The Presidency of the Republic of Brazil, the Ministry of National Integration and the Ministry of Mines and Energy (“MME”) announced on Wednesday, April 4, 2018 that approximately R$ 3.2 billion will be disbursed to finance the facilities of solar photovoltaic generation systems in the North, Northeast and Center-West regions of the country, and in the north of the states of Minas Gerais and Espírito Santo.
The resources will be obtained from the Constitutional Financing Funds of the Center-West (FCO), the Northeast (FNE) and the North (FNO), created by Law nº 7,827, of September 27, 1989 to instrumentalize the National Policy of Regional Development (PNDR).
The credit lines will cover all the assets and services involved in the implementation of the photovoltaic generation system and may be contracted by individuals through Banco do Nordeste (BNB), Banco do Brasil (BB) and Banco da Amazonia (BASA).
According to the Ministry of National Integration¹, the disbursement of the amounts must observe the following conditions:
(i) Northeast, the interest will be 6.24% per year, the financing term of up to 12 years, with 4 years grace period for payment;
(ii) North, the interest will be 6.24% per year, the financing term of up to 36 months, with 2 months grace period for payment; and
(iii) Center-West, the interest will be 7.33% per year, the financing term of up to 24 months, with 6 months grace period for payment.
The initiative aims, among other objectives, to disseminate the generation of power from photovoltaic sources in households and commercial establishments, through Distributed Microgeneration and Minigeneration. The generation of power by the consumers themselves was made possible with the issuing of Normative Resolution No. 482, as of April 17, 2018, published by ANEEL, which established the general conditions for access by Microgeration and Minigeration to power distribution systems, and created the Power Compensation System, by means of which the power generated and injected into the distribution system is awarded to the local distributor and later compensated, representing a credit for the consuption unit before the distributor.
In simple terms, the Distributed Microgeneration and Minigeneration allow the consumer to generate their own electric power from renewable sources, such as solar power, as well as to provide eventual surplus of power generated to the National Interconnected System (SIN), through the distribution system, which becomes a credit for the consunption unit before the distributor.
If the amount of power injected into the distribution grid is greater than the unit’s consumption, the consumer receives a credit in power (kWh) that may be used to compensate its own consumption in up to 60 months.
The installation of small generators close to the loads offers several advantages for the power system, such as (i) low environmental impact; (ii) expansion of the country’s power capacity; (iii) diversification of the power matrix through the expansion of renewable sources; and (iv) decentralization of generation.
Nonetheless, the Power Sector has already identified some difficulties in diffusing the Distributed Microgeneration and Minigeneration and, if no regulatory improvements are made, the exponential evolution of this new system may bring some disadvantages to the sector. By way of example, we cite the economic and financial imbalance of the distributors associated with the loss of their market.
For the propagation of the Distributed Microgeneration and Minigeneration system, some States have adhered to the Pact ICMS No. 16 of the National Financial Policy Council (Confaz) as of April 22, 2015, which provides for the ICMS exemption on the power supplied to microgerators and minigerators in the amount corresponding to the power injected into the distribution grid.
In addition, within the framework of environmental licensing in the State of São Paulo, the Secretary of Environment of the State, through the Resolution of the SMA No. 74, of August 4, 2017, dispenses from authorization the photovoltaic solar enterprise that has installed capacity planned less than or equal to 5MW, except if for the installation of the venture it is necessary to suppress native vegetation or installation in protected areas.
Other initiatives also demonstrate the willingness of the authorities to encourage the production of power through Distributed Microgeneration and Minigeneration, such as (i) Law Project No. 317/2013, which exempts from the tax on imports the equipment and components of power generation of solar photovoltaic and (ii) Law Project No. 204/2014, which aims to amend Law No. 9.991, of July 24, 2000, to include the Distributed Microgeneration and Minigeneration in the mandatory minimum percentage of application of resources in energy efficiency projects by the concessionaires and permit holders of electricity distribution.
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For further clarification on the contents of this memorandum, contact:
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Rosi Costa Barros
rosi.barros@nbfa.com.br
(11) 3707-8370
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Luisa Tortolano Barreto
luisa.barreto@nbfa.com.br
(11) 3707-8370
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William de Figueiredo Lins Junior
william.lins@nbfa.com.br
(11) 3707-8370
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