Subsidies for micro and mini distributed generation reach R$20 billion annually, sparking intense regulatory debate over tariffs and impacts on Brazil’s power grids.
Financial incentives aimed at MMGD (Micro and Mini Distributed Generation) have reached a billion-dollar level, creating direct effects across the national electric system.
A recent study prepared by the consulting firms PSR and Daimon, commissioned by Abradee(Brazilian Association of Electric Energy Distributors), shows that these charges multiplied almost sixfold between 2022 and 2025.
The publicly released survey highlights the urgent need to rethink the current rules of the SCEE(Electric Energy Compensation System).
While proponents of the technology point to benefits in diversifying the energy mix, the technical analysis demonstrates that the financial burden transferred to captive consumers without solar panels outweighs the systemic gains brought by the modality.
The Cost of Over‑Contracting on Electricity Bills
One of the report’s core issues is the mismatch between the energy contracted by utilities and the actual billed demand.
With the proliferation of in‑house solar systems, the market served by distributors shrinks, yet long‑term contracts signed earlier remain in force, creating unwanted surpluses.
Simulations conducted in the operating areas of major companies such as Cosern, Cemig and Energisa Mato Grosso illustrate the severity of the situation.
In the Cosern region, for example, the contractual surplus reached 23.5%.
To mitigate this distortion, Abradee suggests that the costs arising from this involuntary over‑contracting be borne by the SCEE beneficiaries themselves, shielding other users of the regulated market.
New Proposals for the Tariff Structure
Faced with operational challenges, the document offers sharp recommendations to reform sector billing.
Among the suggestions is the implementation of hourly, bi‑nomial or tri‑nomial tariffs that can more accurately reflect the real cost of using distribution infrastructure depending on the time of day.
The entity also advocates for taxing the so‑called Fio A on injected power, adding remuneration for the use of the transmission network.
“Unregulated expansion without proper cost allocation threatens the sector’s financial sustainability and unfairly burdens the consumer base that lacks access to their own generation,”
the consulting firms’ document states.
Operational Challenges and Power Flow Reversal on the Grid
Beyond the financial impact, the high penetration of photovoltaic generation profoundly changes the operational dynamics of the SIN(National Interconnected System).
The concentration of energy production during daylight hours sharply reduces the demand served by centralized plants, requiring rapid adjustments late in the afternoon to meet the rebound in consumption.
The study also highlights the phenomenon of power flow reversal at border substations, where energy moves from distribution to transmission.
States such as São Paulo, Minas Gerais, Paraná, Rio Grande do Sul, Goiás and Mato Grosso already face critical scenarios that demand additional investments in structural reinforcement and new planning methodologies by ANEEL(National Electric Energy Agency).
The continued growth of self‑generation, projected by the MME(Ministry of Mines and Energy) to reach even higher levels in the coming decade, requires urgent regulatory balance.
The major institutional challenge will be to preserve incentives for renewable sources without imposing disproportionate burdens on taxpayers who rely solely on the traditional grid.