Viability of distributed generation for small consumers in Brazil through an availability-cost exemption for systems up to 1.5 kW

Abstract

The application of public policies to promote Distributed Generation (DG) in Brazil is an example of the diffusion of clean energy; however, this growth is concentrated in certain consumer profiles. This study evaluates the economic feasibility of small residential Photovoltaic Distributed Generation (PVDG) systems and proposes a regulatory adjustment to make them viable. The economic feasibility was assessed by simulating Net Present Value (NPV) and payback indicators for small residential systems across 51 Brazilian distribution utilities, using open data from the Brazilian National Electric Energy Agency (Aneel). The results show that small residential systems, especially those serving consumers with 80–170 kWh/month, have the least favourable economic performance under the current rules. To address this imbalance, the study proposes creating a new subgroup (DG-II-0) for systems up to 1.5 kW that are exempt from the availability cost. Simulations indicate that this change would improve the NPV and Payback period, making distributed generation more attractive to low-income families. The proposed adjustment aligns with Brazil’s goal of eradicating energy poverty and with international commitments to a fair and inclusive energy transition.