Brazil launches incentive program for distributed generation

On Tuesday, the Brazilian government launched a national incentive program for distributed generation, with a special focus on solar PV. The ProGD program covers a spectrum of measures including tax incentives and creates lines of credit.

With this program the government predicts an investment of 100 million reals (US$26 million) by 2030 in this segment. The nation’s Ministry of Energy and Mines forecasts 23.5 GW of distributed generation installations, primarily PV, by this year. Currently, the cumulative installed capacity in this segment is around 15 MW.

The program sets a reference price for the sale of electricity from PV installations at 454 real (US$117) per megawatt hour. This tariff is what electricity distributors will pay and will be updated to conform to the consumer price index in the years under contract.

The program also contemplates mechanisms for the sale of surplus electricity on the market. Currently, installations under the net metering program can exchange surplus electricity for credits but not sell the surplus on the market.

Other stimulus programs are of a fiscal nature, including a reduction from 14% to 2% on import taxes on equipment for PV installations before the end of the next year.

ProGD introduces important tax exemptions for the part of the electricity which is consumed by generators. Specifically, the ICMS and PIS/Cofins taxes will apply solely to the electricity received by the distributor and not compensated.

The government plans to create and apply lines of credit for the installation of distributed renewables under the program. Additionally, development bank BNDES will provide financing at specific rates for a project for solar installations in schools, universities and hospitals as part of ProGD.

In addition to promoting distributed generation, the program also acts in the industrial plan and for training. It considers incentives to promote the creation of a productive industry for components in Brazil. Simultaneously, it is expected to promote the development of professionals in the renewables sector.

This program is part of the efforts of the Brazilian government for reducing CO2 emissions. Brazil has proposed to reduce emissions substantially over the next 10 years. The government estimates that installations under the ProGD program are expected to generate 48 terawatt-hours in 2030.

Translated by Christian Roselund. For the original article in Spanish, please see the pv magazine Latinoamérica website.