Energy for Sustainable Development 80 (2024) 101445

Contents lists available at ScienceDirect

Energy for Sustainable Development

journal homepage: www.journals.elsevier.com/energy-for-sustainable-development

Amazon energy transition: The need to accelerate emission reduction by the

extensive adoption of solar photovoltaics and storage in Brazil
Osvaldo Soliano Perreira a, *, Tereza Mousinho Reis b, Ricardo Rüther c
a
Instituto de Humanidades, Artes e Ciências Professor Milton Santos (IHAC), Federal University of Bahia (UFBA), Rua Barão de Jeremoabo s/n, PAF V, Ondina,
Salvador, BA 40170-115, Brazil
b
Centro Brasileiro de Energia e Mudanças Climáticas (CBEM), Praça Geraldo Walter 64, Rio Vermelho, Salvador, BA 41950-355, Brazil
c
Fotovoltaica-UFSC Laboratório de Sistemas Solares, Federal University of Santa Catarina (UFSC), Av. Luiz Boiteux Piazza, 1302, Lotes 114/115 - Cachoeira do Bom
Jesus, Florianópolis, SC 88054-700, Brazil

A R T I C L E I N F O A B S T R A C T

Keywords: This article aims to compare the situation of greenhouse gases emissions due to the supply of electricity to the
Solar energy two Brazilian power generation systems: The National Interconnected System (SIN) and the Isolated Systems
Energy storage (SISOL). The former composes the national grid. The latter is composed of 212 isolated generation systems
Decarbonization
basically supplied by diesel.
Renewable energy policies
A plethora of reasons justify the different energy generation sources, either the rain forest or the so-far
Hybrid systems
Amazon available technologies for remote areas, but the focus of this article are the energy policies adopted to push
new technologies. The well succeeded policies adopted by Brazilian government to foster new renewable energy
technologies since the beginning of this century in the SIN, now need to be adapted to a new moment of energy
transition and new emerging technologies suitable to the SISOL, particularly solar photovoltaics and energy
storage. Biofuels has succeeded to compete with fossil but can also be benefitted from policies to foster emerging
technologies.
Energy policy approaches to both power systems and results of consultation to key actors are analysed. Two
recently approved regulations open space to advances on the decarbonization of the SISOL provided the success
histories from the SIN and experiences of agents with emerging technologies are considered. These correspond to
the suggestions and recommendations which close the article.

supply electricity to less than 1 % of the population (ANEEL, 2024).

Introduction Comparing the level of greenhouse gases (GHG) emissions from the
two systems, the differences are also abysmal: not only total emissions,
The Brazilian electrical system can be divided into two large blocks: but also those originating from the energy sector (EPE, 2022a, 2022b,
the National Interconnected System (SIN), a network integrating prac­ MME/EPE, 2022). These figures are in relative and not absolute terms,
tically all National States, and the Isolated Systems (SISOL), composed since the region brings together a tiny percentage of the population and
of 212 systems not connected to the SIN and isolated from each other, of the national Gross Domestic Product (GDP). These emissions are
including one state and cities, towns, and villages spread across eight disproportionately higher in the Land Use, Land Use Change, Forests
states, only one of which is outside the Amazon region (EPE, 2022a). A (LULUCF) sectors, due mainly to deforestation, which is not the subject
basic feature that distinguishes the two systems is the energy sources of this article, and in the energy sector, due to the use of fossil fuels
that feed them. The first uses mostly renewable energy sources, mainly (SEEG, 2024). Although the country’s commitments under the Paris
hydroelectricity,1 while the second is almost entirely fuelled by fossil Agreement - its NDC - are economy-wide, the region can significantly
fuels, basically diesel oil (EPE, 2022a; ONS, 2023b). The supply of diesel contribute to increasing Brazilian ambitions in these two sectors, even if
to these isolated communities is expensive and demands a complex lo­ emissions from the energy sector are very small when compared with
gistic, costing the country around 2 billion US$ per year in subsidies, to those of the LULUCF sector.

* Corresponding author.
E-mail address: osvaldo.soliano@ufba.br (O. Soliano Perreira).
1
Brazilian Energy Balance – BEN (EPE, 2022b) and energy sector consider hydropower as a renewable energy source (RES). This understanding is also shared by
the authors of the article.

https://doi.org/10.1016/j.esd.2024.101445
Received 25 September 2023; Received in revised form 6 February 2024; Accepted 30 March 2024
Available online 13 April 2024
0973-0826/© 2024 International Energy Initiative. Published by Elsevier Inc. All rights reserved.
O. Soliano Perreira et al. Energy for Sustainable Development 80 (2024) 101445

the share of renewable energy sources in the SISOL. An ex-post

Abbreviations comparative analysis of national programs of Brazil and Venezuela,
using quantitative and qualitative criteria proposed policies to the
ANEEL National Agency of Electric Energy (Agência Nacional remaining isolated population (Leduchowicz-Municio et al., 2022). The
de Energia Elétrica Brazilian government has developed a public consultation to improve
BESS Battery Energy Storage System the guidelines adopted for carrying out auctions for the SISOL (MME,
CCC Fuel Consumption Account (Conta de Consumo de 2021; MME, 2022a).
Combustíveis) The energy status of both systems, their respective emissions and
CGPAL Pro-Amazônia Legal Steering Committee (Comitê adopted policies are the starting point for comparative analyses. The
Gestor do Pró-Amazônia Legal) results observed in energy auctions and stakeholders’ contributions to
DG Distributed Generation some consultations and interviews provided results and trends which are
EPE Energy Research Company (Empresa de Pesquisa discussed. The article concludes with suggestions of some technical and
Energética) policy recommendations and implications to accelerate the energy
GHG Greenhouse Gases transition in the region and analysing their outcomes.
GIZ Deutsche Gesellschaft für Internationale
Zusammenarbeit Energy situation in Brazil and the Amazon
IPP Independent Power Producer
Li-Ion Lithium Ion Figs. 1 and 2 give an overview of the two national electrical systems.
LULUCF Land Use, Land Use Change, Forests There is a large transmission network operating at different voltage
MME Ministry of Mines and Energy (Ministério de Minas e levels, connecting almost the entire country. In the Amazon, however,
Energy) there is no extension to the state of Roraima, in the extreme north; there
PROINFA Program of Incentives for Alternative Electric Energy are large voids in the states of Acre, Amapá and Amazonas, and still
Sources (Programa de Incentivos às Fontes Alternativas some voids in the state of Pará. Fig. 2 shows the SISOL mini grids,
de Energia Elétrica) located exactly in these large voids, and a central line can be seen along
RES Renewable Energy Sources the states of Amazonas and Pará, which corresponds to the Amazon
SHP Small Hydro Power River. Only one system is outside this cluster of the Amazon Region,
SIN National Interconnected System (Sistema Interligado which corresponds to the island of Fernando de Noronha, in the Atlantic.
Nacional) The SIN comprises 179,311 km of transmission lines at voltage levels
SISOL Isolated Systems (Sistemas Interligados) ranging from 230 kV (67,137 km) to 800 kV (9204 km), at the end of
TE SISOL Energy Transition in Isolated Systems 2022. The total installed capacity was 84,560 MW, in April 2023,
distributed as shown in Fig. 3, totalling 85.8 % from renewable sources,
against 12.9 % from fossil sources, in addition to nuclear. For 2027, the
same source indicates 270,558 km, 208,033 MW, adding up 84.8 % from
The reasons for such a difference in emission levels in the energy renewables, against 15.3 % from other sources, recording a small gain in
sector are diverse, including historical-geographical, socioeconomical, natural gas and a reduction in the share of other fossil fuels. Regarding
technical reasons, and adopted energy policies, which are the focus of the energy generated in 2022, 589,366 GWh, hydroelectric accounted
this article. Throughout its energy history, Brazil managed to assemble for 72.5 %, wind 13.4 %, solar 2.1 %, totalling 88 % among these three
an eminently hydroelectric energy generation mix and began to diver­ sources, without considering biomass, which appears integrated among
sify it significantly at the beginning of this century, with a series of the thermal sources that produced 9.5 %, difference being due to nuclear
political incentive measures that proved to be extremely successful. (ONS, 2023b).
Despite being rich in water resources, the Amazon region is flat, which
limits the use of this resource for power production, and the large forest
practically prevents the construction of transmission lines.
Other renewable technologies have advanced a lot, both technically
and in cost effectiveness, particularly solar and wind; however, wind has
a very limited potential in the Amazon region compared to the rest of the
country. Furthermore, the cost of energy storage has also been reduced
considerably, which circumvents the major obstacle to the use of re­
newables in the region, particularly solar energy.
The energy policies adopted for the region, on the other hand, did not
follow the national standard and those designed for the region proved to
be ineffective in reducing regional dependence on fossil sources, with
some perceptible change only in an auction that took place in 2019
(CCEE, 2019), for the only state that remains isolated from the SIN –
Roraima.
Brazilian policies to promote RES in SIN have moved from a type of
feed-in tariff to reverse auctions with impressive results (Tolmasquim
et al., 2021). In a step ahead towards energy transition, the issue of
adopting a carbon pricing mechanism to achieve Brazilian NDCs has
been discussed (Grottera et al., 2022). The question of expanding the
analysis beyond the energy dimension and of the inclusion of other
stakeholders has been raised by some researchers (Lampis et al., 2022;
Werner & Lazaro, 2023). All these references have considered Brazil as a
whole and homogeneous country, but the Amazon requires a different
energy policy approach which is still under construction. da Ponte et al.
(2021) used a multicriteria decision model to compare policies to foster Fig. 1. National Interconnected System (SIN). Source: ONS, 2023a.

2
O. Soliano Perreira et al. Energy for Sustainable Development 80 (2024) 101445

Fig. 2. Isolated Systems (SISOL). Source: ONS, 2023a.

and only 6 % of renewables. For 2023, the situation improves a little

with fossils reaching 90 % and renewables 10 %, with an emphasis on
increasing the installed capacity of biomass (ONS, 2022). As for 2024,
the Energy Research Company (EPE) (EPE, 2022a) works with a sce­
nario of 58.3 % diesel, 20.9 % natural gas, 19.6 % biomass, 1.0 % small
hydro power (SHP) and only 0.2 % solar photovoltaic.
Regarding emissions, Table 1 presents the forecast data for SISOL for
the year of 2024, when the installation of all auctioned systems is
completed, including a significant addition of biomass generation. As it
can be seen, the total emissions reach 1.829 MtCO2eq/year, which
would mean an emission of 498 kgCO2eq/MWh. According to data from
the 2022 National Energy Balance (EPE, 2022b), emissions from elec­
tricity production in Brazil were 118.5 kgCO2eq/MWh.
Forecast for the SIN for 2024, based on data from the 2031 Ten-Year
Energy Expansion Plan (MME/EPE, 2022), is 17 MtCO2eq (see Table 2)
which would result in an emission of 24.4 kgCO2eq/MWh, considering
only the forecast demand of 79,414 MWaverage, for the same year.
Therefore, in 2024, SISOL emissions per MWh will be around 20.4 times
the emissions of the SIN. Furthermore, the SISOL is subsidized by an
account fed by all national consumers, called Conta de Consumo de
Combustíveis (CCC), standing for Fuel Consumption Account, which
will cost 2.2 billion US$ in 2023, in a clear subsidy to fossil fuels (CCEE,
2022). These are the key challenges faced by Amazon energy system.

Material and methods

In preparation of this article, the authors used National Laws pro­

duced by Brazilian Congress and documents produced by government
entities, such as the Ministry of Mines and Energy (MME), Energy

Fig. 3. Evolution of Installed Capacity in the SIN (April 2023/December 2027). Table 1
Source: ONS, 2023b Forecast of electricity generation and GHG emissions in the Brazilian SISOL –
2024.
The SISOL includes 212 systems, distributed among seven states, Source Estimated generation Emissions Emissions
serving populations ranging from 15 inhabitants to 436 thousand in­ (MWh) (MtCO2equiv/year) (%)
habitants in Boa Vista, the capital of Roraima. The maximum demands Diesel 2,140,189 1.399 76.5
at these two extremes are 2 kW and 243 MW. Consumption in SISOL in Natural gas 766,823 0.426 23.3
2023 was forecast to be equal to 0.6 % of the national load. The total Biomass/ 720,495 0.004 0.2
biofuel
load forecast for 2023 was 3522 GWh and the total demand is 632 MW
Photovoltaics 6939 0 –
(EPE, 2022a). The total installed capacity was 1198 MW at the end of Small hydro 37,979 0 –
2022, with 80 % based on petroleum derivatives, 14 % on natural gas, 5 TOTAL 3,672,424 1.829 100 %
% on biomass and 1 % on hydroelectric, adding up 94 % of fossil fuels Source: EPE, 2022a, 2022b.

3
O. Soliano Perreira et al. Energy for Sustainable Development 80 (2024) 101445

Table 2
GHG Emissions in the SIN.
Sectors 2005 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Variation % 2021/31

Power sector 27 47 33 32 32 33 37 43 48 53 58 59 24 %
SIN 21 34 18 17 17 17 20 25 29 34 38 39 17 %
Self-production 6 14 14 15 15 16 16 17 18 19 19 19 42 %

Source: MME/EPE, 2022.

Research Company (EPE), National System Operator (ONS), and the and expanded to sources that could promote CCC cost reduction: the so
National Agency of Electric Energy (ANEEL). These documents include called CCC Subrogation.2 The first hybrid solar photovoltaic/Diesel
policies, regulations, programs, and energy plans. Reports produced by hybrid generator was installed in the Amazon, at the Araras - Rondônia
authors and an expanded team, produced to EPE, under the support of mini grid (Rüther et al., 2003), using this mechanism. However, this
GIZ, still unpublished, were also used (IESS, 2022a, 2022b, 2022c, incentive proved to be ineffective in the sense of expanding the use of
2022d). Some recent literature on policy instruments to foster RES, renewable sources because, effectively, most of the renewable genera­
particularly in Brazil, complete the literature review. tion, at the time, was much more expensive than diesel generation. This
Following the literature review a comparative analysis of the policies mechanism ended up being used largely to stimulate the interconnection
adopted in Brazil to the SIN and to SISOL was developed, showing the of SISOL to the SIN.
history of success in the SIN, but policy gaps to reach high penetration of Only in 2002, after some major power shortage and rationing the
RES in SISOL. This review was vital to prepare a questionnaire to country had suffered in the previous year, did Brazil introduce the
interview key entrepreneurs who had been qualified by EPE to partici­ Program of Incentives for Alternative Electric Energy Sources
pate in previous power and energy auctions to supply SISOL. The (PROINFA) (Brasil, 2002). PROINFA was an effective aid that targeted
questionnaire consisting of 43 questions addressed the main aspects wind, biomass, and SHP sources, with a feed-in tariff component and a
related to barriers and opportunities identified by entrepreneurs to minimum quota of 1100 MW for each source, in an acquisition that
advance technical, legal, and regulatory improvement proposals for would come to be in 2004.
expanding RES supply solutions in SISOL. The questionnaire is presented The program was a success and made the national wind industry take
in Appendix A. The results of this survey are discussed later in the article off with those three renewable sources, in particular wind power. The
and complete results are expected to be published by EPE soon (IESS, program did not include solar power and anticipated a second phase in
2022a and IESS, 2022d). They are key contributions to the recommen­ which the market should acquire, annually, 10 % of the growth in de­
dations and conclusion of this article. mand from these three sources. This second phase, despite a legal pre­
Parallel to the survey, the MME has developed a public consultation cept, was never formally fulfilled as a new government was elected in
aiming to collect contributions of different players interested in the 2004 with a new approach to the power sector.
development of solutions to SISOL. This plethora of agents cover not As PROINFA was scaled up to a national program, several arrange­
only those interested in RES, but also improved diesel solutions and ments were developed to achieve its effective implementation. Special
natural gas entrepreneurs, besides distribution utilities, academia, and credit lines by the national development bank covered up to 80 % of the
NGOs. The full consultation is available at MME (2021) and complete investment. The national state-owned power utility, through long-term
results are shown in MME 2022. A synthesis of the findings is discussed power purchase agreements (PPAs), guaranteed the investor a mini­
later and was also crucial to the conclusion and policy implications of mum revenue of 80 % of the power contracted, even before the corre­
this article. sponding transmission system was up and running (take or pay
contracts). The Program also incorporated mechanisms for the devel­
Comparative analysis of energy policies and prices for the SIN opment of a national industry for equipment and services.
and SISOL Law 10,848 (Brasil, 2004) consolidated power-purchase-auctions
and clearly distinguished regulated contracting instances, where dis­
Energy policies adopted to SIN and SISOL: a comparative analysis tributors should buy 100 % of their demand, and free trading instances,
where the parties would make bilateral agreements. The Law also
Compared to the world average, Brazil has always had a history of a established reserve-power auctions that were flexible to allow specific
greater use of renewable energy sources due to its generation of electric auctions and the possibility of different treatment for the new Renew­
power based largely on hydroelectricity and the use of ethanol for able Energy Sources (RES).
transportation. Brazil’s power market restructuring actions, which could In the first few years of the new law, only the generation of fossil
facilitate new renewable energy sources, were initially neutral from a fuels and large hydroelectric power plants were included. Only in 2007
technological point of view, such as in the creation of independent did a first auction of alternative sources took place, in which only
power producers and free consumers (for power demand contracts biomass and SHP plants were included. In 2008, a reserve auction again
above 3000 kW (Brasil, 1995)). addressed only biomass, and, finally, in 2009, the first wind power
The first effective incentives for new renewable energy production auction took place, contracting 71 wind farms, totalling more than 1800
appeared in 1996 (Brasil, 1996), with the establishment of a minimum MW, with an average discount of 21.49 %, in relation to the originally
reduction of 50 % in the tariffs for the use of transmission and distri­ established ceiling price.
bution systems, which the regulatory agency fixed in 80 % (ANEEL, Thenceforth, wind power was the renewable energy resource that
2004). It also expanded the concept of free consumers to those con­ participated the most in all annual energy auctions, until 2015, when the
sumers with power demand contracts of over 500 kW, provided they first solar energy auction took place, which reached a discount of 13.5 %
were supplied by new renewable energy generation capacity, in this case on the original auction ceiling price, but with a price higher than that of
including only small hydro power (SHP). However, both incentives had wind power, in the same year. Specific auctions became, then, a success,
no impact at the beginning, as conventional sources generated power at
tremendously lower costs. The subsidy has been gradually reduced.
In 1998, (Brasil, 1998) the subsidy for power production in the SISOL 2
This aims to reward with CCC resources the projects that result into con­
– CCC, which levelized the final price of diesel generation in these sys­
sumption reduction, replace the fossil thermoelectric generation, or that lead to
tems to the average cost of energy and capacity in the SIN, was renewed
interconnection to the SIN.

4
O. Soliano Perreira et al. Energy for Sustainable Development 80 (2024) 101445

as they coincided with the systematic and strong fall in the prices of energy sources accounted for 42.6 % in this auction, against 14.4 % for
wind and solar equipment in global markets. Therefore, the biased dy­ diesel generation. It should be noted that diesel gave way to another
namics were essential to the successful integration of these two sources fossil source, natural gas, which also emits GHGs, albeit in a significantly
to the SIN, reaching the point in which specific auctions were no longer smaller volume (CCEE, 2019).
needed within the scope of the SIN. In the 2nd SISOL auction, held in April 2021, to supply 23 locations
By 2012, the Brazilian National Agency of Electric Anergy (ANEEL) in the states of Amazonas, Acre, Pará, Rondônia and Roraima, the
introduced regulatory changes that seeked to encourage the expansion penetration of fossil sources was still quite relevant as shown in Fig. 4,
of distributed generation after the meter through a net-metering system with 64.8 % to diesel generators, 7.3 % to natural gas and 27.9 % to
(ANEEL, 2012). Further actions included the possibility of remote self- biodiesel (CCEE, 2021). The great novelty of this auction is that bio­
consumption and shared generation. Subsequently, tax breaks and diesel proved to be more cost-effective than diesel in short-term con­
financial incentives were given. These breaks and incentives made it tracts for some locations. There is, therefore, a clear need for new
possible to spread the mechanism that benefited solar photovoltaics, initiatives to demonstrate the technical and economic viability and
which is currently the fastest growing energy technology in Brazil. comparative advantages of other sources, such as the use of photovoltaic
Installed capacity reached 20.5 GW, expanding at a very large pace systems with storage, especially considering all the specific constraints
(more than 1 GW of new rooftop installations every month in 2023), of the Amazon region, regarding environmental preservation, protection
representing over 70 % of total photovoltaic capacity installed in Brazil of indigenous peoples and transportation of fuels.
(ABSOLAR, 2023). New rules introduced in 2022 are gradually reducing By the same time, EPE, with the support of GIZ, finally released a
the incentives to Distributed Generation (DG), but this is being public study on the integration of RES in the SISOL, covering the critical
compensated by the still declining costs of solar PV. factors, optimization, and analysis of sizing packages to promote a
On the SIN side, focused incentives resulted in significant results. In smooth and sustainable transition to decarbonize the minigrids systems
the SISOL, neutral actions, adjusting to the prevailing pro-diesel dy­ in Brazil (EPE, 2021c).
namics, made the results ineffective. The CCC Subrogation model was For the situation of much more remote and low-load regions, the
basically used to pay for investment in interconnection to the SIN. In Federal Government has created the Mais Luz para Amazônia (MLA)
fact, less than 3.3 % of CCC’s resources are currently used for CCC Program (“More Light to Amazônia” in English), a national program that
subrogation (CCEE, 2022), a mechanism that should encourage the expects to take power to remote regions of the Amazon Region) antici­
replacement of fossil fuel generation with RES, including hydroelec­ pating the use of renewables. It points to a new direction, establishing
tricity, which mostly power the SIN. The rest of CCC resources are used that the supply to unattended households and any replacements of fuel-
basically to pay for diesel generation or other sources with higher costs powered generators are to be made with renewables. It goes beyond,
of generation, compared to average price of the energy at SIN. therefore, the neutrality of the previous Luz Para Todos Program (“Light
EPE used to answer demands of distribution companies to antici­ for All” in English, a different program with the same goal for the whole
pating interconnection comparing it to existing diesel generators, country), which, despite having made possible the installation of small
demonstrating a problem in the planning conception, by not including and medium-sized off grid systems called SIGFIs and MIGDIs3 in the
alternatives of modern isolated systems without fossil fuels. If the beginning, ended up making these alternatives unfeasible and again
interconnection was not feasible, diesel was maintained, but not network extension remained the only option. Thus, SISOL remained in
replaced by a cleaner generation source. These are the cases of studies between two models which foster the use of renewable energy – SIN and
developed for the states of Acre (EPE, 2021a), Amazonas (EPE, 2021b), MLA, but SISOL itself had no effective incentives.
Rondônia (EPE, 2020), and Pará (EPE, 2019), in which were shown the Finally, throughout 2022, two normative instruments have created
economic benefits of interconnection to the SIN. In all these cases rules that tend to accelerate the use of renewable energy, and conse­
interconnection was adopted, resulting in investments of 1.41 billion quent reduction of the level of greenhouse gas emissions from the Bra­
reais (~ US$ 300 million) from CCC Subrogation resources, which over zilian SISOL. The first is a normative resolution (REN) on rules to replace
15 years would reduce 4.27 billion reais that otherwise would be spent diesel energy with renewable energy (ANEEL, 2022) and the second
in diesel. It also represented a reduction of CO2 emissions, with a instrument was a decree (Brasil, 2022), which created the program for
benefitted population of 629 thousand people accessing the SIN, which the structural reduction of energy generation costs in the Amazon.
emits just a fraction of the CO2 emitted by diesel (MME, 2021). REN 1016/2022, among other provisions, establishes the criteria for
In 2019, following the national model of power-purchase-auctions,
the 1st SISOL auction, carried out for the Boa Vista system, took place.
The diesel monopoly was partially broken with the entry of natural gas,
which supplied 43.0 % of the nominal power (see Table 3). Renewable

Table 3
Result of the 1st SISOL Auction – Boa Vista, in 2019.
Source Rated Rated Reference Price (US
Power power (%) $/MWh)
(MW)

Fossil Diesel 42.3 14.4 211.8

Natural gas 126.3 43.0 159.6
Total 168.6 57.4
Renewable Biofuel + 17.6 6.0 134.0
Biomass
Biofuel + 56.2 19.1 165.0 Fig. 4. Result of the 2nd SISOL Auction, in 2021. Note: Acre (AC), Amazonas
Solar (AM), Pará (PA), Rondônia (RO), Roraima (RR). Source: CCEE, 2021
Biofuel 11.5 3.9 164.1
Wood chips or 40.0 13.6 150.8–160.0
residues
Total 125.3 42.6
Grand Total 293.9 100 3
MIGDI: Isolated Electricity Generation and Distribution Microsystem, SIGFI:
Fonte: CCEE, 2019. Individual Electricity Generation System with Intermittent Source.

5
O. Soliano Perreira et al. Energy for Sustainable Development 80 (2024) 101445

adding renewable source generating units to generating plants in the Another advance of the Decree was that the viability of the inter­
Brazilian SISOL. The energy selling agent in SISOL, that is the holder of connection will be compared not only with the existing diesel systems,
concession or authorization for the generation of electric energy, winner as in the previous studies carried out by the EPE, mentioned above, but
of a bidding for energy generation, may add to the existing generating with solutions of “Lowest Overall Cost, respecting the criteria of quality
plant generating units of renewable energy source, storage system, as and continuity in the supply of electricity, which structurally reduce or
well as using other fuels, provided that the conditions of the initial eliminate in the short, medium and long term the costs borne by the Fuel
contract are ensured with regard to the minimum amounts of power and Consumption Account” (Brasil, 2022).
energy established in the respective contract. A first window was open to This implies the migration of diesel generation to any sources that
solar energy with storage. generate electricity at a lower price or that may make use of the CCC
The incentive created allows energy producers to replace part of subrogation mechanism for the installation of sources without genera­
their diesel generation, with renewable energy sources, which are tion costs, such as solar photovoltaics. Additionally, the decree is very
known to have lower production costs, such as photovoltaic solar en­ clear about the possibility of including storage.
ergy. The stimulus is valid for solar energy with storage, but this last
component still lacks proof of its limits of viability. Precisely for this A comparative analysis of the result of energy prices in recent auctions at
reason, an additional incentive, whether in terms of price or quota, must the Brazilian SIN and SISOL
be granted for a determined transition period and subsequently reas­
sessed, as was given to renewables in the SIN, in its early days and Table 5 summarizes the results of the auctions held in Brazil in the
discussed earlier. last four years, and the resulting prices achieved in both the Brazilian
The resolution also established that if the existing contract is for up SIN and SISOL.
to five years, all the benefit of the generation price reduction will be During this period, the first two auctions for isolated systems, whose
given to the energy producer; if it lasts longer than that, they can retain results were mentioned above, were carried out in the same way as for
70 % of the benefit and the remaining 30 % will be passed through to the SIN, within the new system of supply solutions4 with reference prices
consumers. and benefits given to renewable sources and natural gas with terms of
As the contract is made with a reference price based on diesel, gen­ 15 years, whereas to diesel seven years in the first auction, and in the
eration at a lower cost can be a great benefit in the case of photovoltaic second auction reduced even more, to five years.
solar energy, as seen in the results of the auctions presented in Table 3. A A first observation is that the energy prices practiced in the Capacity
ceiling price for photovoltaic solar energy varying with the installed Reserve auctions for the SIN, which included the Simplified Competitive
power and with the number of years that the contract will still last. Procedure, where basically natural gas has been contracted, were
These values vary from US$ 146/MWh for systems of up to 150 kWp significantly higher, even for small volumes purchased from renewable
with six remaining years, to 78/MWh for systems with installed power energy. Auctions for isolated systems are always carried out in the de­
equal to, or greater than 5 MW and with 15 remaining years in the mand (power) plus energy modalities, and the power acquisition round
contract. has contemplated energy needs, with no exclusive acquisition of energy
The resolution opens a loophole for the use of storage systems, as so far. The need for the power component (reserve) naturally raises final
such use will be considered as a specific case and, therefore, the calcu­ prices when comparing average final prices, even with the same tech­
lation of the reference price reduction will be evaluated by ANEEL. It is nology between energy-only auctions held for the SIN.
also desirable that, in cases where there is a limitation of areas for the Some findings about the technologies can be drawn from the analysis
installation of centralized solar systems, due to the need to suppress of the SISOL auction results. Diesel is still the most important source in
vegetation in the Amazon Rainforest region, and that it becomes the Brazilian SISOL auctions as shown in Table 3 and Fig. 4 with prices
necessary to use DG, with a power much lower than 150 kWp, the values still slightly lower than those of its renewable counterpart, biodiesel
can also be made more flexible as small systems have a much higher (Table 5). It is also observed that the price of natural gas, when and if
price per unit of power. available, is already significantly cheaper than diesel, a fact observed in
The other instrument, the Decree 11,059 (Brazil, 2022), on reduction both SISOL auctions.
of energy generation costs in the Amazon is a Presidential Decree which Regarding renewable energy sources, they have stood out in all new
regulate the Program for the Structural Reduction of Energy Generation energy SIN auctions. The last time that natural gas competed in a new
Costs in the Brazilian Amazon and the Navigability of the Madeira River energy auction, the offer prices were more than double those presented
and the Tocantins River – Pró-Amazônia Legal, pursuant to the pro­ by solar and wind energy projects, slightly above biomass, with the cost
visions of Law no. 14,182 (Brasil, 2021b), of July 12, 2021. lower only than hydroelectric power. Since then, natural gas has only
The aforementioned Law, in its 7th Article, established that the participated in capacity reserve auctions.
subsidiary of the recently privatized Eletrobras, responsible for the Solar and wind sources have average prices that are currently much
system in the northern region, must contribute US$ 59 million annually, lower than the prices of other renewable sources, with an insignificant
for a period of ten years, restated by the price index effective, as of the difference only in the 2021 A-5 Auction, when it competed with a large
month the new concession contract is signed, for application in the hydroelectric plant. It is also noted that in the last auction there was a
program for the structural reduction of energy generation costs in the specific quota for the hydroelectric plant and the price of the plants
Brazilian Amazon, with at least 30 % of this amount to be allocated to using Municipal Solid Waste (MSW), always have an incentive price.
guarantee the navigability of two important rivers of region. Finally, it appears that from all the cases listed, in only one was the
In regulating the Program created by Law, the Decree clarified the solar energy price slightly higher than that of wind energy. Thus,
operationalization of the program. The technological options to reduce photovoltaic solar generation has become the cheapest source of energy
the electricity generation costs, borne by the Fuel Consumption Account in Brazil, having become the cheapest even in a capacity reserve auction,
– CCC, listed by the Decree are: albeit in an extremely small volume of energy traded (10.5 MW of Solar
against 1178 MW of natural gas).
• the interconnection of SISOL to the SIN, However, what is clearly noticeable is that this source, the cheapest
• the replacement of existing generation,
• the development of new supply solutions comprising renewable
sources or from renewable fuels, with or without energy storage, 4
Supply Solution: Installation or set of installations designed for the gener­
• energy efficiency actions and reduction of technical energy losses in ation of electrical energy and power to supply the Isolated Systems (MME,
the SISOL. 2022b).

6
O. Soliano Perreira et al. Energy for Sustainable Development 80 (2024) 101445

Table 5
Average energy prices in the last auctions.
Year Type of Auction Price (R$/MWh)

Natural gas Wind PV Hydro Biomass MSW Diesel Average

Solid Biodiesel

Capacity Reserve (energy) 444.0

2022 New energy A-51,3 176.0 171.5 278.0 211.7 603.6 237.5
New energy A-45 179.3 178.2 281.9 314.9 258.2
Simplified Competitive Procedure2 1563.6 343.2 345.2 1563.6
New energy A-53 160.4 166.9 174.3 271.3 549.4 238.4
New energy A-3 136.2 123.0 219.0 175.6 165.1
New energy A-4 150.7 136.3 207.2 196.0 174.6
Sistemas Isolados
2021
Acre 1098.0
Amazonas 890.0
Pará 1100.0 1079.0
Rondônia 1252.3
Roraima 990.0
New energy A-6 188.9 99.9 84.4 205.8 187.9
2019 New energy A-4 80.0 67.5 198.1 179.9
Sistema Isolado Boa Vista - RR4 798.2 777.0 820.7 1059.2

Source: Informe Vencedores (EPE, several years).

Bold text refers to SISOL.
1
50 % reserved for hydro.
2
Reserve Energy Auction to guarantee electricity supply.
3
Solid biomass is sugar cane bagasse.
4
A biodiesel biomass plant at R$670/MWh and a biofuel solar plant at R$825/MWh.
5
Biomass, basically lye.

in the country, does not appear in the isolated systems in the two auc­ aware that this value should be dynamic since the cost of storage has a
tions held since 2019. perspective of reduction as shown by several international studies
Some exceptions can be reported. In the 2019 auction, there was a (BloombergNEF, 2023; S&P Global, 2023).
hybrid biofuel plant coupled to a solar energy system with storage –
Híbrido Forte de São Joaquim, 56 MW. This is the only one still under Consultation processes: interviews and public consultation
construction, but without incorporating the solar system with storage.
Lack of guarantees on the performance of the batteries made its imple­ A study, in which the authors were fully involved, on the Energy
mentation unfeasible, according to the entrepreneur (IESS, 2022a). The Transition in Isolated Systems (TE SISOL) was developed within the
winning company ended up choosing to build a hybrid biomass plant scope of the Brazil-Germany Technical Cooperation. It began with the
with wood chips and palm oil. incentive program for renewable sources (PROFREE), with the objective
Another case is that of the Oiapoque power plant. In that case, due to of supporting the MME, with the direct collaboration of the EPE (IESS,
delays in the completion of a hydroelectric plant, the company has 2022c). In its first stage, the study envisaged the application of a ques­
decided to install 4 MWp as a diesel saver. In the end, the plant repre­ tionnaire, applied by the authors, addressed to entrepreneurs that
sented savings of only 1.3 % (IESS, 2022b). On top of this, there is no participated in previous SISOL auctions, whose results were mentioned
room at the site to significantly increase solar power and include bat­ above. The focus of the questionnaire specifically sought to understand
teries. The company concluded that storage at that time was not the perspectives of the entrepreneurs who participated in the auctions
economically viable (IESS, 2022a). and the concessionaires that would receive the energy generated in the
A third case, in which the diesel plants that won the 2nd auction of auctioned systems for distribution. Appendix A presents the complete
isolated systems in Roraima, in the cities of Amajari and Pacaraima, questionnaire, composed of 43 questions.
changed the original project, which only provided for diesel generation, The questions were aggregated into three large blocks:
with the installation of solar systems using batteries for energy storage,
within the above-mentioned mechanism regulated by ANEEL (REN • Perceptions about the effectiveness of the changes promoted in the
1016/2022). The winning company reports a “saving of 17.5 million 2019 and 2021 SISOL Auctions.
litres of diesel, which will no longer be consumed due to the generation • Opinions about the difficulty in proposing hybrid supply solutions
of solar energy. The numbers represent that 47 thousand tons of CO2 integrating diesel generation with renewable sources in isolated
will no longer be emitted in the operation of the plants” (EPBR, 2023). systems.
From these three experiences, it is evident that an extremely prom­ • Suggestions for improvements that allow greater contracting of
ising technological alternative in serving SISOL locations is photovoltaic projects from renewable sources in future auctions to supply the
solar energy coupled with storage, provided that the right incentives are Brazilian SISOL.
put in place. Existing regulatory instruments still need to prove their
effectiveness. Some additional incentives, like what exists in the SIN, At the same time, the MME carried out a public consultation to
with the introduction of a quota, as with small hydroelectric plants, or a receive subsidies for the improvement of the Guidelines for Conducting
differentiated price, as is the case with RSU, are highly desirable to push Auctions for SISOL. The complete questionnaire is in MME (2021). There
the emerging technologies. It is evident that the eventual incentive is were several items consulted, namely:
directed to storage and not to photovoltaic energy, which does not need
any incentive. First windows were put in place by the REN 1016/2022 • Planning for service to isolated systems and new auctions.
and Decree 11,059, mentioned above, but still without any effective • Driving non-diesel solutions.
incentives. In this sense, break-even values need to be studied, being • Increasing in the contractual term for supply solutions.

7
O. Soliano Perreira et al. Energy for Sustainable Development 80 (2024) 101445

• New public policies for the energy transition. Table 6

• Encouraging energy efficiency. Main suggestion of stakeholders on carbon market and hybrid systems collected
• Seek new approaches in the economic assessment of supply on consultations.
solutions. MME GIZ/authors

Carbon Market
Both consultation processes had many questions in common. The Definition and implementation of
interviews carried out by the team in charge of the Deutsche Gesellschaft maximum emission limits for supply Establishment of an emissions curve that
für Internationale Zusammenarbeit (GIZ) study – authors of this article, solutions to be registered for technical would adjust contract terms or reference
qualification. prices.
and the responses from the MME Public Consultation (PC), as expected,
One of the interviewees is using carbon
produced similar results. In the case of the Ministry’s PC, 19 contributors Carbon Credits as additional revenue, not credits in SISOL and Renewable Energy
including private sector agents, associations, non-governmental orga­ entering on fixed or variable revenue, Certificates (RECs) in the interconnected
nizations, energy concessionaires, among others, produced 310 sug­ but within a regulated environment. system.
gestions (MME, 2022a). In the GIZ study, 12 interviews were carried out, Adoption of mathematical mechanisms
to compare energy, power with
nine with entrepreneurs and three with distribution agents. Appendix B associated energy and clean energy
present these numbers in detail. certificate.
Several questions in both consultations were related to some Consideration of the cost of CO2
bureaucratic issues such as registry and qualification of projects, terms emissions as an additional factor in
determining the winner of the bid, to
for project preparation, availability of additional data, improvements on
favour hybrid and RES projects
CCC subrogation, among others. Establishment of a regional and
regulated carbon market, reducing the
Some results of the consultation processes and comparative risk of carrying out carbon
analysis of policies to foster renewables transactions.

Main findings of the consultations Hybrid Projects (diesel + renewables with or without batteries)
The biggest impasse was the imposition
Consider the Cost of CO2 Emissions as an that the 15-year incentive could only be
Among the formulated questions whose answers were practically additional factor in determining the given to projects that were 100 %
consensual in the two consultations are: Bid Winner which would favour hybrid renewable, natural gas, or a
and renewable projects. hybridization of these two sources.
• The need for exclusive auctions for renewables. Contract specific batches of generation Hybrid projects with more than 60 %
with a purely intermittent RES renewables should have the same
• Minimum terms of 20 years for renewable or hybrid solutions.
associated with energy storage, for benefit given to 100 % renewable or
• The extension of the current contractual terms for projects that power demand up to 1 MW. natural gas: 15 years contracts.
replace the diesel source with photovoltaic energy solutions coupled Market planning, load characteristics Prices of batteries are still high. It was
with electrical energy storage. (evolution, annual hourly curves etc. recognized that without incentive
for sizing battery banks – hybrid policies, storage projects are still not
• Maintaining renewables connected to the local grids after the inter­
generation). feasible.
connection of isolated systems to the SIN, considering different forms Auction is carried out in two stages: For systems with storage, it would take
of renegotiation. Bidding phase 1 for renewable sources, 25–30 years of contractual term to make
• Greater use of the subrogation of the CCC, an existing mechanism, so and Bidding phase 2 for other sources, the project viable, 10 more than current
far too under exploited in the auctions. including hybrids. contracts.
Hybrid supply solutions, with Possibility of qualification of solar
dispatchable renewables, must have storage system as the base and fuel
Table 6 presents answers the most related to the issues discussed in contracts extended for a minimum (diesel or biodiesel) system as the
this paper: hybrid systems and GHG emissions. Questions related to the period of 10 years. backup.
carbon market were more emphasized in the public consultation as it
covered a broader scope of participants from the private sector besides
other stakeholders, such as NGOs and academia. The interviews have that could have been supportive to RES, ended up being not effective or
focused on bidders of the previous auctions and utilities directly affected of very limited impact. PROINFA was the first effective instrument to
with the results of the auction. These players still see the carbon market support renewables in the SIN. SISOL never had a differentiated tariff or
as a remote opportunity. However, both groups are totally aware of the quota to renewables. The second effective instrument to foster RES were
opportunities of hybrid systems in short terms and the barriers that they the specific reverse auctions to renewables, fours years after the model
still face to introduce an emerging technology. was adopted in the country. Solar auction occurred 11 years later.
Some issues were raised specifically on the interviews. An example Reverse auctions in SISOL were adopted 15 years later than in SIN, but
was related to the same contractual term of 15 years granted to projects no technology driven auction was adopted in SISOL, despite the higher
that use RES and natural gas. The vast majority considered it as a risk costs and emissions of the diesel. That is the challenge faced by Brazilian
factor for the implementation of renewable projects and believes that power sector.
the terms should be different. Some were quite emphatic in saying that To make the challenge easier, two complementary instruments are in
they found it unacceptable that renewables and natural gas have the place. The CCC Subrogation, completely underexplored from the
same contractual term. Another suggestion was that it should be renewable energy transition’s perspective, and the new established
compared the emissions of natural gas to those of hybrid systems and program to reduce the CCC’s resources with diesel. If the former in­
granted similar terms. strument is well coupled with the latter a pro-renewables or emissions
Furthermore, the land issue was mentioned as one of the main dif­ reduction bias can be consolidated. Sources of financing at facilitated
ficulties in finding land for solar plants in isolated systems, sometimes conditions are fundamental for capital-intensive technologies, such as
surrounded by forests. The use of the roofs could minimize the problem. variable RES coupled to storage.

Discussion
Main findings of comparative policies

From the findings presented in the previous section, it was made

Table 7 summarizes the comparative analysis of policies adopted to
clear that the energy transition in the Amazon requires not only
foster the use of RES in Brazil, as presented in Section 4.1. Some of these

8
O. Soliano Perreira et al. Energy for Sustainable Development 80 (2024) 101445

Table 7 auctions. The bias towards diesel in these two states could prevail even
Policies adopted to foster RES in the SIN and SISOL. over the distributors’ regular way of expanding their distribution net­
Ano SIN SISOL works through interconnections to the SIN.
It should be noted that the national logic of interconnecting new
1995 Establishment of Independent
Power Producers and free macro-regions, via the so-called Basic Network (Rede Básica, 230 kV or
consumers (3 MW) higher, as presented in Fig. 1), to the SIN has always gone through the
Reduction in the tariffs for the use of counterparts of power contributions from the interconnected regions. It
transmission and distribution was the case of Belém region, with the Tucuruí hydropower plant; of
systems, and free consumers for
1996 renewables
Rondônia, with the Madeira River hydropower plants; of the Altamira
1998 CCC Subrogation Region, with the Belo Monte hydropower plant, and of the Manaus re­
2002 Proinfa gion with their natural gas thermal power plants. In the case of Roraima,
2004 Reverse power auctions open to RES mentioned above as the only state not connected to the SIN, there is also
1st Specific auction to biomass and
the prospect of it becoming another power exporter. There is currently a
2007 SHP
2008 Exclusive auction to biomass forecast to be connected to the SIN by 2027 (MME/EPE, 2022).
2009 1st exclusive auction to wind There is government recognition with the two most recent standards
2012 Net-metering that hybrid systems are part of the solution, as both cite storage clearly,
2015 1st exclusive auction to solar and that a significant volume of resources needs to be allocated to
1st reverse power auctions open to
2019 RES
reduce the costs of generation at SISOL, and consequently the emissions.
2nd reverse power auctions open to Logically, there is an internal solution in the case of Brazil, arising from
2021 RES the privatization of Eletrobras, which is not a similar condition in other
Possibility of replacing part of the emerging or developing countries, in which the energy transition will
diesel with renewable in diesel
require external resources.
plans, and Program for the
Structural Reduction of Energy It is evident from the results of the consultations that stakeholders
Generation Costs in the Brazilian are keen on using hybrid solutions and they foresee opportunities that
2022 Amazon carbon market can bring. To get this Brazilian carbon market needs
urgently regulated.
On the other hand, it was also made clear by consultations that
sustainable technological options from a socioeconomic and environ­
hybrid systems still require an additional incentive for storage, whether
mental point of view, but also new regulatory arrangements and/or
in terms of price or quota, and it must be granted for a determined
adaptation of those used successfully for the widespread adoption of
transition period and subsequently reassessed, as was given to renew­
renewables in the SIN. In recent auctions, renewables proved to be
ables in the SIN, in its early days and discussed earlier.
competitive in supplying power in the quantity and price necessary to
From the composition of the two consultations, it is clear that
serve the market and contribute to low tariffs5 in the SIN.
stakeholders expect at least either exclusive auctions for renewables or
In this sense, one possible way to assist the transition is to follow
minimum terms of 20 years for renewable or hybrid solutions. Provided
what was adopted for the SIN, first with PROINFA and then with specific
that the systems are not connected to a grid, renewable resources will
auctions. Both experiences have been very successful. Of course, the
always require storage, and occasionally some back-up by fuels, either
global standard changed from the feed-in tariffs (FiT) model to specific
diesel or biodiesel, to reduce the capital costs of RES plus storage,
auctions and this model can be adopted for the SISOL. So far, the
resulting in reduced emissions. The main challenge is to find the break-
fundamental change made for SISOL was the establishment of conven­
even point for the binomial generation costs and level of emissions.
tional auctions where the only benefit given to renewable sources was
also extended to natural gas, with a 15-year contract, against 5-year
Conclusion and policy implications
contracts given to diesel power plants. This can be the focus on the
case of SISOL, to provide larger contract periods for renewables with
The initiatives, implemented for new renewable energy sources,
storage in the future auctions. These contract periods can be propor­
those with a very clear bias (PROINFA and specific auctions), worked
tional to the level of GHG emissions, allowing hybrid solar systems with
well to increase the participation of renewable energy sources in the SIN,
diesel or biofuels, which would result to zero emissions. This can be
without, however, causing any impact in the Isolated Systems in the
coupled either to premium price to reference price of the auction.
Amazon region. On the other hand, the instruments aimed at that region
Furthermore, the bias towards diesel includes several actors. The
were neutral, particularly the CCC subrogation, adjusting to the pre­
revenue from its sale, and the corresponding taxes, are important
vailing pro-diesel dynamics in the Amazon.
sources of income for the states. In the cases of the states of Amazonas
The SISOL expansion planning does not foster technological options
and Roraima, a consortium between a company that installed diesel
that use RES as an alternative to the anticipation of interconnection of
generation systems and a trader of petroleum products won the distri­
SISOL to SIN, even in the medium term, nor does it develop a method­
bution concessions. This consolidates the bias towards diesel generation,
ology to assign value to the benefits and features associated with the
even though new power is always acquired through competitive
intensification of RES in the Amazon region.
The leapfrog for the region could be the consolidation of the concept
of renewable isolated system based on renewables, particularly solar
5
The question of the intermittency of solar and wind sources is being over­ photovoltaics with batteries, (and green hydrogen in the medium term)
come with the technical and economic advances achieved with battery storage including biofuels, representing a technological leap in the direction of
technologies. Between 2010 and 2019, there was an 87 % reduction in the price an energy transformation.
of lithium-ion batteries. In any case, studies show that there is still a reasonable
The new socioeconomic and environmental contexts are demanding
distance to go to make this technological option economically viable, but the
a wide range of technological options for supply, not being restricted to
cost reduction rates, which follow the same curve shown by solar photovoltaic
technology, allow to speculate that, within the present decade, competitiveness conventional options for interconnection via large transmission lines or
economic growth could become a reality. This process will be accelerated by transport of liquefied natural gas, but, above all, targeting the renew­
the forthcoming widespread adoption of electric vehicles, and the resulting ables (e.g., solar photovoltaics + Li-Ion BESS + some diesel or biofuel),
synergies in battery technology development including the stationary use of that are already successfully operating elsewhere.
second life batteries repurposed from electric vehicles. Auctions have been proven as a successful mechanism either in SIN

9
O. Soliano Perreira et al. Energy for Sustainable Development 80 (2024) 101445

and SISOL, but to benefit renewables and reduced emissions specific sources, but technologies that enable sources that are already extremely
auctions driven towards emerging technologies are vital. However, effective from the point of view of their costs. The most obvious case is
provided that the main concern of the government is still minimizing the that of storage that enables higher penetration of photovoltaic solar
use of CCC which impacts national tariffs, it adopts a technology energy. The use of PV coupled to BESS is already considered by several
neutrality, which does not contribute to reduces the SISOL’s emissions. entrepreneurs, but still shows limitations in costs or guarantees, some­
In the past and for the SIN, it provided incentive policies, such as thing that an incentive for emerging sources such as longer terms or
establishing quotas and differentiated prices for certain technologies, differentiated prices can make popular between isolated systems.
specific auctions, but for the SISOL only a penalty of small terms of The simulation of the feasibility of hybrid solutions, using diesel,
contract for diesel. The compromise between higher use of CCC re­ solar and batteries, should show the need for longer amortization pe­
sources and higher level of emissions must be balanced with a carbon riods. Additionally, it is questionable why only 100 % renewables would
mechanism which must cover the occasional marginal cost of renewable entitle a 15-year contract, when, in fact, high percentages of renewables,
generation. with a small share of diesel, should generate similar benefit and accel­
The agent responsible for influencing a greater share of renewable erate adoption of cleaner energy generation solutions at lower costs.
sources and the eventual use of storage, encouraging emerging tech­ Thus, it seems that Brazil is in a comfortable position provided that
nologies, incorporating the environmental dimension, reducing green­ available resources from CCC coupled to those from Pró-Amazônia Legal
house gas emissions in the system of the Amazon Region is solely and are wisely combined with a carbon pricing mechanism and climate
exclusively the Ministry of Mines and Energy at the time of defining the change funds what would result in less pressure to national tariffs and
guidelines that will guide the regulatory agency in the preparation of the less GHG emissions. The experience could be replicated elsewhere with
Auction Notice. international funds created to support the mitigation of GHG emissions.
Here it is worth recovering the results of the two public consultations Finally, the lesson of a public consultation to a very sensitive issue was
formulated by the Ministry itself and by the GIZ project team. A first very meritorious and must be replicated everywhere.
obvious observation is the flagrant omission of past auctions on the
reduction of greenhouse gases and the market for carbon credits. Of Declaration of competing interest
course, a distinction was made between diesel and renewables, which in
turn were levelled with natural gas, which, despite emitting much less The authors declare that they have no known competing financial
than diesel, is still a significant emitter. interests or personal relationships that could have appeared to influence
So, an important issue should be considered into the next auctions: the work reported in this paper.
the attribute of reduction of GHG emissions, establishing a sketch of a
carbon market, by linking the terms of the concession contracts to the
level of CO2 emissions, allowing to hybrid systems, and circumventing Acknowledgements
the past situation of giving the same benefits of contractual terms for
natural gas and renewable sources. Empresa de Pesquisa Energética – EPE (National Agency for Energy
As mentioned in the consultations to the players, alternative prop­ Research) for its suggestions and final review.
ositions were towards exclusive auctions for renewables, a quota for
renewables, as exists in some SIN auctions, or even a first auction Funding
dedicated to renewables only, leaving for a second round to complement
the eventual power shortages. This work was supported by the Brazil-Germany Technical Cooper­
Another omission from past auctions is the failure to consider some ation – GIZ [Projeto Sistemas de Energia do Futuro III – 19.2253.3-
type of incentive for emerging technologies, not specifically energy 001.00].

Appendix A. Questionnaire to key stakeholders

1. Perceptions about the effectiveness of the changes promoted in the 2019 and 2021 Isolated Systems Auctions
1.1. Auction 2019 × 2021/Influence of reference prices.
1.1.1. What factors do you think contributed to the 2019 and 2021 auctions having a greater share of renewables?
1.1.2. Did you notice any differences between 2019 and 2021?
1.1.3. Do you think that the reference price equation had an influence on this result?
1.1.4. What modifications should be made to the formulation of reference prices to contribute to greater contracting of renewables?
1.2. Delay in implementing projects
1.2.1. In your opinion, should the fine for delay in implementing renewable projects be changed to bring greater equality between sources?
Currently, delays in the implementation of projects are quantified solely by the fixed portion of the energy cost and the CAPEX of
projects that use RES are significantly higher than those of projects powered by fossil fuel.
1.2.2. Do you believe that changes based on fixed and variable costs could be an option?
2. Opinions on the difficulty in proposing hybrid supply solutions integrating diesel generation with renewable sources in isolated
systems.
2.1. Requirements/Measures
2.1.1. What requirements/conditions contained in the EPE Instructions, in the Directive Ordinances and/or in the Notice do you consider
having hindered the competitiveness of renewable projects?
2.1.2. What measures could contribute to enabling supply solutions with storage systems?
2.1.3. In your opinion, in the case of hybrid supply solutions with renewable sources + fossil sources, from what percentage of renewable
sources could the supply solution benefit from the criteria defined for renewables?
2.2. Deadlines

10
O. Soliano Perreira et al. Energy for Sustainable Development 80 (2024) 101445

2.2.1. What contractual period do you consider appropriate to make the projects viable? According to ANEEL, very long terms, exceeding 15
years, keep the cost of energy at very high levels. For predominantly renewable systems, what project deadline do you consider
appropriate to make the projects viable?
2.2.2. In your opinion, does a RES supply contract lasting more than 15 years tend to set the kWh price at a very high level?
2.2.3. Would the inclusion of a contractual clause providing for a review of renewable energy prices after the 15th year of the supply contract
be a solution?
2.2.4. Should the contractual term be independent of the interconnection term?
2.2.5. Could predominantly renewable solutions be used after interconnection to increase system reliability? Under what conditions?
2.2.6. Is the 15-year contractual supply period granted to projects that use natural gas a risk factor for the implementation of renewable
projects? If so, how distinct should these periods be?
2.3. Proof of previous experience
2.3.1. Do you consider the requirement for proof of prior experience with technology for auction winners under the conditions established in
contracts to be a restrictive factor for hybrid supply solutions?
2.3.2. If so, do you suggest any type of less restrictive requirement?
2.3.3. Alternatively, should it be allowed to hire entrepreneurs without any prior experience installing new technologies?
2.4. Why hybrid projects that use PV + storage with non-variable sources (biomass, diesel oil and natural gas) were not viable in the 2021 auction.
[Question directed to those who proposed solutions with natural and biodiesel + hybrids]
2.5. Does determining the reference consumption of locations represent a disadvantage for predominantly renewable + storage + diesel systems?
Why? [context of the question: as it is necessary to install power based on reference consumption, if the actual consumption is systematically
lower than expected, the entrepreneur whose CAPEX is high has a disadvantage in relation to enterprises that use diesel, whose CAPEX is
lower and fuel expenses can be adjusted to supply requirements]
2.6. In your opinion, what would be the pricing methodology to be adopted for hybrid projects (fossil source + renewable source + storage) and
purely renewable projects? Would you recommend a single pricing (R$/MWh), a fixed and variable component, or another methodology?
2.7. Do you have any further suggestions on aspects that could be improved to minimize the difficulties in integrating diesel generation with
renewable sources in isolated systems?
3. Suggestions for improvements that enable greater contracting of projects from renewable sources in future auctions to supply isolated
systems.
3.1. Deadlines for renewable energy supply solutions
3.1.1. How long before the closing date for registration should the directive ordinance and notice be published in their final version to
enable the development of renewable energy supply solutions?
3.1.2. Do you consider that renewable energy supply solutions require a longer period to prepare projects than diesel supply solutions?
3.1.3. What aspects are relevant to this distinction in deadlines?
3.2. In addition to knowing the auction dates of 2022/23/24, what other factors would improve predictability for the RES entrepreneur?
3.3. Should there be exclusive auctions for RES and/or hybrid supply solutions with predominantly renewable sources?
3.4. Would holding specific auctions for the energy product in SISOL be an attractive option for renewable energy supply solutions?
3.5. In the case of non-specific auctions, should there be a minimum quota of renewables? What percentage?
3.6. 15. CCC Surrogation
3.6.1. Have you considered subrogation to facilitate a RES and/or storage project? If not, why? What’s missing from surrogation?
3.6.1.1. Would implementing some proofs of concept be a solution?
3.6.1.2. Would propose Strategic R&D Projects in which their resources are used to make RES projects viable become the subrogation
a more friendly mechanism?
3.6.1.3. Would modify the conditions of subrogation to differentiate the conditions for renewables (term, environmental benefits
such as leverage, etc.) be a solution?
3.7. Contractual indexation:
3.7.1. Which contractual indexers should be used to maintain values relating to variable costs, whether associated with fuel consumption,
fixed costs and other contracted prices?
3.7.2. Considering that each source and component of the reference price is updated by different indices throughout the contract, how does
this affect the relative competitiveness of renewables?
3.8. Carbon Credit
3.8.1. Do you know and/or have used carbon credit mechanisms?
3.8.2. Do you have any suggestions for a market mechanism, such as carbon credits, in a simultaneous auction where the price of carbon
credits can make up the revenue for the renewable solution?
3.8.3. If yes, how would it be structured (receivables) and the auction design?
3.9. Renewable Energy Certificates (RECs)
3.9.1. Additionally, do you know and/or have used Renewable Energy Certificates (RECs)?
3.9.2. Do you believe that the current values of RECs remunerate the associated transaction costs?
3.10. When contracting for market expansion of an isolated system with existing PIE and in operation, what should be the auction guidelines to
ensure competition considering the operation of the system and the existing contract?
3.11. What should be the operating rules for contracting renewable sources in a system where there is already an IPP with a fossil source? Who
should operate this system? What are the main difficulties for the operation?
3.12. Given all the issues discussed, do you have any further suggestions on aspects that could be improved in the Guidelines, Instructions, Notice
and Contracts for bidding on a supply solution to allow for greater expansion from renewable sources?

11
O. Soliano Perreira et al. Energy for Sustainable Development 80 (2024) 101445

Appendix B. List of agents interviewed or contributors to the public consultation

Perfil GIZ: bidders and distribution companies MME Contributors: private sector, utilities, NGOs, Associations
interviewed

Private Sector and Bidders A, B, C, D, E, F, G, H, I Guascor, Unicoba, TECNOGERA Transformação e Geração de Energia S/A, Amazonas Power, Acumuladores
Bidders Moura S.A., Eneva, YOU ON Energia S.A.,
Brasil Bio Fuels (BBF)
Distribution Utilities D1, D2, D3 Amazonas Energia,
Companies Roraima Energia
NGO’s IDEC, Fórum de Energias Renováveis,
Rede Energia e Comunidades,
Associations Abrace, Absolar, APINE
Research Group GESEL,
Fórum Permanente de Energia (UFAM)
Individual Kennedy Alves Vieira
contribution
Sources: MME, 2022b and IESS, 2022a

References EPE. (2021c). Estudo para Identificação de Modelos Técnicos e Econômicos de

Integração Renovável em Sistemas Isolados. https://www.epe.gov.br/pt/publicaco
es-dados-abertos/publicacoes/estudo-para-identificacao-de-modelos-tecnicos-e-
ABSOLAR (Associação Brasileira de Energia Solar Fotovoltaica). (2023). Energia Solar
economicos-de-integracao-renovavel-em-sistemas-isolados [accessed 16 May 2023].
Fotovoltaica no Brasil – Infográfico ABSOLAR. https://www.absolar.org.br/merca
EPE. (2022a). Sistemas Isolados – Planejamento do Atendimento aos Sistemas Isolados
do/infografico/. (Accessed 3 April 2023).
Horizonte 2023–2027 Ciclo 2022. EPE-DEE-NT-102/2022-r0. Empresa de Pesquisa
ANEEL. (2004). Resolução Normativa n◦ 77, de 18 de agosto de 2004. Available in
Energética (EPE). Rio de Janeiro, 06 de dezembro de 2022.
http://www2.aneel.gov.br/cedoc/ren2004077.pdf. (Accessed 16 May 2023).
EPE. (2022b). Balanço Energético Nacional 2022: Ano base 2021. Empresa de Pesquisa
ANEEL. (2012). Resolução Normativa n◦ 482, de 17 de abril de 2012. https://www2.
Energética (Brasil) (p. 2022). Rio de Janeiro: EPE.
aneel.gov.br/cedoc/ren2012482.pdf [accessed 16 May 2023].
EPE. several years. Informe Vencedores. https://www.epe.gov.br/pt/leiloes-de-energia/
ANEEL. (2022). Resolução Normativa ANEEL n◦ 1,016 de 19/04/2022. Diário Oficial da
leiloes [accessed 20 April 2023].
União (DOU). Brasília, 25 de abril de 2022. https://www.normasbrasil.com.br/nor
Grottera, C., Naspolini, G. F., La Rovere, E. L., Gonçalves, D. N. S., Nogueira, T. F.,
ma/resolucao-normativa-1016-2022_430709.html. (Accessed 10 April 2023).
Hebeda, O., … Lefèvre, J. (2022). Energy policy implications of carbon pricing
ANEEL. (2024). Subsidiômetro. Brasília. https://portalrelatorios.aneel.gov.br/luznat
scenarios for the Brazilian NDC implementation. Energy Policy, 160, Article 112664.
arifa/subsidiometro (accessed 20 January 2024).
IESS. (2022a). Produto 02 – Questionário Elaborado. Ideal Estudos e Soluções Solares (IESS).
BloombergNEF. (2023). Top 10 Energy Storage Trends in 2023. https://about.bnef.co
Internal Team Document, unpublished results.
m/blog/top-10-energy-storage-trends-in-2023/ [accessed 1st May 2023].
IESS. (2022b). Relatório de Visita Técnica. Cobija, Amazonas, Fernando de Noronha e
Brasil. (1995). Lei n◦ 9,074, de 7 de julho de 1995. http://www.planalto.gov.br/
Oiaipoque. Ideal Estudos e Soluções Solares (IESS): unpublished results.
ccivil_03/leis/l9074cons.htm [accessed 16 May 2023].
IESS. (2022c). P1 - Plano de Trabalho – Projeto: Sistemas De Energia Do Futuro III
Brasil, 1996. Lei n◦ 9,427, de 26 de dezembro de 1996, https://www.planalto.gov.br/
(19.2253.3-001.00). Ideal Estudos e Soluções Solares (IESS): unpublished results.
ccivil_03/leis/l9427compilada.htm. [accessed 16 May 2023].
IESS. (2022d). P5 – Relatório Resumo – Projeto: Sistemas De Energia Do Futuro III
Brasil, 1998. Lei n◦ 9,648, de 27 de maio de 1998, https://www.planalto.gov.br/ccivil_
(19.2253.3-001.00). Ideal Estudos e Soluções Solares (IESS): unpublished results.
03/leis/L9648cons.htm. [accessed 16 May 2023].
Lampis, A., Martín, M. M. I., Zabaloy, M. F., Soares, R. S., Guzowski, C., Mandai, S. S., …
Brasil. (2002). Lei n◦ 10,432, de 24 de abril de 2002. https://www.planalto.gov.br/ccivil
Bermann, C. (2022). Energy transition or energy diversification? Critical thoughts
_03/leis/2002/l10432.htm#:~:text=Disp%C3%B5e%20sobre%20a%20extin%C3%
from Argentina and Brazil. Energy Policy, 171, Article 113246.
A7%C3%A3o%20da,Nacional%2C%20e%20d%C3%A1%20outras%20provid%C3%
Leduchowicz-Municio, A., López-Gozález, A., Domenech, B., Ferrer-Martí, L.,
AAncias [accessed 16 May 2023].
Udaeta, M. E. M., & Gimenes, A. L. V. (2022). Last-mile rural electrification: Lessons
Brasil. (2004). Lei n◦ 10,848, de 15 de março de 2004. https://www.planalto.gov.br/cci
learned from universalization programs in Brazil and Venezuela. Energy Policy, 167,
vil_03/_ato2004-2006/2004/lei/l10.848.htm [accessed 16 May 2023].
Article 113080.
Brasil. (2021b). Lei n◦ 14,182, de 12 de julho de 2021. https://www.planalto.gov.br/cciv
MME, 2021. Nota técnica n◦ 149/2021/DPE/SPE. Ministério de Minas e Energia.
il_03/_ato2019-2022/2021/Lei/L14182.htm [accessed 16 May 2023].
Brasília, 2021. https://antigo.mme.gov.br/c/document_library/get_file?
Brasil, 2022. Decreto N◦ 11,059, de 3 de maio de 2022, https://www.planalto.gov.br/
uuid=0453f3e2-2a54-fa3c-4b52-2ab23442f258&groupId=36189.
ccivil_03/_Ato2019-2022/2022/Decreto/D11059.htm#:~:
MME, 2022a. Nota técnica n◦ 115/2022/DPE/SPE. Ministério de Minas e Energia.
text=D11059&text=Regulamenta%20o%20Programa%20de%20Redu%C3%A7%
Brasília, 2022. https://antigo.mme.gov.br/c/document_library/get_file?
C3%A3o,Gestor%20do%20Pr%C3%B3%2DAmaz%C3%B4nia%20Legal. [accessed
uuid=f1c26f49-19d3-f5d9-7248-d23ec50e7c6f&groupId=36189.
10 April 2023].
MME. (2022b). Portaria normativa n◦ 59/GM/MME, de 26 de dezembro de 2022.
CCEE. (2019). 1◦ Leilão do Sistema Isolado. Relatório de Resultados do Leilão. Available
Ministério de Minas e Energia. Brasília, 2022. https://www.gov.br/mme/pt-br/a
in https://www.ccee.org.br/web/guest/mercado/leilao-mercado. (Accessed 16 May
cesso-a-informacao/legislacao/portarias/2022/portaria-normativa-n-59-gm-mme
2023).
-2022.pdf.
CCEE. (2021). 2◦ Leilão do Sistema Isolado. Relatório de Resultados do Leilão https://
MME/EPE. (2022). Plano Decenal de Expansão de Energia 2031. Brasil, Ministério de Minas
www.ccee.org.br/web/guest/mercado/leilao-mercado. (Accessed 16 May 2023).
e Energia, Empresa de Pesquisa Energética. Brasília: MME/EPE.
CCEE. (2022). Premissas Orçamentárias Contas Setoriais 2023. https://www.ccee.org.
ONS. (2022). Plano Anual da Operação Energética dos Sistemas Isolados para 2023 – PEN
br/documents/80415/919412/2022.10.14%20-%20Proposta%20Or%C3%A7ament
SISOL 2023. RT-ONS DPL 0528/2022. Operador Nacional do Sistema Elétrico (ONS).
%C3%A1ria%20CS%202023.pdf/30871d13-48de-19ff-7a43-e427da20fa70
Rio de Janeiro, outubro 2022.
[accessed 16 May 2023].
ONS. (2023a). Mapa dinâmico do SIN. https://www.ons.org.br/paginas/sobre-o-sin/ma
da Ponte, G. P., Calili, R. F., & Souza, R. C. (2021). Energy generation in Brazilian
pas [accessed 1st May 2023].
isolated systems: Challenges and proposals for increasing the share of renewables
ONS. (2023b). O Sistema em números. https://www.ons.org.br/paginas/sobre-o-sin
based on a multicriteria analysis. Energy for Sustainable Development, 61, 74–88.
/o-sistema-em-numeros [accessed 11 April 2023].
EPBR. (2023). Oncorp inicia operação de usinas híbridas no sistema isolado. https://epbr
Rüther, R., Montenegro, A. A., Beyer, H. G., Schmid, A. L., & Oliveira, S. H. F. (2003).
.com.br/oncorp-inicia-operacao-de-usinas-hibridas-no-sistema-isolado/ [accessed 10
Cutting on Diesel, Boosting PV: The Potential of Hybrid Diesel/PV Systems in Existing
April 2023].
Minigrids in the Brazilian Amazon. 3rd World Conference on Photovoltaic Energy
EPE. (2019). Avaliação dos Benefícios Econômicos da Antecipação da Interligação de
Conversion (30th IEEE Photovoltaic Specialists Conference), Osaka-Japan (pp.
Sistemas Isolados no Pará. No. EPE-DEE-NT-100/2019-r0. Empresa de Pesquisa
1753–1756). https://ieeexplore.ieee.org/document/1305129.
Energética (EPE). Rio de Janeiro, 17 de dezembro de 2019.
S&P Global. (2023). 10 Cleantech Trends in 2023. Technologies to reduce emissions and
EPE. (2020). Avaliação dos Benefícios Econômicos da Antecipação da Interligação de
confront climate change. S&P Global Inc., 2023. https://www.spglobal.com/co
Sistemas Isolados em Rondônia. No. EPE-DEE-NT-012/2020-r0. Empresa de Pesquisa
mmodityinsights/PlattsContent/_assets/_files/en/specialreports/energy-transition
Energética (EPE). Rio de Janeiro, 14 de fevereiro de 2020.
/10-cleantech-trends-in-2023.html. (Accessed 16 May 2023).
EPE. (2021a). Avaliação dos Benefícios Econômicos da Antecipação da Interligação de
SEEG. (2024). Emissões Totais. https://plataforma.seeg.eco.br/?highligh
Sistemas Isolados do Acre. No. EPE-DEE-NT-078/2021. Empresa de Pesquisa Energética
t=br-net-emissions-by-sector&_gl=1*cin6nz*_ga*MTgyNTIxNzgwLjE3M
(EPE). Rio de Janeiro, 16 de julho de 2021.
EPE. (2021b). Avaliação dos Benefícios Econômicos da Antecipação da Interligação de
Sistemas Isolados do Amazonas. No. EPE-DEE-NT-001/2021-r0. Empresa de Pesquisa
Energética (EPE). Rio de Janeiro, 07 de janeiro de 2021.

12
O. Soliano Perreira et al. Energy for Sustainable Development 80 (2024) 101445

DU5NDU5ODM.*_ga_XZWSWEJDWQ*MTcwNTk0NTk4My4xLjAuMTc Werner, D., & Lazaro, L. L. B. (2023). The policy dimension of energy transition: The
wNTk0NTk4My4wLjAuMA [accessed 20 January 2024]. Brazilian case in promoting renewable energies (2000− 2022). Energy Policy, 175,
Tolmasquim, M. T., Correia, T. de B., Porto, N. A., & Kruger, W. (2021). Electricity Article 113480.
market design and renewable energy auctions: The case of Brazil. Energy Policy, 158,
Article 112558.

13