Law 10.438/2002, establishing the Programme of Incentives for Alternative Electricity Sources (PROINFA)

This Law creates the PROINFA, the largest national plan to promote the use of alternative energy sources, as well as other programmes.

Regarding energy supply-side policies PROINFA's implementation is co-ordinated by Eletrobras (a publicly traded company controlled by the government) and divided into two consecutive stages. The first stage sets a target power production value of 3,300MW from renewable energy including wind, biomass and small hydroelectric sources. This target is to be reached by the end of 2007 through a system of subsidies and incentives drawn from an Energy Development Account. This is to be funded by end-use consumers through an increase in energy bills (with the exemption of low income sectors) as well as by financing programmes available for renewable energy projects from the Brazilian National Development Bank (BNDES). The second stage establishes a target of increasing the electricity generated by these three renewable sources to 10% of annual consumption within 20 years. In addition, Renewable Energy Certificates that are proportional to the amount of clean energy produced by each plant should be issued in this second stage.