sources in Brazil

Brazil occupies a prominent position in the renewable energy sector. According to data from the Ministry of Mines and Energy, renewable sources already account for 48.4% of the country's energy matrix – triple the global percentage. This can be explained by the geographic characteristics of Brazil and the abundance of the country's natural resources.

Investment in solar energy, for example, grew 92% in 2019 in the national territory, while the generation of wind energy grew 15.5%. Together, these numbers represent 50% of the total increase in the share of renewable sources in the Brazilian energy matrix. These indicators are part of the 2020 Brazilian Energetic Review, whose data source is the National Energy Balance for the base year (in this case, 2019), produced by the Energy Research Company (EPE), in partnership with the Ministry of Mines and Energy, companies in the sector and other agents in the energy sector.

The Decennial Plan for Energy Expansion (PDE), also prepared by EPE, indicates that investment in renewable energy sources will have an average increase of 5.1% per year in the country. Other important EPE indicators suggest a growth in wind energy production from 1,000 megawatts to 16,000 over 2021. The generation of energy from sugarcane-derived products, such as ethanol and bagasse, also tends to increase – something around 8.1% per year. The plan also foresees an increase in the installed capacity of hydroelectric energy, which is expected to grow 56% over the next 10 years.

In 2021 a record number of new solar projects were registered with ANEEL (National Electric Energy Agency). But the new distributed generation legislation, currently awaiting ratification, will see a new rush of solar projects as developers seek to avoid gradual new charges for the use of transmission networks through TUSD (Distribution System Usage Tariffs).

The legislation proposes a 10-year transition from the current model, with projects already connected to the grid authorized to operate according to existing rules until 2045. The new legislation will see developers moving quickly with projects in an effort to overcome higher tariffs so they can offer cheaper power purchase agreements, or PPAs, to outside buyers for as long as possible. In 2021, the installed solar capacity in Brazil reached 12 GW and, before the changes were outlined, in September 2020, the portfolio of renewable projects registered under development was 8.7 GW.

In April 2021, at a US-sponsored climate summit, Brazil pledged to achieve zero carbon emissions by 2050 (commitment reinforced in November during the 26th United Nations Conference on Climate Change), a 10-year forecast earlier than previously planned.

Source: Roedl Insigths & Bloomberg New Energy Finance

What is the new legal framework for electricity generation and what does it provide?

2022 is the last year to guarantee exemption from paying distribution fees until 2045.

By Good Morning Brazil

02/11/2022 08:26 Updated 5 days ago

Ceará is already a reference in the production of wind and solar energy, and in recent years the state has also bet on the production of green hydrogen — Photo: GettyImages

Ceará is already a reference in the production of wind and solar energy, and in recent years the state has also bet on the production of green hydrogen — Photo: GettyImages

The year 2022 began with the presidential sanction of the law that creates the legal framework for own energy generation, known as distributed generation - Law 14.300/22. The new law establishes rules for consumers to produce their own energy from renewable sources, including solar.

The generators already installed – as long as they follow the criteria of the law – retain the rights acquired by the old rules for another 22 years. For those who want to invest in solar energy and guarantee the subsidy of the tariff charged by the legislation, the recommendation is to hurry because the deadline runs until January 6, 2023.

The segment and some parliamentarians believe that the new law contributes to greater legal certainty and transparency for consumers and companies in this market in homes and businesses.

There is also a forecast of gradual changes in the rules for own generation, which was previously regulated by a normative resolution of the National Electric Energy Agency (Aneel).

Let's summarize what the law says:

New power limits for mini and microgeneration

According to the legal framework, microgenerators generate up to 75 kW of energy through renewable sources, such as wind and photovoltaic, in their consumer units. Mini-generators, on the other hand, generate a power greater than 75 kW, with a limitation of up to 3 MW for water sources and 5 MW for other types of sources.

This variation will depend on the consumption of your home or business.

More autonomy in the distribution of credits

The consumer-generator will be able to choose how to distribute the credit, being able to request alteration of the percentages or order of use of surplus energy or reallocate the surplus to another consumer unit of the same holder and the same concession area.

In addition, energy credits generated within a permit holder can now be offset within the concessionaire's concession area in which the permit holder is located.

Wire B Pricing

Payment of a tariff component that was previously not charged to consumers with distributed micro and mini-generation was established, the TUSD Fio B, which refers to distribution costs.

It is important to highlight that this charge will only be made on the portion injected into the concessionaire's network - that is, on the credits - and does not impact the energy generated and consumed simultaneously.

Subsidy continues until the end of 2022

The micro and mini-generator systems already installed will continue without paying distribution fees until 2045. The rule is also valid for those who install and file the system until January 6, 2023.

Tight deadline

For those who are thinking of investing in solar energy and want to guarantee subsidies, the suggestion is to start the search for suppliers – we help you with that choice here (link to the first solar energy article).

2W and GreenYellow reach agreement to supply solar energy in seven states from 2023

Contract provides for the lease of seven 5 MW power plants, totaling 35 MW for fifteen years

Ana Guerra August 5, 2022 In Solar

2W and GreenYellow close an agreement to supply solar energy in seven states from 2023. In the image, GreenYellow's photovoltaic solar plant in Padre Bernardo, Goiás (Photo: Disclosure)

GreenYellow photovoltaic solar plant in Padre Bernardo, Goiás (Photo: Disclosure)

RECIFE — 2W Energia closed an agreement with the French company GreenYellow this Thursday (4/8) to supply solar energy in seven Brazilian states from 2023 on the distributed generation (GD) model. The contract provides for the lease of seven 5 MW power plants, totaling 35 MW for fifteen years, starting from the start of commercial operation.

The plants are located in the states of Mato Grosso do Sul, Mato Grosso, Goiás, Bahia, Ceará, Piauí and São Paulo, where 102 GWh of energy will be supplied annually to customers. The energy is equivalent to the consumption of around 52 thousand homes and will avoid the emission of more than 10 thousand tons of CO2.

2W has been offering solar energy in the DG model since June last year, when it launched its credit marketplace, where companies or individuals can join as consortium or cooperative members of shared distributed generation centers in Minas Gerais. The venture is also scheduled to arrive in Pernambuco, but there is still no date for its launch.

The French company will be responsible for the initial investment, construction and operation of the seven photovoltaic farms involved in the project.

Brazil has 12.2 GW of DG

In July, distributed generation reached 12.2 GW of installed power in Brazil, of which 11.9 GW are from photovoltaic installations, according to data from Aneel. Minas Gerais leads the ranking of states, with almost 2 GW of installed power, followed by São Paulo (1.6 GW) and Rio Grande do Sul (1.4 GW).

In the first half of this year, 2.9 GW of distributed generation were added, with more than 316,000 new photovoltaic installations, in addition to 19 thermoelectric plants and four wind farms, totaling 316,159 connections in 2022.

Among the regions with the highest annual number of connections, the Southeast leads the ranking, with 124,739; then comes the Northeast with 75,966 annual connections; the South, with 50,798 and, finally, the North, with 21,636.

With the advance in the DG scenario, the Energy Research Company (EPE) projects, by 2031, an increase of almost three million new consumers in Brazil.

While the accumulated installed capacity should reach 37,218 MWp, maintaining the trend of greater participation of photovoltaic energy, with 91% of the market.

For this year, industry associations expect the new connections to add at least 8GW of power and reach 15GW by the end of 2022.

Electric sector discusses valuation of DG attributes

The Ministry of Mines and Energy (MME) received 32 contributions from the electricity sector and civil society in the public consultation that should serve as a basis for defining the valuation calculations for distributed generation in Brazil.

The consultation was opened on June 23, with a maximum deadline for receiving suggestions until July 15, and is an offshoot of law 14,300/2022 enacted in January, which removes subsidies for own generation - with the preservation of current rules until 2045 for systems already installed and for new customers who place an order for connection to the network by next January.

To compensate for the withdrawal of incentives, the new legal framework for micro and mini energy generation designated 18 months for the National Energy Policy Council (CNPE) and Aneel to establish guidelines and rules for the valuation of costs and benefits, which will be appropriated by prosumers — consumers who generate their own energy — after the transition period.

The CNPE will be responsible for establishing guidelines, while Aneel will make the calculations to assess the costs and benefits of the modality.

Fonte https://epbr.com.br/2w-e-greenyellow-fecham-acordo-para-fornecer-energia-solar-em-sete-estados-a-partir-de-2023/

Deputies will discuss postponement of the new rules of Law 14,300

Deputies will discuss postponement of the new rules of Law 14,300

Extension of current GD rules to January 2024 is possible, says INEL secretary

Author: Henrique Hein ; Canal Energia - November 1, 2022

Postponement of the current rules must be voted on, in Plenary, until the end of November. Photo: Marcelo Camargo/Agência Brasil

Representatives of INEL (Instituto Nacional de Energia Limpa) met again this Monday (31), in Brasília, to continue the negotiations that aim to extend the current rules for GD compensation (distributed generation), provided for in Law 14,300 , for another 12 months, until January 2024. 

This time, the executives met with federal deputy Lafayette de Andrada (Republicans-MG) around 10 am, had lunch with directors of the MME (Ministry of Mines and Energy) and met with representatives of ANEEL (National Electric Energy Agency) in the afternoon.

In the end, it was agreed that the request to extend the current GD rules should be voted on, in Plenary, by the end of November. However, as the measure can only be passed through legislation , it will be coupled with a bill. 

“Until the end of November, the vote on several bills dealing with the electricity sector is scheduled. The postponement would be an (additive) point within one of these laws”, revealed Ricardo Costa, INEL's Solar Energy Secretary, exclusively for Canal Solar. 

According to him, the extension would be on its way and the chance of being approved is considered reasonable. “Approving in the Chamber of Deputies, the Law (with the increment of the additive) goes to the Senate, where we will also need to get approval”, he stressed.

Support for the extension

Also this Monday, three days after Canal Solar revealed that the new rules of Law 14,300 may be postponed to 2024 , ABSOLAR (Brazilian Association of Photovoltaic Solar Energy) sent a letter to the Federal Government advocating the extension of the current rules. 

In the document, the entity greeted the elected president, Luiz Inácio Lula da Silva (PT), and made itself available to collaborate in the construction of a more renewable, competitive and strong electricity sector. 

“Given that the deadlines of this law are not being met by the authorities, its extension is necessary, for the benefit of legal certainty, predictability and stability”, highlights the letter, signed by the chairman of the board of directors, Ronaldo Koloszuk. 

Blockchain to Track Solar Power Production, Ethereum to Utilise The Data

A host of companies, nonprofits and consortiums gathered in London to discuss how the blockchain could be used to track solar power production across the globe, while Ethereum smart contracts could utilise the data.

Author: Charlie McCombie

Democratization of energy

The ‘Chain-of-things IoT, Blockchain and Security Conference’, that took place in London on 1st June, saw the presentation of a full stack data-logger, that connects multiple blockchains to the digital output of solar energy plants.

“We think we are onto something here; by connecting a data-logger that grabs solar energy output in near-real time and then pushing that securely to multiple blockchains for different purposes we can help democratise energy wherever it is generated,” explained Luke Johnson, co-founder of ElectriCChain and CEO of Solcrypto.

The full-day event examined potential use cases for the full stack, and a two-hour ‘hackathon’ midway through the event allowed for the brainstorming of some wider use cases, with a $100 prize presented to the winner by the Intel Software - Code for Good initiative.

Representatives from Solcrypto, the company producing the node and data-logger software, Bitseed, the node manufacturer, and the SolarCoin Foundation, who distribute the SolarCoin digital token to incentivize solar power production, were present to discuss the solar power case study.

In addition, representatives from IOTA, a new type of blockchain 3.0 technology termed a ‘tangle’ that allows for direct machine-to-machine token discovery on a shared ledger seamlessly and efficiently, allowing for zero-fee microtransactions and quantum security, and the Chain-of-things (CoT) research laboratory, a research consortium for blockchain and Internet-of-things (IoT), were present.

Various speakers working in the IoT space also discussed the security, or the lack thereof, in the IoT space and “how blockchains could be employed to address the multiple attack vectors that have been hampering the development of the IoT industry throughout its history.”

ElectriCChain

“Trusted data about energy production and consumption is key to managing small grids and finance for the bottom of the pyramid,” says ElectriCChain.

ElectriCChain is the blockchain behind the SolarCoin digital asset. It helps to gather and publish non-confidential data related to solar owners for scientific (e.g. climate change), meteorological (e.g. weather/microclimate forecast), and financial (e.g. solar hedging/derivatives tools) applications.

It is aiming to deploy a network of over 7 million of these solar power-data-logger installations around the globe, according to IEA numbers, and exceed 200 million installations within 15-25 years.

However, co-operation is still ongoing as the data-logger transitions to a minimum viable product. Eventually, multiple blockchains could be integrated into the Bitseed node to serve different purposes, including interfacing with apps installed on the data-logger and with distributed apps written as smart contracts for Ethereum. The only limit to the number of blockchains that can be added to the stack is the size of the physical storage on the device and associated hardware.

Francois Sonnet, co-founder of ElectriCChain and solar industry veteran, says of the burgeoning solar power-blockchain collaborative industry:

“With Solar Energy, IoT and blockchains all on their own growth paths, we believe that this is a significant beginning to a new industry that could be phrased as ‘Blockchain-Energy’ with many applications from micro-finance of small solar home systems in developing countries to rewards based mechanisms for large scale solar plants to increase their return on investment.”

Source: Cointelegraph

Video: The Blockchain: Enabling a Distributed and Connected Energy Future

The High-Level Details

With the energy industry trending toward a distributed and connected future, entrepreneurs and industry leaders have an opportunity to look ahead for solutions they can start building today. Bitcoin’s underlying protocol, called “the blockchain”, is a distributed consensus-driven infrastructure enabling trust between connected assets.  While currently considered only a financial tool, the blockchain’s actual capability is extremely broad.

And just as advances in TCP/IP created vast opportunities for the internet, the blockchain is enabling us to rethink the basic infrastructure of how energy is distributed, accounted for and secured. For example, microgrids could become more resilient with peer-to-peer communications.  P2P enables intelligent electronic devices to share information directly without the need for a centralized system.

Also data about the asset activity, and hence the value, can be exchanged instantaneously 24/7, giving rise to new business models and applications for many distributed energy sources as well as increasing the security and reliability of the grid.

We will also have a live demonstration by Grid Singularity on how blockchain can be used in the energy sector.

Sounds exciting?  Join us to learn:

• What is the blockchain, really...isn’t it just a financial tool?
• Why blockchain is and isn’t like the internet.
• How can entrepreneurs and industry leaders leverage blockchain technology?
• What is the business impact, opportunities and potential disintermediation?
• What are the regulatory hurdles and how might blockchain help us address issues of national security?

Speakers

The distinguished panel will be moderated by:

Scott Clavenna,  CEO, Greentech Media, Inc

Panelists:
Joi Ito, Director,  MIT Media Lab
(For some background, read: Why Bitcoin is and isn't like the Internet)

Paul Brody, Ernst & Young, America’s Strategy Leader, Technology Sector; Leader, global strategy on Blockchain

Ed Hesse, CEO, Grid Singularity

Lawrence Orsini, CEO, LO3 Energy

Thanks to our friends at WGBH’s Forum Network, we’ve got this great video from our February 2016 event on the use of the blockchain in distributed energy!

This packed house event with Scott Clavenna, CEO, Greentech Media, Inc, Joi Ito, Director, MIT Media Lab, Paul Brody, Ernst & Young, America’s Strategy Leader, Technology Sector; Leader, global strategy on Blockchain, Ed Hesse, CEO, Grid Singularity and Lawrence Orsini, CEO, LO3 Energy discussed how we might use the blockchain to rethink the basic infrastructure of how energy is distributed, accounted for and secured.

As a bonus, we had an amazing demo at the end of the event (and the video below) — a Bitcoin transfer was made that bought electricity for a small school in South Africa, in real time. It was awesome.

Source: mitforumcambridge.org

To fight climate change, we need to ‘Uberize’ the energy industry

Written by Hemant Taneja, Managing Director, General Catalyst Partners

Organizing capital, in isolation, isn’t enough to get hundreds of Elon Musks dedicating themselves to building companies that develop critical new wind, solar, nuclear and battery technology.

In June, I attended a breakfast organized by Energy Secretary Ernest Moniz and Bill Gates, with top business and policy leaders from around the world. The investors in the meeting were dedicated to increasing funding of early-stage energy companies. Of course, that’s a much-needed step. As the data below shows, exponential decrease in solar costs has led to exponential increase in solar capacity, despite limited technology investment. This has been principally driven by consistent, long-term policy that drove deployment at scale.

But while entrepreneurs recognize the importance of the mission and want to work on advanced energy, markets aren’t creating long-term opportunities to lure them. I’ve lived this myself. I started investing in this space a decade ago because entrepreneurs began moving in. I witnessed the market design problem companies ran into and created Advanced Energy Economy to help policy, technology and finance come together to create long-term markets. But persistent unwinding of policies made entrepreneurs give up and instead go into sectors that were more likely to pay off. Today, in Silicon Valley, I just don’t hear great entrepreneurs wanting to take on one of the most important challenges of our time.

Look at just one example of the market hurdles: earlier this year, regulators in Nevada gave in to push-back from NV Energy, and significantly dropped the price paid to homeowners who sell excess energy generated by their rooftop panels back to the utilities firm. The price drop was so damaging to solar customers that the nation’s biggest rooftop solar company, SolarCity, decided to pull out of the state. While technologies that could significantly reduce carbon emissions are within our grasp, the energy market conditions get in the way and slow progress.

Uber and Tesla show that when companies create amazing consumer experiences, large, fragmented markets can organize fast around a new solution. Customer adoption of Uber, the enthusiasm for Tesla electric cars, and advances in self-driving vehicles have brought the transportation sector to a point of no return. The days of internal combustion engine and gasoline are numbered. Just think about that: in less than a decade, cars running on electric power will be a utility that we can access on demand. Far fewer of us will own cars. The most in-demand new cars will be electric. That is an amazing step forward towards reducing CO2 in the atmosphere.

The swift change to electric-powered transportation makes it all the more important to transform the 21st-century electricity system. An effective way to do that will be to employ the lessons from Uber and Tesla and let entrepreneurs lead the established companies.

How? A crucial early step will be to align utilities with entrepreneurs instead of against them. Let’s create regulatory and business models that give utilities a path to evolve their role from operating mammoth power plants and transmission grids to operating software-powered platforms that interconnect the small-scale power solutions in homes and small businesses. This then becomes a platform that supports entrepreneurial solutions, much like the internet or the iPhone and app store. Utilities can prosper, providing reliability and resiliency in the power network, while faster-moving entrepreneurs create ever more effective ways to generate, move, trade, market, share and store power.

Entrepreneurs will come in hoards to tackle this great mission if they can take advantage of the economies of unscale that have propelled other sectors. Airbnb is an unscaled response to hotels, re-assembling demand for places to stay in a whole new way. The Honest Company took advantage of unscaling to profitably compete against Procter & Gamble in consumer brands.

Time after time, we’re seeing small companies win in established sectors by building on existing platforms and finding a new market. That’s what has to happen in energy. If the right technologies get developed, entrepreneurs will unscale the energy industry, turning it into an ecosystem of small companies and producers generating and moving power in a distributed way.

What can entrepreneurs do in the field of energy? One important role: solve the problem of power storage. A major barrier to unscaling electricity is that it can’t be stored effectively. Tesla and a number of global companies are racing to build affordable battery technology for homes and businesses. Once energy can be stored cost effectively in small quantities, much less of it needs to be produced centrally and distributed on power grids.

Put all of this together, and this is systems thinking about the problem. It follows market principles, centering solutions around what customers actually want. We need to bring to the power industry the same mindset we apply to internet-based “utilities” like Facebook and Google. After all, how are they any less important to life today than energy?

If we do this right, no utility will ever again build a large-scale carbon-based power plant. Such a thing won’t be necessary if every home is generating electricity on its roof and the grid works more like the internet, moving power to where it’s needed and storing excess in new-age batteries for reliable access. Just as anyone can now be a hotelier because of Airbnb, in a decade anyone will be able to be a power company once these new technologies are in place. In an unscaled era, the mini power plant in a home or small business will be better, cheaper, cleaner and more resilient than the next massive power plant.

Customers will have choices, and if new energy technologies are better, cheaper and cleaner than old ones, that’s what customers will choose. And this is what COSOL offers with its crowdfunding model and community solar farms throughout Brazil.

Souce: World Economic Forum

COSOL - Condomínio Solar

Intersolar panel calls on investors to act fast to reap Brazilian PV rewards

By PV Tech, Danielle Ola

Brazil’s emerging PV market poses significant opportunities for foreign as it is still at a stage before consolidation occurs and the market becomes more saturated. A panel of experts at Intersolar Europe discussed why now is the right time to penetrate the Brazilian market.

The panel at Intersolar discussed Brazil's smart local content requirement policy. Source: Flickr/Charlie Phillips

Although Brazil’s PV industry is nascent – with 3GW of utility-scale solar installed to date, it yields attractive prospects.

“The underdeveloped Brazilian currency makes projects cheaper for foreign investors,” said Miguel Lobo, Brazil director of Martifer Solar. He also cited the country’s “stable and reliable regulation” and “20-year government-backed PPAs” as further reasons why Brazil is an ideal market.

Eduardo Tobias Ruiz from Clean Energy Latin America (CELA) attested the “competiveness and great business environment” of the market as “imperative to growth”.

Notably, Brazil does have one of the highest interest rates in the world but “if companies know how to exploit the significant tax burden, there is lots of potential for the Brazilian PV market,” said ASBZ Advogados lawyer Alexandre Gleria. The country is also currently enduring a fiscal crisis but still has “solar as a priority” according to Felipe Guth, manager of the department of renewable energy for BNDES (Brazilian Development Bank), who also emphasised the strength of the margins and returns.

Brazil has two PV auctions scheduled this year – for July and October respectively. Maurício Tolmasquim, president of EPE, Brazil Ministry of Mines and Energy, said that the two auctions may be combined, but the total amount of PV awarded would be the same. The country’s last auction in November awarded 1.5GW, with the preceding auction in August seeing 31 PV project wins.

“The first auction saw the chicken-and-egg problem,” said Tolmasquim. “If you put strong [local content] requirements, then there is the risk of having a failure of an auction. Anyone can import anything; but if you want to have the financing you need local content.”

“Auction winners are not obliged to follow local content requirements,” added Guth. “It is important to be flexible with content requirements.”

To this end, products can be assembled in Brazil to fulfill the requirement.

“Instead, create a market first and then increase the local requirement,” said Tolmasquim. "This is a smart policy because low level of content to receive BNDES money, with a bonus available if you have high content. Nowadays you may import everything and assemble it in Brazil and still have access to vendors’ money."

“Maybe in future we will increase the content requirement but now is not the time. The first to arrive are those that win more – the time to invest is now.”

Source: PV Tech

Brazil searches for a rooftop PV model

By Alexandre Spatuzza in Sao Paulo 

 Monday, December 21 2015

A few days after the revision of Brazil’s net-metering regulation, and before the government announced a new distributed power generation incentive plan, a researcher in the Federal University of Bahia (UFBA) launched a new 'Solar Condominium', spearheading the country’s search for new business models for rooftop solar.

“The project has been developed to be adapted to the new net-metering rules,” Hungarian born Csaba Sulyok told Recharge.

Brazil's rooftop sector has huge potential but is yet to take off

In a country where financing is scarce because of rates that can top 5% a month and average earnings stand at around $20,000 a year, a $15,000-$20,000 investment on a rooftop array of less than 10kW capacity is only available to the few.

As an example, despite a potential for more than 50 million rooftop arrays, just over 1,000 roofs have solar modules installed under the 2012 net-metering rules.

“The Solar Condominium (Cosol) is a 5MW plant that will sell or rent out panels to consumers,” said Sulyok, who has been living in Brazil for about half a decade and saw the opportunity to make money in solar power.  

The idea to build ground-mounted solar PV to supply power to homes and businesses through net-metering arrangements was only firmly permitted in the nine-month-long revision of the 2012 rules that concluded in November.

These rules, combined with rising power prices, wire-fee discounts and tax reductions now allow for this and other business models which promise to boost rooftop solar to over 4GW by 2030, from a current 9MW capacity.

“Brazil's electricity sector is facing a difficult moment and power prices will continue high for the next four to five years,” Leontina Pinto, a partner at Rio de Janeiro-based consulting firm Engenho told Recharge. “These factors have brought the payback rate down to four or five years from around eight years previously.”

Like Cosol, others have already come up with new business models.

Also in the state of Bahia, local Brazilian solar firm Brasil Solair built 2MW in a horizontal condominium of low-income houses. With financing from Brazil's National Savings Bank (CEF) the panels were installed and the power generated is now sold in the wholesale market, generating a monthly R$90 revenue per family after the managers of the condominium pay off all expenses.

In the state of Ceará, Prátil – an electricity services subsidiary of Italian power company Enel – built a 1MW ground-mounted solar plant to supply the retail shops of a local chain of chemists.

Rodrigo Sauaia, executive president of the Brazilian Solar Power Association (Absolar), said that under the new rules Prátil's project is now legal, since before the revision of the net-metering rules, it wasn't clear whether this business model was allowed.

In November, Sauaia had dubbed the revision a “historic day” for solar power in Brazil, and he was even more optimistic after the government announced a broad distributed generated power programme in December, which indicated that power distributors should contract 10% of their needs from small arrays in the concession areas and signalled new financing mechanisms.

“Private banks are looking more and more at solar power, but if the government created a credit line through one of its state banks it would grow in scale,” said Sauaia, pointing out that there is resistance from distribution companies to the installation of new solar arrays.

They consider that a growing number of rooftop arrays implies the use of the existing network, or new investments to upgrade it. As result they are questioning the exemption of wire usage fees. The solar industry says they fear losing revenue.

For Engenho's Pinto, however, for the rooftop solar market to accelerate and for banks to really commit with financing, power distribution companies would have start to investing in the sector.

“This is the only way for solar power to gain scale. In the middle of [an economic] crisis I don't see many people investing in solar power, especially because there is still a lot of doubts about its benefits in Brazil,” she said.

Among her clients are several power distribution companies and their trade group, Abradee, whom she advises on new business models.

“They could rent out roofs to install solar modules and resell the excess power through their network, making the modules free for consumers,” she said. “This works for consumers also: if someone doesn't have a roof, they could rent out roofs from other houses [according to the new rules]”.

Still, convincing power distribution companies will be an uphill struggle.

“In the long term, they are right, but, for now, with such a small number of arrays it doesn't have a big impact. But they should look in the long term because they could gain in other areas such as network stability, since the power will be produced close to where it is consumed,” Pinto said.

With surge of interest in solar PV, Brazil has now over 500 module installation companies, up from around 300 in 2014. As demand grows these companies will have to seek new business models to overcome the inherent problems of a developing economy that is currently facing a crisis.

“Many of these companies will fail. Let’s hope they won't harm the reputation of solar power,” Pinto said.

Meanwhile, Cosol's Sulyok has already obtained support from the university, keen to see a start up arise from its ranks, a green light from the National Development Bank (BNDES) that it would finance, and is looking for investors.

“People are interested, I just hope the rules don't change,” he said. 

Souce: RECHARGE

Brazil approves ‘historic’ net metering revision

Brazil’s energy regulator National Electric Energy Agency (ANEEL) has approved an “historic” revision of the country’s net metering scheme for small-scale renewable energy systems, making it amongst the most forward-thinking countries in this sector, according to Rodrigo Sauaia, the director of Brazil’s solar industry association, Absolar.

The revision, which has been scheduled since the net metering regulations were first implemented several years ago, came about after the realisation that the number of installed small-scale distributed generation energy systems is still relatively small compared to Brazil’s potential.

There are currently 1,300 installed systems connected to the grid of which 96% is solar PV, said Sauaia.

Under the revision, Brazil now has ‘virtual net metering’, which means any company or consumer can install an energy system at different points of electricity use and still get credits, which can be used to abate consumption costs on another unit.

Sauaia said this was already in place, but the revision clears up areas of doubt as companies and subsidiary companies are now able to share their energy under net metering.

He added: “This scheme has been fundamental for the growth of PV in small-scale in several parts of the US and in other countries.”

Credits are now also valid for five years instead of three years.

Furthermore this “landmark” revision from ANEEL creates a new business opportunity; now any group of clients can invest together in a single PV system for example and receive a share of the electricity generated and reduce their consumption from the grid, at a level proportional to the financial resources each entity has invested in the system.

Sauaia said: “This is an important way to give scale and to multiply interests in distributed solar.”

Systems up to 5MW can now also participate in the net metering scheme, up from just 1MW previously.

Finally Sauaia said there have been beneficial structural changes in the distribution area. Now the 63 distribution companies in Brazil will have three different power classes with three different standardised forms that will be used throughout the whole country.

Sauaia added: “In this way Brazil is also cutting the red tape significantly by standardising procedures for connecting the systems and for making new requirements for connections into the grid.”

There is now also a provision that the subscription processes for net metering systems delivered by distribution companies must only be done online and digitally by 2017, which will increase speed and reduce costs for all parties involved.

ANEEL predicts around 1.2 million consumer units will be installed in Brazil by 2024, totaling 4.5GW of installed capacity.

Sauaia concluded: “This is a massive improvement to the net metering system, incorporating several of the international best practices and this puts Brazil really into the forefront of public regulations in support of the development of small-scale renewable energy connection to the grid.”

“It also shows that Brazil as a government is starting to put into action what it has been sharing as words in preparation to COP21. Therefore the country is not only committing to reducing its carbon footprint and emissions but it is also putting plans into action that will make this happen.”

Over the last six months Brazilian states have gradually started to introduce an ICMS tax exemption for net metering from distributed generation solar PV. Rio de Janeiro became the seventh state to do this earlier this month.

Source: PV-tech