Electric sector modernization in Brazil: Milestones, challenges, and prospects

Since Brazil's first specific distributed generation (DG) resolution (Regulatory Resolution No. 428/2012), the installed capacity has grown extensively, reaching nearly 25 GWp in Nov/2023. As long as DG is smartly deployed, it provides several benefits to the electrical grid and society, such as energy loss reduction, investment deferral, mitigation of environmental impacts, job creation, and economic development. However, it also implies drawbacks such as tariff raises, which can be significantly harmful in the long term. Therefore, aiming to ensure balanced and fair regulatory frameworks for all market agents, Brazil is undergoing a transition process in which the incentives for deploying DG are moderately reduced. This transition process requires critical discussions concerning the effectiveness of the implemented changes, the tendencies of the sector, and how to improve future regulation. In this context, this paper provides an in-depth review of regulatory aspects associated with DG and the modernization of the electric sector, including historical milestones (e.g., normative resolutions, public consultations, and laws), challenges, regulatory models, market liberalization issues, uptake of other distributed energy resources, and prospects. Moreover, although Brazil is the focus of the study, the status of other countries is also discussed for enhanced contextualization. Hence, the paper might be useful for researchers, government institutions, and policymakers. •All-encompassing review of electric sector modernization in Brazil.•The paper addresses both historic milestones and future challenges/prospects.•An important research gap is filled by discussing a range of topics.•Although Brazil is making progress in its regulatory structure, barriers persist.•Emerging regulatory models can assist decision-makers.