Brazil: Renewables and Energy Transition - Policy and Latest Developments
This is an Insight article, written by a selected partner as part of Latin Lawyer's co-published content. Read more on Insight
In the light of energy transition, structural changes in the energy system have been brought by technology innovations and research improvements, as well as legal and regulatory frameworks, all considering three major objectives: (i) energy security, (ii) access availability to consumers and (iii) socio-environmental criteria. It is necessary to introduce new renewable sources of energy in this era of climate change and the reduction of Greenhouse Gas (GHG) emissions.
From this perspective, Brazil’s energy and electricity matrices are constantly gaining strength; as an example, in July 2023, Brazil has reached the goal of 23 GW of capacity only from consumers who generate their own energy from photovoltaic plants: the distributed mini and microgeneration. Even though diversification is a key factor to great investments opportunities in the sector, there is a relevant impact to be aware of: renewable sources depend on natural factors that are, despite being predictable, unstable, such as solar incidence and the occurrence of winds. In this sense, the intermittency of their generation leads to a crucial challenge, that initially has been mitigated by the dispatch from termogas plants and now start to count on the improvement of ancillary services.
In general terms, ancillary services are additional resources through specific tools necessary to ensure the proper functioning of the electrical system, assisting operators worldwide to guarantee its systemic operation, especially in the face of instabilities. The ultimate goal when operating the electricity system is to provide the perfect balance between load and generation, which can be sometimes difficult when considering the penetration of those intermittent sources of energy that are so important for the diversification of the sector.
To set up the terms and conditions for ancillary services, in July 2022 the Brazilian Electricity Regulatory Agency (ANEEL) issued the Normative Resolution No. 1,030/2022, consolidating regulatory acts to improve ancillary services and adjust power generating plants installations motivated by changes in the electrical system configuration. Subsequently, earlier this year, ANEEL published the Normative Resolution 1,062/2023, expanding its possibilities for provision and remuneration to specify current and future system conditions to the maintenance of operating power reserve.
Although ancillary services provisions are realising the necessity of granting stability for the energy system, renewable sources might be attached to energy storage facilities as an alternative to the difficulty of storing electricity for later consumption. Besides that, there are benefits coming from the possibility of controlling voltage, grid stabilisation and load balancing, among others, not to mention its faster implementation when compared to other solutions, such as the construction or repowering transmission lines.
As for those energy storage systems, in 2019 ANEEL implemented a subsidy call to discuss the matter, for the purpose of introducing different regulatory mechanisms in a way to satisfy market expectations. In addition, the agency aimed to identify the costs of provision and which path could lead to allocate it efficiently. Based on those contributions, the agency had prepared a regulatory roadmap, divided into three discussion cycles lasting 18 months each. The first one (2022-2023) is still going on, with the agency’s public consultation 039/2023, aiming to obtain subsidies for improving the regulatory impact analysis report on the regulations.
Finally, the regulatory framework is expected to be published by ANEEL very soon in an effort to make clearer how the storage agent figure is going to perform, as this new service segment in the energy system is increasingly relevant to successfully conduct energy transition and guarantee an energy supply for all consumers.