Keywords

1 Introduction

The power sector currently attracts more investment than oil and gas combined investment needed as the generation mix changes and obsolete infrastructure is upgraded [1]. Three-quarters of global greenhouse gas emissions result from burning fossil fuels for energy. Fossil fuels are responsible for a large amount of local air pollution, causing health problems that lead to at least 5 million premature deaths each year. To reduce CO2 emissions and air pollution, the world needs to rapidly shift to low-carbon energy sources. The structure of the Brazilian energy matrix defines Brazil as a world leader in electricity generation from renewable sources [2]. The main source of electricity generation in Brazil is still hydraulic power, making up more than 70% of the country’s generation capacity, even though the country has great potential for exploring other renewable energy sources, such as wind, solar, and biomass [3]. With a new approach to the energy resources used, factors such as sustainability, environmental pollution and energy security have become frequent agendas, especially in emerging countries. The search for an offer of electric energy capable of meeting the growing demand, the decrease in the dependence on the use of fossil fuels like oil, natural gas, and coal is making countries like Germany, Sweden, Spain, Australia, China and Brazil, invest in renewable energy sources, e.g.: such as wind, solar, and biomass energy.

2 Methodology

Brazil has a great potential in renewable sources such as wind and solar energy. According to the Reference Center for Solar and Wind Energy - CRESESB/CEPEL, Brazil has a potential of 143 GW of wind energy that can be harnessed, besides having regions in the national territory compared to the best irradiation regions in the world of solar rays for photovoltaic energy generation. Since this reality, existing mechanisms were reviewed, to study the promotion of new incentive strategies for the expansion of the renewable electricity matrix in Brazil, some global strategies were also studied. A description of the main incentives follows. Applied Discounts TUSD/TUST: The law No. 9,427 was created, establishing that the enterprises framed in § 1 of its article 26 could, by determination of the National Agency of Electrical Energy (Aneel), receive the minimum 50% discount to be applied to the Tariffs for Use of the Transmission Systems (TUST) and Distribution Systems (TUSD), affecting the production and consumption of the energy sold [4]. The TUST and the TUSD are paid by the free, regulated and special consumers and by the electricity generators that need to use the transmission and distribution networks, i.e., they are tariffs paid for providing a service. Consumers pay TUST and TUSD to receive the energy purchased, while generators, for send the energy produced [5]. PROINFA: Created in 2002, after the rationing, the Alternative Sources Incentive Program (Proinfa) came into operation in 2004 with the aim of increasing the participation of alternative sources in the National Interconnected System. The calculation of the quotas is based on the Annual Plan of Proinfa (PAP) prepared by Eletrobras and forwarded to ANEEL. The cost of the program, whose energy is contracted by Eletrobras, is paid by all final consumers (free and captive) of the SIN, except those classified as low income. LAW Nº 10.438, OF APRIL 26: 2002, Art. 1, establishes that the costs, including those of an operational, tax and administrative nature, related to the acquisition of electric power (kWh) and the contracting of generation or power capacity (kW) by the Comercializadora Brasileira de Energia Emergencial - CBEE will be apportioned among all classes of end consumers served by the SIN, proportionally to the individual consumption verified, by means of specific additional tariffs, according to regulations to be established by the Agência Nacional de Energia Elétrica - Aneel. [6]. According to Convention 101/97- CONFAZ: Convention 101 of the National Council of Fiscal Policy (CONFAZ) grants exemption from the Tax on Circulation of Goods and Services (ICMS) in operations involving various equipment and components for the use of solar and wind energy, among which are aerogenerators and photovoltaic generators, inverters, and other system components [7]. ICMS Agreement no. 16/2015 – CONFAZ: Convention No. 16 of the National Council of Finance Policy (CONFAZ) concerns the collection of ICMS on energy injected into the grid in order to grant exemption in internal operations related to the circulation of electric energy, subject to billing under the Electric Energy Compensation System dealt with in Normative Resolution No. 482, of 2012, of the National Agency of Electric Energy - ANEEL. Thus, the energy injected into the grid is compensated in the same amount in the consumer unit. However, as the consumption tariff is composed of two factors: the TE (Energy Tariff) and the TUSD, some states apply the ICMS exemption only on the energy portion, leaving a small portion of taxes to be paid [8]. Distributed Power Generation Development Program (ProGD): The ProGD is a program of the Ministry of Mines and Energy created to stimulate the generation of renewable energy by consumers themselves, especially solar photovoltaic energy. To this end, it foresees the movement of R$ 100 billion in investments in the area until 2030 and establishes more competitive reference values for the remuneration of the consumer who delivers energy to the distribution network through the generated surplus [8]. PRONAF: The National Program for the Strengthening of Family Agriculture (Pronaf) is one of the main government incentives for small farmers to finance photovoltaic systems up to R$ 300,000. Interest rates vary between 2.5% and 5.5% per year and the farmer starts to pay back after 36 months of acquiring the credit [8]. BNDES: The National Bank for Economic and Social Development (BNDES) offers a line that provides financing for up to 80% of the cost of the work with an interest rate of approximately 5% per year, helping to implement large photovoltaic energy projects [8]. Other types of incentives for solar generation involve the possibility of financing micro and mini solar/photovoltaic distributed generation systems since different banking institutions offer lines with attractive interest rates [9, 10]. Investment Funds: BNDES, ANEEL and the financial development institution Finep have jointly created a fund (INOVA ENERGIA) to finance grants and loans for projects related to smart grid and ultra-high voltage transmission, solar and wind technology, and vehicle energy efficiency (INTL. RENEWABLE ENERGY AGENCY, 015). The INOVA ENERGIA 2013 program, with up to R$5 billion in funding, provides subsidies of up to 90% of project costs for R&D projects related to smart grids, renewable energy, hybrid vehicles, and energy efficiency in transportation [11]. REC Brazil: The Renewable Energy Certification Program is a joint initiative of the Brazilian Clean Energy Generation Association (Abragel) and the Brazilian Wind Energy Association (ABEEólica), with support from the Chamber of Electric Energy Commercialization (CCEE) and the Brazilian Association of Energy Commercializers (ABRACEEL), and aims to foster the market of energy generated from renewable sources and with high performance in terms of sustainability. The program consists of two interrelated certifications, which bring benefits to energy generators and voluntary consumers of Renewable Energy [12, 13]. REIDI: The Special Regime of Incentives for Infrastructure Development (REIDI) is a program created by Law 11.488/2007 and regulated by Decree 6.144/2007 as a tax incentive to enable the realization of projects for the implementation of infrastructure works in the sectors of transport, ports, energy, sanitation and irrigation [14]. The adhesion to REIDI suspends the requirement of Contributions to the PIS/PASEP and COFINS, in acquisitions, leases and imports of goods and services, linked to the approved infrastructure project, carried out within five years from the date of qualification of the legal entity, owner of the project [15].

3 International Mechanisms that can be Incorporated in Brazil: Germany and Sweden

Governments in different countries have been striving to develop regulations and policies aimed at the stimulation of energy generation from renewable sources, as well as efficiency strategies and technological innovations. It is important to develop sustainable energy policies and provide relevant and appropriate policy recommendations for end users [16]. The strategies act in different areas to promote the intensification of the use of renewable sources, acting on the development of new technologies and strategies by encouraging R&D, promoting facilities and monetary. In the German case, the mainly solar-focused initiatives have had significant effects. Firstly, they induced several new, often small, companies to enter and expand the sector, and also, the large number of cities with local feed-in laws and a proliferation of green pricing schemes led to a broad public interest in increasing the diffusion rate [17]. German renewable energy policy also showed impressive results in the 1990s. Between 1990 and 2002, 13,000 MW in new capacity came on stream. The costs of wind and solar energy decreased by about 30% and 60% between 1990 and 2000 [18].

In the case of Sweden, financial incentives used in conjunction with mandatory regulations, such as Net metering and Portfolio Standard, seem to have been the most effective. Public benefit funds (supported by surcharges on electricity users) have also played a role in stimulating RE technologies and promoting green electricity products. In conjunction with green energy education programs, these instruments can be critical to the long-term development of the renewable energy industry [18].

Table 1. Consolidated comparison of strategies and mechanisms used in Brazil and in the world
Full size table

4 Comparative Results

Renewable sources, such as solar and wind, are gaining more and more space in Brazil’s energy market, and much of this is due to incentives, such as tax and tariff discounts and long-term contracts. In 2021, the expansion of the Brazilian electricity matrix was almost 1 GW (957.03 MW). Table 1. Presents a compilation of the main references that present the mechanisms currently applied in developed countries.

5 Conclusions

In the last 20 years, many countries have started to create policies to encourage generation from more sustainable energy sources, creating mechanisms that make the generation, transmission, and consumption of these sources feasible through tax incentives, discounts, and subsidies, among others. Brazil has a lot of potential to expand the participation of renewable sources and already has several strands of incentives in place, only 5 of the 15 mechanisms mentioned in Table 1 are not yet used. However, this does not mean that the current incentives are de-signed in the most efficient way, since the growth of renewable sources in Brazil is, so far, at a slow pace. Some policies are also going out of force, such as the TUSD and TUST. Another mechanism that risks being cancelled is the current exemption from wire usage charges for distributed generation systems, through PL 5829/19. Due to rising costs and public budget constraints, many of the incentive schemes are being phased out in other countries, as well as in Brazil, following a path contrary to the evolution of the energy context towards retrogression. In order to improve the internal policy of incentives for renewable sources, Brazil can expand the projects already in place by increasing fiscal incentives, ex-tending and adding tax exemption on products and technologies related to generation by RES, greater investment in R & D in order to develop national technology and make installations cheaper and also study the implementation of mature mechanisms in other countries, as the sale of carbon credits.