Key Considerations for Distributed Generation
On 21 May 2025, a range of changes to Brazil’s electricity sector were announced through Provisional Measure No. 1.300/2025 (MP 1.300 — a decree with the force of law, pending congressional approval). The measure brings far-reaching changes, addressing chiefly tariffs, subsidies embedded in electricity bills and the rules for opening the market to low-voltage consumers. But which points matter most to the distributed generation (DG) market? 3D Watt has prepared a summary so that you, as an installer or a player in the DG market, can get to know the main considerations for your business.
The Two-Part (Binomial) Tariff
Today, Group B consumers (low voltage — residential, rural and low-voltage commercial customers) pay a single tariff; that is, they pay only for what they consume in kWh. MP 1.300 requires that, by 1 July 2026, a new tariff structure be introduced that separates consumption (kWh) from demand (kW) — known as the two-part, or binomial, tariff.
Why does this matter?
This is a key consideration for distributed generation, as it has direct impacts such as changes to the way credits are offset. At present, credit offsetting is based on the energy (kWh) exported to the grid; under the two-part tariff, a significant part of the bill (the demand component) would no longer be offset as it is today. In practice, this also means that surplus credits may come to be offset on the basis of time-of-use signals or by source attribute.
Opening the Free Market to Low Voltage
The text provides that, from 1 August 2026, low-voltage businesses (Group B3 — small and medium-sized low-voltage commercial consumers) will be able to choose their energy supplier. On 1 December 2027, this opening will extend to residential consumers (Group B1 — low-voltage residential consumers).
Why does this matter?
The option for low-voltage consumers to buy energy directly from retailers, rather than investing in a PV system or an energy subscription contract, will increase competition. Installers will need to highlight the advantages of on-site self-generation and improve the precision and efficiency of their projects.
Although tariffs are generally expected to rise, business models based on remote self-consumption and shared generation will need to keep a close eye on their competitiveness, given that some consumers currently on lease contracts, consortia and cooperatives may migrate to the free market (ACL).
Changes to CDE Funding and the End of Subsidies
At present, the Energy Development Account (CDE — Conta de Desenvolvimento Energético), an important component of energy tariffs, is paid only by consumers in the regulated market (ACR). MP 1.300 provides for the CDE to be shared among all consumers, including free-market consumers.
The Provisional Measure also ends the discounts on transmission and distribution network tariffs (TUST/TUSD) for free-market energy purchase contracts from incentivised sources such as solar, wind, biomass and small hydro plants.
Why does this matter?
This matters because, although it has no direct effect on distributed generation, the change may bring indirect benefits by making the free market (ACL) less attractive, given that many projects modelled for the free energy market and for serving commercial and industrial consumers rely on this benefit to be viable. That may allow installers and project developers in the distributed generation market to offer more stable, competitive energy solutions against an ACL that becomes more exposed to price volatility and network usage costs.
Conclusion: The “Glass Half Full”
Although Provisional Measure 1.300/25 marks a significant regulatory turning point in the electricity sector, with new challenges for distributed generation, we believe that the changes identified so far preserve the relevance of DG — reinforcing the value of on-site self-consumption solutions and their role as a strategic alternative for consumers seeking greater predictability.
For installers and project developers, it will be a chance to take a leading role as energy transition specialists, offering tailored solutions in a market that is becoming more open, competitive and dynamic.
