Programme of Incentives for Alternative Electricity Sources (PROINFA)

Brazil: Programme of Incentives for Alternative Electricity Sources (PROINFA) Programa de Incentivo a Fontes Alternativas de Energia Elétrica- Law 10438

The first stage will promote the use of renewable technologies (specifically wind, biomas and small hydro) through incentives and subsidies. Once the first phase objectives have been achieved, in the second phase, the program aims to increase renewables’ share of annual energy consumption to 10%. Also in this phase, participating plants will be required to issue Renewable Energy Certificates annually in proportion to the amount of clean energy they produce.

Date Implemented: 2002

Status: In Force; Mandatory

Funding Information: The first phase subsidies/incentives will be funded from the Energy Development Account. Consumers pay into this account through an increase on energy bills (from which low-income sectors are exempt). Also the Banco Nacional de Desenvolvimento Econômico e Social (BNDES, the Brazilian National Development Bank) has special financing available for these renewable projects as well (up to 70% of capital costs (excluding site acquisition and imported goods and services) at the basic national interest rates plus 2% of basic spread and up to 1.5% of risk spread. No interest charged during construction )

Target: PROINFA will introduce 3,300MW of renewable energy (wind, biomass cogeneration and micro-hydropower ) by 2007. Once this target has been met, stage II will aim to increase the share of energy produced by renewable sources to 10% of total annual energy consumption within 20 years.

Milestones: By early 2005 the first phase was finshed and 3,300 MW were completed (1,266 MW Solar, 655 MW Biomass, 1,379 Wind)

References: IEA,