Federal Government Ends Subsidy for Solar and Wind Energy in Brazil: Aneel Will Accept New Requests Until March 2022

Since The Federal Government Ended Subsidies For Wind And Solar Energy, Aneel Claims That Permit Applications Have Doubled. Secretary Claims That Many Of These Projects Will Not Move Forward.

According to Paulo Cesar Magalhães Domingues, Secretary of Planning and Energy Development of the Ministry of Mines and Energy, a large part of the projects for new wind and solar power plants will not be realized due to the lack of demand from the country for the energy that will be generated. Furthermore, Aneel states that new subsidies may be requested until March next year (2022).

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The Increase In Permit Applications For The Construction Of New Solar And Wind Power Plants

The number of permit applications for new wind and solar power plants nearly doubled after the Federal Government announced the end of subsidies for these projects.

Those who will be entitled to this benefit will be those who submit permit applications to Aneel by the beginning of March next year (2022). In September 2020, the Federal Government officially announced its intention to end subsidies by publishing a provisional measure. Since then, Aneel claims that permit applications have doubled, reaching 1,886 permit requests for wind and solar power plants.

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In total, these solar and wind energy projects would add up to a production capacity of 85 GW, equivalent to half of the total installed generation capacity in Brazil today. Therefore, the best solution so far has been to limit the authorizations from Aneel.

Words From The Secretary

According to Domingues, it is estimated that the demand for energy will reach 50 GW in Brazil by 2030. He emphasizes that the law also requires that projects authorized by Aneel must be fully operational within a maximum of 48 months.

“We would not have a consumer market for all this energy even in the next 10 years. Many of these projects will not be implemented since no developer will build without having an energy purchase contract.”

The Possible Overload Of Agencies, According To The Federal Government

Regarding the rush of investors to take advantage of the end of subsidies, the Federal Government could change the law; however, the secretary states that there are still no predictions of changes from the Federal Government and that it remains the interest of the Ministry of Mines and Energy to end the benefit.

The subsidy covers, in addition to wind and solar energy, other renewable sources such as biomass-powered plants and small hydropower plants. Thus, all consumers pay the subsidy that has been added to the electricity bill.

The excess of requests may overload those responsible for the necessary processes for these ventures to begin operating, such as Aneel and the National Electric System Operator (ONS).

The ONS reported that, just this year, 116 pieces of information have already been issued, and the operator states that this increase is due to the Federal Government’s decision to set a deadline for the granting of subsidies.