Por Mauro Rebelo

The Impact of MP998 on R&D Projects in the Electricity Sector

The structuring of the Brazilian electricity sector, which began in the 1960s, was not trivial and required a great deal of knowledge, research and extremely important technological efforts. In Brazil, due to its unique characteristics, such as territorial extension, geographical diversity and hydrology, this structuring has imposed innovative technologies in the implementation of electricity generation, transmission and distribution projects, making the country a world reference.

New technological challenges in the most varied fields of knowledge were imposed and, in order to intensify and direct the promotion of Research, Development and Innovation in the sector, Law 9991/2000 was enacted. This initiative has met the needs of Brazilian research institutions, which have matured their processes, structured themselves and grown organizationally to meet the demands of innovation.

As a result, over the last 20 years, R$7.71 billion has been invested in R&D projects in the electricity sector, resulting in around 345 patents and intellectual property registrations, more than 1,600 postgraduate degrees and almost 5,000 scientific articles and published papers. The resulting solutions and innovations cover various areas of knowledge, ranging from issues related to the operation and maintenance of G, T and D assets to biotechnology, genetics and artificial intelligence. As with all research, the initial objective of using a particular technique or piece of knowledge can, along the innovation chain, spill over into another area of knowledge, expanding its innovation and application and reinforcing the importance of R&D in the development of nations and their people.

With the COVID-19 pandemic and its consequences on people’s lives, the electricity distribution sector was immediately affected. Families, companies and society as a whole, under the impact of a yet unknown enemy, have practically come to a standstill. There were huge defaults with the distributors, with no offsetting sanctions and fines, causing a reduction in their revenues. The government looked for alternatives and one of them was Provisional Measure 998, which initially allocated amounts previously earmarked for R&D to the CDE – Energy Development Account, with the aim of mitigating this issue.

This measure, even though it has no financial repercussions for the electricity companies, which are obliged to allocate resources to R&D, i.e. they will continue to allocate the 1% of their net operating revenue to the R&D account, was received with great distress by the research organizations and the companies themselves. After 20 years, research and innovation has been incorporated into the structures of companies in the electricity sector, making it possible to objectively evaluate their results in every sense.

At first, there was a lot of uncertainty about the future prospects for research organizations. The original text of the Provisional Measure provided for a five-year reduction in investments in research and development (R&D) and energy efficiency in the electricity sector, meaning that R$6.7 billion would be blocked by 2025, practically half of the investments made in R&D and Energy Efficiency projects over the last 12 years.

After a public consultation (Public Consultation 078/2020), the proceedings in the House and Senate, with the inclusion of amendments that managed to partially reduce the value of the blockade, Conversion Bill (PLV) No. 42/2020 was sanctioned. Its final text practically halves the block on investments in R&D and energy efficiency by 2025, initially planned, from R$6.7 billion to R$3 billion. With this, the approved text allocates part of the resources to the CDE, without drastically jeopardizing new investments and mitigating their impact on the process of innovation and scientific and technological development in the Brazilian electricity sector. In other words, investment will decrease, but it won’t stop!

Tags: Budget