Brazil: PV must become more affordable

"Despite its great potential, the current cost of this technology is still very high and this fact prevents its more widespread use. Nevertheless, its costs have fallen sharply in recent years, with a tendency for continued reduction, which could help this energy source become competitive," said EPE in its latest annual report on prospects for the next decade.

It predicts that more affordable photovoltaic energy will have a role to play both in the distributed generation market and the larger solar plant segment in Brazil. "Installation of solar panels by residential and commercial consumers could become viable in several years, however it is still difficult to estimate the magnitude and spatial distribution of insertion, because other variables exist that can impact consumer decisions, apart from cost," EPE explained.

The agency, which is affiliated with Brazil’s Ministry of Mines and Energy (MME), expects that larger solar energy plants will have a somewhat tougher time competing directly with other power generation sources in Brazil over the next 10 years, due to the relatively higher costs of solar energy generation at this point in time. Still, EPE admitted that lower costs could make the technology competitive even in this market segment over a 10-year period.

Brazil’s northeast region, especially its central areas, has the highest potential for solar energy generation, according to the new 386-page report, which is now in a process of public consultation at the Ministry of Mines and Energy until October 31. The average solar irradiation in Brazil ranges between 1,200 and 2,400 kWh per square meter per year

EPE, which is in charge of developing studies and research destined for federal energy sector planning in Brazil, recently concluded in July that one of the best models for supporting large-scale photovoltaic contracting would be the holding of targeted auctions restricted to this energy source. EPE also recommended that all other federally-sponsored electricity auctions be open to the participation of photovoltaic solar energy.

According to the report, the price of electricity from a centralized photovoltaic plant in Brazil would amount to around BRL400 per MWh for a 1MWp plant, which is still significantly higher than average verified prices — BRL95-110 per MWh — achieved in recent federal energy auctions. "This reveals the main difficulty that photovoltaic energy has to overcome to become competitive in the short-term," explained EPE.

Nevertheless, the agency admitted that a combination of several tax incentives, better financing terms and installation of plants in regions with the highest potential for solar energy generation could instantly reduce the estimated BRL400 per MWh price of photovoltaic energy to a much more sustainable BRL302 per MWh.