Brazilian local content rules could spur domestic industry


A key hurdle for projects participating in Brazil's first solar-only national energy auction may be one step closer to being met. On August 12th, the National Bank for Economic and Social Development (BNDES) published an accreditation methodology and local content rules for financing solar projects.

Eligible projects will include those in the nation's reserve auction, which will be held on October 31st, 2014. The solar-only portion of the auction has attracted over 400 projects, with a total capacity of more than 1 GW.

Until 2017, the rules stipulate that projects receiving funding must use PV modules assembled in the nation using locally produced frames, with additional requirements and methodology to be introduced in 2017. PV module manufacturing is the only part of the supply chain where Brazil currently has any capacity.

“We are still in the beginning,” says Dr. Rodrigo Sauaia, executive director of Brazilian trade group ABSOLAR. “There is no silicon production, cell production, or balance of systems. Our expectation is that from this new ruling, and with the incoming auctions, and hopefully more auctions coming from next year, this will give enough critical demand to attract manufacturers.”

Market analysts have identified financing as a key barrier to project development in the Brazilian market, and this may be the reason that none of the projects awarded in a solar-only auction in the state of Pernambuco have begun construction.

Popular content

A portion of the funding will come from BNDES' Climate Fund, and the bank is offering financing well below commercial lending rates. For direct loans, up to 15% of project financing is available from the Climate Fund interest rates of 1.4-3.9%, and up to 65% of project cost at rates of 6.4-8.9%. For intermediary bank funding, there is a baseline of 1.0-1.5% from the Climate Fund and 6.0-6.5% for other BNDES funds, in addition to negotiated interest rates.

GTM Research Solar Analyst Adam James says that this compares to commercial lending rates of 12-13%. “This is definitely a good step for the industry,” says James. “There is an option now to qualify for competitive financing, where there wasn’t before.”

ABSOLAR says that the rules are an important first step in what they expect will be a growing industry. “We have high expectations that the government will start to include PV periodically into auctions, so that we have a forseeable demand in the future,” notes Dr. Sauaia. “So the rules from BNDES, they are good, this auction is also a good sign, but we need more mid- and long-term targets to actually attract manufacturing to the county.”

This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact:


Related content

Elsewhere on pv magazine...

Leave a Reply

Please be mindful of our community standards.

Your email address will not be published. Required fields are marked *

By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.

Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.

You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.

Further information on data privacy can be found in our Data Protection Policy.