Impact of Regulatory Changes on Economic Feasibility of Distributed Generation Solar Units

Gabriel Nasser Doile de Doyle, Paulo Rotella Junior, Luiz Celio Souza Rocha, Priscila Franca Gonzaga Carneiro, Rogério Santana Peruchi, Karel Janda and Giancarlo Aquila
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Gabriel Nasser Doile de Doyle: Renewable Energy Graduate Program, Federal University of Paraiba, Brazil & Electric Engineer PhD Program, Federal University of Itajuba, Brazil
Luiz Celio Souza Rocha: Department of Management, Federal Institute of Education, Science and Technology - North of Minas Gerais, Brazil
Priscila Franca Gonzaga Carneiro: Renewable Energy Graduate Program, Federal University of Paraiba, Brazil
Rogério Santana Peruchi: Department of Production Engineering, Federal University of Paraiba, Brazil
Giancarlo Aquila: IEPG, Federal University of Itajuba, Brazil

No 2022/02, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: The Brazilian National Electrical Agency (ANEEL) proposed in 2019 that the costs for accessing the electricity grid should be shared among all consumers. This would do away with cross-subsidies where normal consumers without installed solar distributed generation (DG) units effectively cover the costs of access to the grid for consumers with DG units. We compared the viability of two scenarios, one before and the other after the proposed changes, to understand how this legislature will affect the viability of DG projects in Brazil. We did this by studying all 5 regions covering the whole Brazilian area by analyzing data on average solar radiation, demand, and energy prices. We conducted stochastic analysis by varying the investment costs, demand, and energy prices, for DG solar plants. Lastly, we conducted scholastic analysis for the national scenario by varying the Discount Rate (DR). We confirmed that there is a statically significant reduction in economic viability for DG solar units in Brazil if the proposed legislation were to be enacted, while the payback period and other financial indicators differ across regions. We confirmed that solar radiation is not the only decisive factor in determination of economic viability of DG solar production.

Keywords: Distributed Generation; Regulation Policy; Cross-subsidies; Micro-Power Plants; Economic Feasibility Analysis; Solar Photovoltaic Energy (search for similar items in EconPapers)
JEL-codes: Q41 Q48 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2022-02, Revised 2022-02
New Economics Papers: this item is included in nep-ene, nep-lam and nep-reg
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