Check out the concepts related to PROINFA and how it affects your energy bill.
In this article we will address the historical characteristics and rate composition of PROINFA which, according to the Brazilian Chamber for the Commercialization of Electric Energy allowed the generation of 873 MW on average by May 2018 using alternative energy sources, totaling more than 11,000 MW on average in the last 12 months.
What is PROINFA?
PROINFA is the acronym for the Alternative Sources Incentive Program (Portuguese: Programs de Incentive às Fontes Alternativas), established by Brazilian Federal Law no. 10.438/2002, under coordination of the Brazilian Ministry of Mines and Energy. The aim of the program is to promote the diversification of the Brazilian Energy Matrix, seeking alternatives to increase security in the supply of electricity, in addition to promoting increased electricity generated by sources such as wind, small hydroelectric plants, and biomass burning in the Brazilian National Interconnected Electrical System.
“A study on PROINFA’s power plant portfolio, published by IEEE in September 2017, indicated that PROINFA has foreseen the contracting of 3,300 MW of installed power, apportioned equally among the benefitting sources. The public call was finalized in 2005, contracting 144 power plants, totaling 3,299.40 MW of installed capacity, with 1,191.24 MW coming from 63 small hydroelectric plants, 1,422.92 MW from 54 wind power plants, and 685.24 MW from 27 thermal biomass power plants, distributed in almost all of the states of Brazil, as shown in the graphic below.
Location of power plants by installed power.
The Ministry of Mines and Energy is responsible for establishing the annual planning of actions to be implemented, defining the annual amount of procurement and evaluating the impact of costs to final consumers.
Centrais Elétricas Brasileiras S.A. (Eletrobrás) was responsible for the commercialization of energy generated by the undertakings contracted for a period of 20 years. All of the energy produced through PROINFA, consisting of the amount commercialized by Eletrobrás in the Brazilian Chamber for the Commercialization of Electric Energy, with the sellers being the power plants participating in the program and the buyers being the distributors of energy, free and special consumers, and self-producers acquiring shares of this program.
The costing of PROINFA pertains to the values paid for the acquisition of energy, administrative charges, and taxes, and are apportioned between the classes of end consumers served by the Brazilian National Interconnected Electrical System, except for consumers with consumption equal to or less than 80 KWh/month (low-income residential subclass).
For the other consumers, the apportionment is performed proportionally to the verified monthly consumption in MWh of each consumer unit represented in the Brazilian Chamber for the Commercialization of Electric Energy, in the period of September of the prior year to August of the current year.
PROINFA cost quotas are established in accordance with the Annual Plan of PROINFA, developed by Eletrobrás, containing the generation data of the previous year, projection of consumption, and strategic planning for the subsequent year.
After considering market data and consumption projections for the subsequent year, the Brazilian National Electricity Agency calculates and publishes the cost quotas by November 30th.
Calculation of Cost Quotas
The essence of the calculation to determine the cost quotas of PROINFA takes into account the total cost of the program and the amount of energy consumed by agents connected to the Brazilian National Interconnected Electrical System, excluding customers of the low-income residential subclass. Detailed information can be found in the Procedimento de Regulação Tarifária da ANEEL.
Electric energy quotas
Annual electric energy quotas are calculated based on the total contracted energy of the power plants participating in PROINFA, deducting the additional energy of the new consumers, self-producers, and independent producers.
The annual electric energy quotas of the distributors are calculated from the proportion of consumption of captive consumers, including the low-income residential subclass.
For free consumers, the calculation of energy quotas considers the consumption of electricity of each unit, and for self-producers or independent producers the energy consumed and not sold that exceeds their own generation is taken into account.
For free consumers, self-producers, and independent producers that access the distribution environment, the electricity quota of PROINFA should be separated from the quota of responsibility of the distributor.
The rate composition of PROINFA takes into account the transmission and distribution of the energy generated. The component of the Usage Rate of the Transmission System of PROINFA is obtained from the ratio between the total cost of the program in R$ and the total consumption of the market in MWh.
The specific component of the Usage Rate of the Distribution System of PROINFA is established from the calculation of the contractual rate readjustment or the periodic rate review of the electricity distributors.
The billing of the cost quotas for the transmission distributors is performed by the 10th day of the month preceding the reference month of the cost quota. And for the case of the free consumer, the value of the payment, in R$, should be obtained by applying the specific parcel of the Usage Rate of the Transmission System over all of the energy consumed in the month four months prior to the reference month.
How does PROINFA impact your energy bill?
The impact of PROINFA on energy bills varies between captive and free consumers.
For those who are in the Regulated Contracting Environment, the cost quota of PROINFA focuses on the share of the Usage Rate of the Transmission System in the form of sector charges, and the energy quota focuses on consumption, deducting the parcel of the energy quota from the measured consumption.
Consumers who are in the Free Contracting Environment pay the parcel relative to the cost quotas in the bill of the distributor, and the energy quotas are applied over the measured consumption, in MWh, and invoiced by the producer.
Therefore free consumers can identify that energy consumption, in MWh, invoiced by the generator is less than the consumption measured and registered in the Brazilian Chamber for the Commercialization of Electric Energy, and this difference is precisely their energy quota.
The Viridis energy and utilities management platform fosters the management of contracts for buying and selling energy, along with the auditing of invoices according to the taxation of the current period. With PROINFA being a compulsory contract for energy purchasing, using the Viridis platform it is possible to monitor the annual cost quotas and thus learn the percentage of additional energy your company possesses on a monthly basis. Click here to learn about our solutions.