Exploring the effect of subsidies on small-scale renewable energy solutions in the Brazilian Amazon

Abstract

The Brazilian government aims at universal electricity access. The national rural electrification initiative has provided electricity services to more than 14 million people since 2003, mainly through grid extension. However, the initiative has not been able to reach remote areas in the Amazon, thus requiring a review of conditions for small scale off-grid power generation projects. As a result, new rules established under the national rural electrification program address the design and implementation of off-grid power generation projects with an installed capacity up to 100 kW. The objective of this paper is to explore the effects of the new set of rules on the levelized cost of electricity for different power generation solutions in the Amazon. Our study shows that the new rules may be beneficial to isolated communities, as they reduce the levelized cost of electricity, favor renewable energy technologies and may contribute to reduce CO2 emissions. In addition, the new rules may help engage new actors to provide rural electrification of the Amazon region. To fully take advantage of the current scheme, action at local level is required to define the most appropriate model for small-scale power generation projects and establish synergies between concessionaires and local energy providers.