Brazil's electricity industry regulator, Aneel, has forecasted that subsidies for renewable energy sources in the country will surpass those allocated to fossil fuel-powered thermoelectric plants by 2024, potentially impacting taxpayers' electricity bills.
According to Aneel's general-director Sandoval Feitosa, discounts granted to wind and solar projects for utilizing transmission and distribution systems are projected to amount to 11.5 billion reais ($2.32 billion) this year. This figure exceeds the 10.7 billion reais ($2.15 billion) earmarked for the “CCC” fund, which subsidizes fossil fuel usage for energy generation in Brazil's isolated regions not connected to the national grid, typically located in the North region.
Both the CCC fund and subsidies for renewable sources are funded by taxpayers through the Energy Development Account (CDE), a tariff charge incorporated into Brazilians' electricity bills.
Feitosa anticipates this trend to persist in the coming years, fueled by the robust expansion of renewables. Aneel recently greenlit 142 gigawatts of solar and wind power plants between 2022 and 2023, the majority of which qualify for discounts upon commencement of operations.
While incentives for wind and solar energy were initially introduced to enhance their competitiveness and integration into Brazil's energy system, there's growing discourse within the market suggesting that these sources may no longer require subsidies. Nevertheless, the transition period following the passage of a 2021 law aimed at phasing out subsidies could see an increase in renewable projects receiving financial support.
Despite the potential rise in subsidies, the surge in renewable energy generation promises to bolster supply, consequently contributing to lower energy prices in Brazil.