Law 1715, regulating the integration and promotion of non-conventional renewable energy to the national energy system
The Law aims to promote the development and use of non-conventional energy sources, mainly renewable energy sources, in the national energy system, by integrating them into the electricity market and in other energy uses. The Law seeks to promote efficient energy management, which comprises both energy efficiency and demand response.
The Law establishes the legal framework and mechanisms to promote the use of non-conventional energy sources, and to foster investment, research and development of clean energy technologies. It seeks to set lines of action to comply with commitments made with regard to renewable energy, efficient energy management and GHG reduction, such as those acquired by approving the Statute of the International Renewable Energy Agency (IRENA).
The Law allows the release of surplus energy into the network for all self-generators. Surplus energy of small self-generators that use FNCER is recognised as energy credits, which can be negotiated according to regulations issued by the Energy and Gas Regulatory Commission. The Law introduces a new classification for self-generators: small and large scale, but only in reference to the form of energy delivery that is classified as small scale by the Mining and Energy Planning Unit.
This Law also signals spot energy prices to domestic demand, guaranteeing the participation of end-users in the electricity market, as they have the opportunity to make decisions according to the consumer price signal observed, particularly during peak hours.
Distributed generation is also an important modification of the electricity sector. The new Law allows a generator close to consumption centres and connected to a Local Distribution System to deliver energy directly to consumers.
Incentives for FNCER include those related to: (i) tax, through deductions on the investment income statement related to these purposes; (ii) tariffs, through the exemption from payment of import duties on machinery and equipment for this type of generation; and (iii) accounting, where an accelerated depreciation on assets is permitted.
The Law provides for the establishment of a Non-Conventional Energy and Efficient Energy Management Fund (FENOGE), which may finance all or part of the programmes and projects for the residential sector, at levels 1, 2 and 3, as long as they involve small scale, self-generation solutions and promote energy efficiency and good practice.
UPME and CREG are responsible for issuing regulations applicable to FNCER, establishing new self-generation schemes, and setting price signals. The Law provides the government 12 months to issue such regulations.
