Distributed vs. centralized generation

Brazil recorded 4,716,423 distributed generation systems by July 20, 2026, compared to only 18,810 centralized generation plants operating in the same period, according to ABSOLAR and the ANEEL Open Data Portal. Distributed generation is energy production by the consumer themselves or nearby, like a home garden supplying the kitchen without relying on the supermarket truck. Centralized generation, on the other hand, is the large industrial farm, distant and dependent on high freight costs. This scale shift raises a practical question for investors: Does today’s return lie in the brute force of large plants or in the agility of millions of small network points?

The Decennial Energy Plan (PDE 2036) estimates R$ 3.3 trillion in investments by 2036, but the logic of where to apply this resource has changed hands. While transmission auctions still move billions to build towers in distant states, system flexibility now depends on those generating energy close to the load. In 2024, global electricity demand rose 4.0%, driven by new habits and technologies. Value shifts to the network edge, where transport cost disappears and efficiency ceases to be a technical promise to become direct balance sheet return.

Distributed Generation Dominates the Brazilian Scenario

Brazil reversed the market’s central energy logic. This is not just about clean sources; it is a structural change in scale and distribution. Here, the consumer became an active agent. Data shows asymmetry between what is in homes and what is in large plants. The traditional electrical grid was not designed for the vision that all energy originates from a distant point.

ABSOLAR records 4,716,423 distributed generation systems in national territory, updated as of July 20, 2026. For comparison, the ANEEL Open Data Portal lists "in operation" plants centralized generation as projects that have commenced commercial operation of at least one generating unit, with installed capacity defined by the sum of nominal active powers of generating units. ABSOLAR’s cutout places only 18,810 plants in this segment, a proportion of over 250 distributed generation systems per centralized plant. Energy no longer flows only from large hydroplants to cities; it is generated on the roof next door, and transmission infrastructure still adapts to this bidirectional reality.

Generation Type	Number of Units
Distributed Generation	4,716,423
Centralized Generation	18,810

This popularization directly impacts grid management. The distributor must balance flows that were once linear, and excess local generation may saturate transformers sized only for consumption. Economic value shifts to connection points locally; this is essential for real estate investors or energy planning: efficiency becomes topological, not merely thermal.

The official GD data record has its own address and rule

DG numbers are not from market research: ANEEL maintains the List of Distributed Mini and Microgeneration Projects on its Open Data Portal, updated by connected reports from distributors — connected distributor, project code, owner, source, installed power in kW, and municipality. ANEEL itself records that between September 23, 2025 and November 13, 2025, these data updates were suspended during the migration of the old system (SISGD) to the new MMGD system, which requires higher quality submissions — a detail explaining why GD historical data has a "gap" in that period and why month-to-month comparisons require caution.

On the other side of the mirror, ANEEL also publishes the Quantity of energy generation projects in operation: a record of centralized generation where installed power determines plant size for permit, regulation, and inspection purposes. It is the same metric — quantity and power in kW — but applied to an entirely different regulatory regime, with federal permits instead of simple distribution connection.

Renewable energy investments exceed R$ 300 billion

In 2026, the renewable energy sector recorded BRL 328.2 billion in new investments, according to ABSOLAR. This amount surpasses the BRL 300 billion that the sector had already projected, showing that the bet on clean sources is advancing with force.

This expansion does not limit itself to large power plants: ABSOLAR points out 4,716,423 distributed generation systems against 18,810 centralized plants. In addition, 2.2 million jobs were created and BRL 103.2 billion in taxes have already been collected, reinforcing the economic impact of the sector.

In terms of sustainability, the sector avoided 122.6 million tonnes of CO2 and already counts with 74.3 GW of installed capacity. Growth occurs under a specific regulatory framework: Law No. 14,300/2022, the legal framework for micro-generation and distributed minigeneration, which created the figure of "prosumer" and the Electric Energy Compensation System (SCEE).

Distributed generation creates millions of jobs and reduces CO₂

Distributed generation works like installing solar panels on your own roof, instead of relying on a distant power plant. According to ABSOLAR, there are already 4,716,423 installed systems, which has helped generate 2.2 million new jobs. The same scenario avoided 122.6 million tonnes of CO₂.

In contrast, centralized plants sum up to only 18,810 units, although they concentrate BRL 328.2 billion in investments and BRL 103.2 billion in collected taxes. The number of job positions created by centralized generation remains modest compared to the potential of distributed generation, reinforcing that scale does not guarantee, by itself, social impact.

Public policy supports this displacement. Law No. 14,300/2022 defines distributed minigeneration as the undertaking with installed power above 75 kW and up to 5 MW (dispatchable sources, such as biomass and biogas) or up to 3 MW (non-dispatchable sources, such as solar), connected to the distributor's grid. This 5 MW limit applies until December 31, 2045, according to the sole paragraph of Article 26 of the Law itself. Each new panel within this rule cuts carbon and still creates work — a double gain that the network absorbs little by little.

Installed renewable capacity has already exceeded 70 GW

ABSOLAR indicates that Brazil has reached 74.3 GW of installed renewable energy capacity. Installed capacity acts as the total flow of a tap: it is the maximum limit the system can deliver during peak periods. This capacity is regulated by specific standards for each scale: the Resolution Normative ANEEL No 1,000/2021 sets the rules for the public service of electricity distribution and repealed nearly 60 prior regulations — including REN 482/2012, which had instituted the original energy compensation model (net-metering) for distributed generation in Brazil, in 2012.

The decade-long plan projects R$ 3.3 trillion in investments until 2036

The Empresa de Pesquisa Energética (EPE) released the Decade Energy Plan 2036 Synthesis Report on August 10, 2026. The document estimates approximately R$ 3.3 trillion in sector investments by the end of the decade. This figure covers not only new power plants but also the modernization of the grid that distributes electricity.

One of the planned auctions scheduled for October 30, 2026, already directs R$ 8.9 billion toward new lines. 1,866 kilometers of transmission will be built across seven Brazilian states. This movement indicates that the "spinal cord" of the national grid will receive significant reinforcement to ensure system stability against consumption peaks.

Technical terms for energy planning, such as the Decade Plan, may resemble a public works map for electricity: they define where and when public and private money will be applied. By detailing these figures, EPE signals the priority of maintaining the Brazilian power system robust and ready to absorb new generation sources in the coming years.

New transmission lines require nearly R$ 9 billion

The transmission auction scheduled for October 30 will mobilize R$ 8.9 billion in direct investments in the electrical sector. The goal is to enable 1,866 kilometers of lines across seven states. These structures function as high-speed highways, allowing electricity to cross state borders and reach major urban centers with controlled technical losses.

Worldwide solar energy capacity doubled in three years, reaching 2 TW

The world took decades to install its first Terawatt (TW) of solar power capacity, a milestone reached in 2022. According to Ember, the second TW was achieved in just two years. A single TW represents the power output of hundreds of nuclear reactors operating simultaneously under direct sunlight, highlighting unprecedented acceleration in global energy infrastructure.

Solar generation has doubled over the last three years, reaching 2,000 TWh in 2024. This 29% growth marks the fastest expansion in six years. While hydroelectric and nuclear power continue to lead among clean sources, solar now supplies 6.9% of global electricity. Overall, low-carbon energy sources accounted for more than 40.9% of the world's electricity mix last year.

Electricity demand rose by 4% in 2024, driven primarily by data centers and electric vehicles. The Global Electricity Review 2025 reports that clean energy sources covered 96% of consumption growth not caused by heatwaves. The grid now demands flexibility and active consumer participation in demand management.

Global Solar Indicator	2022 Milestone	2024 Milestone
Cumulative Installed Capacity	1 TW	2 TW
Solar Generation (Annual)	1,000 TWh (approx.)	2,000 TWh
Share in Electricity Mix	4.6% (est.)	6.9%
Total Clean Energy Share	39.4% (2023)	40.9%

Low-carbon sources already account for nearly 41% of global generation

The world reached a symbolic milestone in the energy transition in 2024. Low-carbon sources guaranteed 40.9% of global electricity, totaling 12,609 TWh. The TWh (terawatt-hour) is equivalent to the consumption of one billion watts per hour — enough to light cities for months. It is as if four out of every ten lamps on the planet have already stopped depending on fossil fuels to turn on. In Brazil, this transition has a double address: historically dominant centralized hydropower generation, and distributed solar generation, which grows outside traditional planning and is therefore treated in own models by the EPE.

The planner has a dilemma: over-invest in the central grid or risk supply

The EPE formalized this problem in its own technical note: the EPE DEA-SEE 010/2020 Technical Note, which describes the Model of Market for Micro and Distributed Generation (4MD), used by the EPE itself and by ANEEL to project the growth of DG. The document is direct about the risk: if the planner projects a scenario of low distributed generation growth, and in practice a "high" scenario materializes, the result is over-investment in the centralized electricity matrix — public and private money allocated in plants and lines that the grid's edge no longer needs in the same proportion. If the bet is inverse — predicting high DG penetration and it does not confirm — the bill is system reliability compromised or supply cost more expensive.

This is, in practice, the calculation that every energy investor replicates on a smaller scale: betting too much on centralized generation is betting against the speed of DG adoption by the consumer; betting too much on distributed generation is betting against the grid's ability to absorb intermittency without the backbone of the large plants. The EPE uses the 4MD model since 2015 — also adopted by ANEEL in its regulatory impact analyses — precisely not to decide this equilibrium in the dark.

CONECÇÃO

Active consumer participation can reduce costs today

The flexibility of the power system does not depend solely on large power plants far from the consumption point. When consumers act on the demand side, adjusting usage according to the availability of clean energy, the system operates more stably. This avoids overload during peak hours and reduces the need for expensive reserves. The logic resembles a supermarket queue: if part of the customers orient themselves to times with less traffic, the general flow improves without increasing the number of counters.

The Ember, in its Global Electricity Review report, highlights this dynamic: active consumer participation in demand can reduce costs immediately. In 2024, low-carbon sources reached 40.9% of global generation, equivalent to 12,609 TWh. Wind accounted for 8.1% of the matrix in this context, while solar reached 6.9%. This diversification allows the grid to respond better to supply variations — the fine adjustment made by users at the line's end substitutes part of the corrections previously made only by central operators.

This direct participation makes the system less rigid and more accessible. Solar energy doubled its global capacity over three years, surpassing 2,000 TWh of generation, with installed capacity rising from 1 TW in 2022 to 2 TW in 2024. Consumers stop being mere receivers and become agents that influence price and stability. Cost reduction is not a future promise: it is a direct side effect of this behavioral and structural change on the electrical grid.

When it does not make sense

• Small projects attempting to mimic utility plant scale: Law no. 14,300/2022 (Brazilian Power System New Organization) limits dispatchable minigeneration to 5 MW and non-dispatchable (such as solar) generation to 3 MW connected to the distribution grid. Above this limit, the project leaves the distributed generation regime and enters the federal grant regime, with licensing requirements and capital costs that a minigeneration structure was not designed to support.
• Remote autoconsumption or shared generation above 500 kW, with a single titular holding 25% or more of the surplus: The aforementioned law specifically foresees for this case its own schedule for billing on tariff components — 60% in 2026, 75% in 2027, 90% in 2028 and the full rule from 2029 — reducing the economic advantage that made the model worthwhile initially.
• Reliance on distant transmission works to enable connection: The auction of October 30, 2026 allocates R$ 8.9 billion to build 1,866 kilometers of lines in seven states, a construction timeline that does not serve those needing energy operating now. For those facing immediate demand peaks — such as heat waves that raised consumption by 4.0% in 2024 — waiting for the queue connection of the 18,810 centralized power plants costs more than generating on its own roof.

The photon travels cheaper when it is born close to consumption

Electricity behaves like a perishable good in the logistics of transport. When a centralized plant generates electricity at a thousand kilometers distance, part of that value dissipates along the way in the form of heat: it is technical loss, a kind of "physical toll" that nature charges to lead the electron from the big dam until the office switch. In distributed generation, the photon — the particle of light that turns into energy — is born on the roof and "dies" in the neighbor's socket. This proximity eliminates part of the need for large transport infrastructures and keeps the economic value inside the property.

The numbers of ABSOLAR, updated on July 20, 2026, show that this logic advanced in Brazil. There are already 4,716,423 distributed generation systems installed, against only 18,810 centralized generation plants. The difference in scale reveals that the edge of the grid — where consumers are — has become a new center of gravity of the power sector. By generating its own energy, the real estate investor or asset manager stops being merely a bill payer to become an active agent of the system.

Efficiency lies in journey reduction

In centralized generation, investment focuses on brute force and distance. The transmission auction scheduled for October 30, 2026, according to the EPE (Electric Energy Regulatory Agency), expects R$ 8.9 billion to build 1,866 kilometers of lines across seven states. This is a monumental and necessary work, but it increases the final bill. Conversely, own generation utilizes existing infrastructure — it is like cultivating a garden in one's yard rather than relying on a fleet of trucks to bring produce from another state. The opportunity cost here is tariff independence.

Distributed generation retains value at the network's edge

The accumulation of capital in the solar sector is not subtle. As of July 2026, the segment moved R$ 328.2 billion in new investments and generated 2.2 million jobs. This amount was not restricted to large concessionaires; it spread across the roofs of logistics warehouses and condominiums. Tax collection under this model summed to R$ 103.2 billion, showing that decentralization is also a fiscal engine. For real estate decision-makers, a property with own energy is not just "sustainable": it is an asset with more predictable fixed costs.

Indicator (data through July 20, 2026)	Distributed Generation	Centralized Generation
Number of Systems	4,716,423	18,810
Total Installed Capacity	74.3 GW
CO2 Avoided	122.6 million tons

09 lines, 09 lines, 09 lines

Big centralized generation projects require another pocket

Despite growth at the edge, centralized generation remains the skeleton keeping the country standing—its funding follows another scale. BNDES, through the Finem Energia line, participates in generation projects starting at R$ 40 million, with up to 80% of the total value covered (capped at 100% of financeable items) and a rate from 1.1% per annum for solar energy, above TLP. This capital level is something no rooftop residential or commercial minigeneration needs—and yet, nothing can access via its size: the R$ 40 million floor practically separates those financed by BNDES from those paying upfront or through standard bank financing.

This scale difference explains why centralization still handles the magnitude distributed power alone cannot reach, especially to feed base-load industries. The investor's challenge isn't choosing a side, but recognizing that GD and GC serve two pockets and two distinct maturity timelines—and that centralized generation won't vanish, having learned to share protagonism with millions of small plants.

New demands require flexibility on the consumption side

Electricity no longer serves just lights and motors. Ember points out new vectors like data centers and electric vehicles (EVs) have already added 0.7% to global annual demand growth—double the impact recorded over the past five years. In 2024, global demand rose 4.0%, driven also by heatwaves requiring constant cooling. Generating power where these devices are plugged reduces pressure on major transmission lines.

Flexibility now comes from the "demand-side," the consumption side. Instead of building only bigger power plants, the system becomes cheaper when consumers actively participate, adjusting their usage or injecting battery surplus. According to Ember, solar generation has doubled in the last three years, exceeding 2,000 TWh globally. In 2024, low-carbon sources accounted for 40.9% of world electricity. Who invests in edge technology is technically riding the most efficient wave in recent energy history.

A proposal in Congress seeks to rebalance the game in favor of centralized generation

The debate between GD and GC also runs in Congress. The PL 3.716/2026 (Bill 3.716/2026), presented on July 15, 2026, proposes to repeal a provision of Lei nº 10.848/2004 (Law 10,848/2004) — the law that organizes the commercial model of the Brazilian electric sector, including the energy auctions that sustain centralized generation. ABSOLAR treats the project as a correction of a rule considered detrimental to centralized‑generation ventures, showing that the dispute between the two models is not resolved only on the grid: it is also settled in Brasília, and an investor who follows only technical indicators may be caught off guard by a rule change.

Checklist: seven checks to balance investments in own generation and the central grid

1. Validate the project's classification (micro, mini, or federal grant) against the power limits of Law No. 14,300/2022 — a floor of 75 kW and a ceiling of 3 MW or 5 MW, depending on the source — with the engineering department or a regulatory consultancy.
2. Check whether the property is in one of the seven states included in the R$ 8.9 billion investment in new transmission lines, to anticipate the connection timeframe with the local utility.
3. Confirm the registration of the micro or mini-generation system in the ANEEL (National Electric Energy Agency) registry (Open Data Portal) to join the group of 4.7 million operational systems, and not just in the installer's internal system.
4. Analyze the impact of new critical loads, such as electric vehicle chargers and servers, considering the 0.7% annual demand growth rate cited by Ember.
5. Audit the generation or savings promised by a project before treating it as a guarantee in a purchase or financing negotiation — submit the declared figures to an independent auditor, such as Valida Auditoria, to separate projection from measured result.
6. Calculate the billing schedule for tariff components provided for in Law No. 14,300/2022 for remote self-consumption or shared generation above 500 kW — 60% in 2026, 75% in 2027, 90% in 2028, full rate in 2029 — before projecting the return on investment beyond that horizon.
7. Monitor the progress of bills such as PL 3.716/2026 in Congress, which may alter the balance between distributed and centralized generation before even a single project is completed.

Frequently asked questions

What is the fundamental difference between distributed and centralized generation in Brazil?

Distributed generation (DG) consists of small systems installed close to the consumer — think of solar panels on the roof as individual light bulbs that illuminate each room. Centralized generation (CG) groups large power plants, like a single floodlight that illuminates the entire city. Today, the country registers 4,716,423 DG systems against only 18,810 CG plants, according to ABSOLAR and the ANEEL Open Data Portal (data from July 20, 2026).

How do the R$ 3.3 trillion investments outlined in the PDE 2036 impact the choice between GD and GC?

The PDE points to an investment of R$ 3.3 trillion by 2036 to expand electrical infrastructure. Part of this volume goes to expanding transmission lines, favoring GC. The same movement, however, recognizes that diversifying generation location reduces losses and increases grid resilience — which supports GD.

Why does Law No. 14,300/2022 treat GD and GC as different regimes, not as direct competitors?

The law sets power limits — a minimum of 75 kW and a maximum of 3 MW or 5 MW for minigeneration — and creates the Electrical Energy Compensation System (SCEE), specific for those generating near their own consumption. Above these limits, the project stops being "distributed" and enters the federal permit regime where centralized generation competes. They are two distinct regulatory paths, not two competitors on the same shelf.

In what way does the global growth of solar energy influence the value of local distributed generation?

In the last three years, world solar generation has doubled, surpassing 2,000 TWh, and global installed capacity has risen from 1 TW in 2022 to 2 TW in 2024, according to Ember. This impulse lowers equipment costs and expands technological experience, making GD systems more competitive in Brazil.

What is the economic impact of distributed generation regarding employment and revenue collection?

ABSOLAR indicates that GD helped generate 2.2 million new jobs and R$ 103.2 billion in collected taxes (data from July 20, 2026). These figures reflect the local production chain — from inverter manufacturing to system maintenance —, contributing directly and indirectly to income in various regions.

References (11)

1. ABSOLAR. Accessed October 16, 2026. https://www.absolar.org.br/
2. EPE. Plano Decenal de Energia. Accessed October 16, 2026. https://www.epe.gov.br/
3. Ember. Global Electricity Review 2025. Accessed October 16, 2026. https://ember-energy.org/latest-insights/global-electricity-review-2025/
4. ANEEL. Relação de empreendimentos de Mini e Micro Geração Distribuída. Portal de Dados Abertos. Accessed October 16, 2026. https://dadosabertos.aneel.gov.br/dataset/relacao-de-empreendimentos-de-geracao-distribuida
5. ANEEL. Quantidade de empreendimentos de geração de energia em operação. Portal de Dados Abertos. Accessed October 16, 2026. https://dadosabertos.aneel.gov.br/dataset/empreendimentos-em-operacao
6. BRASIL. Law No. 14,300, of January 6, 2022. Ministry of Mines and Energy. Accessed October 16, 2026. https://www.gov.br/mme/pt-br/acesso-a-informacao/legislacao/leis/lei-n-14-300-2022.pdf/view
7. ANEEL. Resolução Normativa No. 1,000, of December 20, 2021. LexML. Accessed October 16, 2026. https://www.lexml.gov.br/urn/urn:lex:br:agencia.nacional.energia.eletrica:resolucao.normativa:2021-12-20;1000
8. EPE. Nota Técnica EPE DEA-SEE 010/2020 — Modelo de Mercado da Micro e Minigeração Distribuída (4MD). Accessed October 16, 2026. https://www.epe.gov.br/sites-pt/publicacoes-dados-abertos/publicacoes/PublicacoesArquivos/publicacao-490/topico-531/NT_Metodologia_4MD_PDE_2030.pdf
9. BNDES. Finem Energia. Accessed October 16, 2026. https://www.bndes.gov.br/wps/portal/site/home/financiamento/produto/bndes-finem-energia
10. Câmara dos Deputados. PL 3.716/2026. Dados Abertos. Accessed October 16, 2026. https://dadosabertos.camara.leg.br/api/v2/proposicoes?siglaTipo=PL&numero=3716&ano=2026
11. Valida Auditoria. Accessed October 16, 2026. https://validaauditoria.com.br/