With strong indications of transformation in the electrical market, energy utilities will have to review business models to adapt to the demands of decentralized generation, seeking new sources of revenue and technology.

The term "death funnel" refers to a phenomenon that occurs in the electrical sector due to distributed generation of energy. With the increasing adoption of renewable energy generation systems, such as photovoltaic solar panels installed in homes and businesses, power distributors face significant challenges.

The Impact of Net Metering on Power Distributors' Management

ANEEL Resolution 482/12 introduced Net Metering, a system of electrical energy compensation that allows consumers to install small generators at their consumption units to reduce energy consumption from the grid. However, large-scale implementation has faced resistance, especially from power utilities, which are not prepared to deal with distributed generation, especially photovoltaic distributed generation (DG).

These resistances are motivated by the increasing impact on grid operations, including flow reversal and voltage fluctuations, as well as the increasing costs of network investments and the progressive reduction of utilities' revenue. Additionally, ANEEL is conducting Public Hearing 59/18 (binomial tariff) and Public Hearing 1/19 (compensation), which have a direct impact on the future of DG.

Although Net Metering has been released, there are currently questions and concerns from utilities regarding compensation and the use of their networks. However, the penetration of distributed generation by photovoltaic energy is an irreversible global trend, driven by the pursuit of greater consumer autonomy regarding electrical energy.

Furthermore, ANEEL conducted Public Hearing 59/18 (binomial tariff) and Public Hearing 1/19 (compensation), which are important but represent a blockage to investments (this year 2.2 billion) in DG. Even in this scenario, ABSOLAR published that there will be an investment of 1.1 billion in distributed generation.

The Impacts of the Death Funnel: The Need for Adaptation and New Opportunities

Distributors face the challenge of adapting to distributed generation (DG), which causes fear of revenue decline and demands investments to accommodate intermittent flow in the grid. Faced with this scenario, the question arises: will distributors seek ways to prevent DG or will they prepare technically and economically for the future of the sector?

In this transformational context, opportunities arise in the area of electric mobility and the provision of ancillary services for new market agents. Utilities have a privileged position regarding their customers' energy consumption and supply. They can actively engage in the installation and provision of photovoltaic systems and batteries for consumers, with personalized control, as well as power electric vehicle charging points.

While this results in revenue loss related to immobilized assets, there are gains with associated services, aiming to increase profitability. However, there is still a set of optimization, software, associated operations, and certified equipment missing to enable a network with widespread penetration of DG and fully exploit this trend.

A clear opportunity is the creation of multiple microgrids, where generation, consumption, storage, and control occur locally, alternating with the typical feeding structure of the distribution system. This involves forming a system composed of a group of distributed energy resources and interconnected loads, with clearly defined electrical boundaries, acting as a single controllable entity relative to the grid. This approach enables greater operational flexibility and system resilience, as well as facilitating the integration of renewable sources and promoting energy self-sufficiency in specific communities.

These transformations require a strategic vision from utilities, which need to adapt to the new context, seek partnerships, and invest in innovative technologies and solutions. Developing digital platforms for monitoring and controlling distributed assets, implementing advanced management systems, and using artificial intelligence algorithms are some examples of approaches that can be adopted to address the challenges and seize the opportunities presented by distributed generation.

By preparing for the future of the electrical sector, utilities will not only survive the changes but also thrive and offer quality service to consumers.

Current trends for power systems include increasing levels of DERs, energy storage, demand response programs, and energy efficiency initiatives. In the short term, system operators must do their best to predict the production of intermittent renewable generation, as well as demand. In the long term, designing the capacity of these resources will be a complex task due to the rapid decline in technology costs, as well as societal political pressure for incentives for them.

Transactive Energy: Solution for the Future of Distribution?

The development of Transactive Energy (TE) aims to establish a dynamic link between supply and demand in the electrical system, through the response of electrical loads and generation on the consumer side, in response to price signals.

The use of TE will offer a solution to the growing challenges related to the efficiency and reliability of the electrical system, resulting from the rapid adoption of new technologies by both consumers and generators.

This innovative approach allows for smarter and more efficient energy management, enabling consumption optimization, cost reduction, and seamless integration of renewable energy sources into the electrical system. By promoting active interaction among the agents involved in energy generation and consumption, TE contributes to building a more resilient and sustainable energy system.

Furthermore, the inclusion of electric mobility tends to bring a new vision to the sector through the control of charging stations that, in addition to charging electric vehicles, can provide additional reliability to the network. Finally, create tools that define the tariff depending on location, capacity and time of use. In addition to the adoption of the economic signal to interface residential automation, DG and the MT/BT network, seeking energy and economic efficiency, guaranteeing financial flow for the sector.

The death spiral is the occurrence of distributed generation of energy, via renewable energy generation installed in homes and businesses.

The Death Funnel of Power Distributors

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