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

Author

Listed:
  • Gabriel Nasser Doile de Doyle

    (Renewable Energy Graduate Program, Federal University of Paraiba, Brazil & Electric Engineer PhD Program, Federal University of Itajuba, Brazil)

  • Paulo Rotella Junior

    (Department of Production Engineering, Federal University of Paraiba, Brazil & Department of Management, Federal Institute of Education, Science and Technology - North of Minas Gerais, Brazil & Faculty of Finance and Accounting, Prague University of Economics and Business, Czech Republic & Faculty of Social Sciences, Charles University, Czech Republic)

  • 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)

  • Karel Janda

    (Faculty of Finance and Accounting, Prague University of Economics and Business, Czech Republic & Faculty of Social Sciences, Charles University, Czech Republic)

  • Giancarlo Aquila

    (IEPG, Federal University of Itajuba, Brazil)

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.

Suggested Citation

  • Gabriel Nasser Doile de Doyle & Paulo Rotella Junior & Luiz Celio Souza Rocha & Priscila Franca Gonzaga Carneiro & Rogério Santana Peruchi & Karel Janda & Giancarlo Aquila, 2022. "Impact of Regulatory Changes on Economic Feasibility of Distributed Generation Solar Units," Working Papers IES 2022/02, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Feb 2022.
    • Handle: RePEc:fau:wpaper:wp2022_02
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    More about this item

    Keywords

    Distributed Generation; Regulation Policy; Cross-subsidies; Micro-Power Plants; Economic Feasibility Analysis; Solar Photovoltaic Energy;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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