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São Paulo ends up disfavoring renewable energy and intends to tax consumers from 75% to 78%
Through the State Decree SP n.o 65.255/2020, valid for two years from January 15, 2021, the state of São Paulo, granted exemption only on 78% of the energy produced, for consumption of up to 700 kWh, and 75% of the energy produced, for consumers who reach above this limit. Thus, for the next two years, 22% to 25% of all energy produced, through renewable energy, in the Distributed Generation regime will be taxed in the state of São Paulo, whatever the compensation. Put bluntly, São Paulo will tax part of the energy used by consumers and even by the producer himself.
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The full exemption of the amount consumed by the producer himself in the Distributed Generation system in São Paulo, will only come into effect from January 15, 2023, in São Paulo. The state's posture discourages producers and consumers from using renewable energy for energy production, such as solar panels and wind turbines, against the grain of the world that is turning to encourage the installation of renewable energy models
Renewable Energy in Sao Paulo
The electricity distributors that operate in the state of São Paulo serve an annual electricity consumption of around 145 GWh, with more than 18,6 million consumer units.
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More than half of the energy matrix in the state of São Paulo is produced from renewable sources, with the state having an installed capacity of approximately 23 GW, corresponding to 15% of Brazilian generation. Hydroelectric plants are responsible for 65% of the state's production, biomass thermoelectric plants for 25% and fossil thermoelectric plants for 10%.
The electricity market in São Paulo is divided between free consumers, with the right to choose their supplier, and captive consumers, linked to the concessionaire that serves their region. The consumer needs to consume more than 500 kW to be included in the free market. Below this value, the user uses the captive market via local distributors.
Renewable energy market grows in Brazil
Another positive point is the generation of new jobs, according to the ILO, the renewable energy industry already generates more jobs than traditional and polluting fuels
Renewable energy does not emit greenhouse gases in power generation processes, making it a cleaner solution to contribute to the environment. According to the World Economic Forum, in some countries, renewable energy is costing the same or even less than polluting sources.
With more than 1 million jobs in the sector, Brazil is one of the biggest job creators in renewable energy and the opportunities in the segment are increasing. According to Irena, the International Renewable Energy Agency, the country is second only to China.
This includes jobs related to biofuels, hydroelectric, wind and solar power, as well as biomass and biogas. But it's not a total surprise. As of 2018, the country has the highest number of renewable energy jobs in Latin America.
Public policies try to increase the renewable energy matrix
Much of Brazil's renewable energy comes from hydroelectric power plants. However, a significant portion of the country's renewable energy stems from past public policies that tried to increase the share of non-traditional renewable energies (especially sugarcane used to make ethanol) and currently the state of São Paulo is trying to increase this number even more.
43,5% of Brazilian consumption is supplied by renewable sources, while 14% of world consumption is supplied by these same sources. The data are from the National Energy Bulletin of Brazil and are based on 2016 figures.
Brazilian renewable energy resources are composed of: 39,1% sugarcane and its derivatives, 27,6% hydroelectric, 18,8% charcoal and firewood and 14,5% other renewable energies (solar, wind, biomass, etc).
The following graph compares the use of various renewable energy resources in Brazil with the worldwide use of the same resources
