Is distributed generation posing a threat to Brazil’s electric power system?

The rapid growth of micro and mini power distributed generation (MMGD) in Brazil is raising concerns about potential risks to the grid, as well as market imbalances.  

Distributed microgeneration consists of a plant with installed capacity of up to 75kW. Mini-generation, on the other hand, is above 75kW and less than or equal to 3MW, or up to 5MW in certain situations.

Today, MMGD systems total around 23GW of installed capacity and are expected to reach 26GW by the end of 2023, with more than 90% based on PV solar. 

Currently, centralized national power capacity is 195GW, according to watchdog Aneel. 

Brazil’s electricity compensation system (SCEE) allows for the surplus energy generated by a PV MMGD system to be injected into the grid during the day and, at night, the grid returns the energy to the consumer unit and supplies additional needs. 

As most of the DG systems are intermittent, this implies challenges for the operation of the country's grid.

The founding partner of Brazilian infrastructure center CBIE, Adriano Pires, recently warned on a social network that the growth of DG is taking place "without any planning."

He said consumers opt for the modality in search of cheaper rates but only those on high incomes are able to install solar panels.

"As the electricity sector works like a condominium, the reduction in the energy bill of the rich increases that of those who can't install the panels. In other words, the expansion of DG without planning is one of the biggest income transfer programs ever seen in Brazil, from the poor to the rich," said Pires.

The attraction of consumers to DG and the free market has left electricity distribution concessionaires – which buy power in the regulated market via auctions held by Aneel – with a surplus of contracted energy. 

"The [mines and energy ministry] MME, Aneel and the [national grid operator] ONS need to promote policies so that blackouts don't recur and electricity distributors don't go bankrupt due to reduced revenue, increased defaults and energy theft," added Pires.

BNamericas contacted MME, Aneel and the ONS but only the ministry responded, saying that it "is working on measures to reform the Brazilian electricity sector, as expressed by minister Alexandre Silveira."

Alexei Vivan, a partner at law firm Schmidt Valois Advogados and CEO of local electricity companies’ association ABCE, welcomes the expansion of DG but recognizes that it will bring challenges to the electricity system. 

He cites, as examples, the constant inversions in the flow of energy, voltage control, the lack of control and planning of its expansion, its intermittency, as well as the repercussions for energy distributors, such as over-contracting and remuneration for the use of the electricity grid. 

Vivan says Brazil is able to accommodate all sources of generation but needs to pay attention to the security of power supply, especially at peak consumption times. 

"To this end, in parallel with DG, it's important not to forget the sources of firm, perennial generation, which give ballast or capacity to the electricity system," he told BNamericas.

Euclides Chuma, a senior member of the electrical and electronics engineers’ institute (IEEE) and a researcher at Linköping University in Sweden, said there are a number of requirements for DG projects to meet in order to connect to the distribution network, including presenting a certificate of technical responsibility for the project. 

“Therefore, from a technical point of view, there are no risks associated with the connection of micro and mini distributed generators to the distribution grid,” he told BNamericas. 

"However, it’s always advisable for Aneel to monitor the quality of the electricity distribution system and, as micro and mini-generator systems increase, for the agency to check whether there are any impacts on the system." 

Carlos Evangelista, chairman of local distributed generation association ABGD, said the idea that only the wealthiest benefit from DG is a "somewhat limited view," given that the costs of photovoltaic systems have fallen significantly, making the technology more accessible. 

"In addition, there are programs and financing focused on democratizing access to solar generation," he told BNamericas, adding that DG can also be seen as an opportunity for job creation and local economic development.

Despite recognizing that the intermittency of renewable sources can present operational challenges, Evangelista said energy storage technologies, such as batteries, and demand management solutions are advancing rapidly. 

"These innovations allow for a more harmonious integration of renewable sources into the grid, as is already being done in countries with a more advanced vision of the electricity sector," he said.