Brazil has reached 37 GW of installed capacity in distributed generation (DG). The Brazilian Association of Distributed Generation (ABGD) projects a 20% growth in installed DG capacity in 2025, which represents more than BRL 25 billion in private investments and the generation of more than 100 thousand new jobs.

Most of the installed DG capacity is concentrated in residences (18.18 GW), followed by commercial establishments (10.63 GW), rural facilities (5.09 GW), industries (2.67 GW) and public institutions (0.41 GW). In the state ranking, São Paulo leads with 5.33 GW, followed by Minas Gerais (4.63 GW), Paraná (3.30 GW), Rio Grande do Sul (3.29 GW) and Mato Grosso (2.39 GW).

The growth of DG, however, has been accompanied by debates about its integration into the electrical system. There are allegations about the impact on the operation of the National Interconnected System (SIN), especially in relation to curtailment – generation cuts due to limitations in the transmission infrastructure.

The ABGD emphasizes that DG operates in a decentralized manner and aligned with consumer demand, not depending on transmission networks to deliver energy.

“DG is the only form of generation that is born tied to the real demand of the end consumer, helping to mitigate problems in the electrical system. The real reason for generation cuts in Brazil is the lack of planning and the structural limitations of the transmission networks, problems that have no relation to distributed generation,” said ABGD President Carlos Evangelista. He emphasized that attributing curtailment costs to DG masks strategic challenges faced by centralized generation. “DG does not depend on the transmission network to transport the energy it produces. On the contrary, one of the main virtues of DG is precisely that it generates electricity close to consumption, reducing the need for investments in transmission infrastructure and relieving the burden on the electrical system. DG also improves grid efficiency, reducing losses and reinforcing the quality of supply,” Evangelista added.

ONS advocates greater control over the dispatch of distributed generation

The ONS's Medium-Term National Grid Operation Plan (PAR/PEL) indicates that, by 2029, DG capacity should reach around 50 GW, becoming the second largest source of electricity generation in the country, behind only hydroelectric power.

Considering micro and mini distributed generation and Type III plants — commonly installed close to the load, connected to the distribution grid and totaling 19.8 GW — there is a total of 53 GW, which represents 22% of the installed capacity in Brazil that is not supervised in real time and cannot be controlled by the ONS.

The distribution network may start to inject energy into the transmission network in some areas, in a larger-scale “flow reversal.” “Minas Gerais, Rio Grande do Sul, Mato Grosso and Piauí stand out as those that presented the largest number of substations capable of operating with the flow of active power in the direction of the distribution networks to the transmission system,” states PAR/PEL.

For this reason, ONS advocates that distribution system operators, that is, energy distribution concessionaires, assume a strategic role with greater control over these distributed energy resources and greater integration with the operation of the transmission network. The operator also reinforces the need to increase investments in dynamic voltage control equipment, such as synchronous compensators.

According to ONS, with the expected growth of DG in the coming years, by 2029 it may be necessary to cut up to 40 GW of centralized solar and wind generation during the times of day when the systems are generating. The ONS estimates that MMGD will generate around 18.35 GW in 2024, considering the midday period, while the forecast for this generation in 2029 is approximately 37 GW.

In view of this scenario, large generators have suggested that distributed generation also share in the generation cuts. New DG projects have been receiving recommendations from concessionaires to inject energy into the grid at night. This could create opportunities for the implementation of batteries, but the high tax burden and the lack of clarity regarding the remuneration for services rendered keep the technology expensive.