Proven strategy to combat electricity theft: Brazil’s model

The theft of electricity is a stunning global crisis, extinguishing about $ 100 billion a year, disrupting power markets and straining already overloaded energy networks. The degree of non-technical losses varies widely in regions: Brazil recorded a 5%NTL index, costing the nation over $ 2.4 billion in 2015; India loses approximately $ 4.5 billion per year, with losses ranging from 10% to 40% of total revenue; And European Union countries suffer losses between 2% and 10% per year, according to 2023 Item of Electricity Research Magazine. Losses of power plants continue to be issues in many parts of the developing world.

These losses are exacerbated by factors such as high unemployment, economic recessions, increased energy costs and low human development indices, all create fertile soil for theft of electricity. Whether through sophisticated cyber attacks on energy networks in developed nations or unauthorized connections in unmarried communities, theft of energy is a multifaceted issue that requires urgent solutions. However, some countries have successfully implemented strategies to curb electricity theft – providing critical lessons and proven models for policymakers and service companies around the world.

Brazil’s electricity solutions: a proven model

Brazil’s Luz Program before Todo (Light for all), launched in 2003, has emerged as a powerful plan to reduce electricity theft while addressing a deep social issue: exception of energy. In rural and undeserved communities, the high front costs of connecting to the network are left unattended, but use illegal electricity connections. The program broke this cycle by making legal access to electricity without energy for those in extreme poverty, shifting the paradigm from a demand -driven model to where access to electricity was seen as a public right, not a market commodity. With an investment of $ 5.7 billion, approximately 72% of the program funds came from Reserva Global De Reversão (RGR) and Conta de desenvolvolvimento Energético, both supported by fees paid by all electricity consumers. The remaining 28% was funded by federal states, municipalities and electricity supply companies. In areas with the lowest levels of electrification, up to 90% of the investment was subsidized, removing the financial burden from local services. The result was deep: over 3.4 million new connections and access to electricity for 15 million people, 68% more than the initial target, effectively reducing the need for illegal connections and promoting legal energy use.

With the subsidy of infrastructure and the displacement of the financial burden throughout the sector, the Luz program before Todo provided a scaled and sustainable model for rural electrification. In particular, the program did not require consumers to pay fees on the front, making it accessible to the poorest communities. The success of the program offers a clear guide for other countries, especially those in high costs of infrastructure and low levels of electrification. This model demonstrates the efficiency of widespread sector tariffs, which enable government and industry funds to cover network expansion by providing access to electricity for all, regardless of revenue. Moreover, the model is adaptable for the integration of renewable energy sources, especially in remote and difficult areas. Brazil’s success in universalizing electricity entry not only underlines the transformative power of target subsidies and cooperative funds, but also offers a reproducible framework that can help other nations address the exclusion of energy and theft.

Electricity Subsidies: Bridging the gap between theft and access

The 2024 report, which sheds light on the impacts of a social electricity subsidy in Brazil, offers a comprehensive look at the social electricity tariff program, which is created to help low -income families in Brazil reduce their energy bills. While Brazil is the largest energy consumer in South America, accounting for 36% of total energy consumption in the region, the program aims to facilitate financial loads for vulnerable populations. Acceptable families for subsidy must meet specific criteria, such as earning less than half of the minimum wage ($ 143.75) per capita, have elderly or disabled members receiving government financial support, or seeking electricity for medical treatments. The program has been operational since 2010, but in January 2022, Law no. 14,203 led the registration process, automatically registering qualifying households to reduce time obstacles and documentation costs. Since 2022, this reform aimed to include over 11.5 million families.

Subsidies are financed through the energy development account referred to as CDE is supported by contributions from electricity distributors. CDE not only finances the social tariff program, but also initiatives aimed at universalizing electricity and alternative energy sources. Customers included in the program are excluded from certain energy costs, such as those related to the Promoting Program for Alternative Electricity Resources (PRINFA), benefiting both low -income households and electricity providers. According to the report, the social tariff accounted for 30.5% of all subsidies in the analyzed countries, with the part of the electricity invoice funded by tariffs varying between 0.23% and 1.01% from 2018 to 2022.

As the program has increased in extension and accessibility, it operates in a challenging environment where theft of electricity remains an important problem. According to 2023 article FavelaBrazil experiences an energy theft rate of approximately 15%, with this figure that increases dramatically in the northern regions of the country, where thefts can exceed 50%. Only in 2020, costs associated with electricity theft reached $ 1.23 million, which strains the total energy infrastructure and increases costs for legal consumers. The prevalence of theft is a noticeable obstacle to ensure that the benefits of the electricity tariff program achieve those most in need of it, as it blows the overall costs of electricity.

Energy Capital: Social Electricity Tariff

The subsidy itself operates through an amazing discount system based on monthly consumption. Indigenous and quilombola households receive a 100% discount if their monthly consumption does not exceed 50 kWh, a 40% discount if the consumption is between 51 kWh and 100 kWh, and a 10% discount for consumption between 101 kWh and 220 kWh. For non-indigenous or quilombola households, the highest deduction of 65% applies if consumption is up to 30 kWh. Families that transcend these thresholds receive smaller progressive discounts, which are consistent in all types of family.

According to a technical note from the Pólis Institute, the average consumption of families benefiting from the program was 130 kWh between 2020 and 2022, compared to 120 kWh between 2017 and 2019. In the first half of 2024, this figure was increased to 150 kWh per month, showing a trend in the use of energy among subsidized families.

Despite these advances, it remains a major obstacle: the lack of registration and information between acceptable families. Prior to 2022, only 65% ​​of acceptable households were registered for subsidy. However, the automatic registration implemented in 2022 has significantly improved this, ensuring that more families benefit from the program without additional financial and administrative burden.

The social electricity tariff program has proven to be a vital mechanism for mitigating energy costs for Brazil’s low -income families. With automatic registration now in the country, the subsidy is more accessible than ever.

Brazil’s Framework for Treating Electricity Theft: A Global Plan

The battle against the theft of electricity requires a co -ordinated global effort and a target approach to universal access. The Luz program before Todo of Brazil and the social power tariff program demonstrate the effectiveness of integrating subsidies, public-private partnerships and renewable energy solutions. The 5 -point strategic framework which can be modeled is highlighted below:

Universal access to electricity

Prioritize affordable and legal access to electricity for undeserved communities.

Subsidize the costs of electricity infrastructure

Use fees from wider electricity consumption to finance network expansion and support low -income households.

Implement social tariffs to reduce theft

Offer discounts to low -income families to make electricity more affordable by minimizing illegal connections.

Promote renewable energy integration

Use renewable energy sources, especially in remote areas, to reduce dependence on traditional networks.

Promote public-private partnerships

Encourage cooperation between governments, municipal services and international organizations to fund and maintain anti-theft programs.

While countries continue to face electricity theft pressures, the Brazil model offers valuable knowledge that can adapt globally to reduce theft and promote access to electricity. Stay awake for our other article, which will explore how Colombia has modeled its efforts to reduce electricity theft and how it can be approved.

For further knowledge, see:
1. Theft of Electricity: Economic burden risks and sustainability
2. Losses of power plants and that: Treatment of inefficiency for sustainability 3. Economic and social dimensions of electricity theft