Brazil has been a hot destination for solar manufacturing in 2015. In September Soltec Renewable Energies announced that it would build a tracker factory in the nation, and SunEdison unveiled plans for a module factory.
This follows BYD’s May announcement that it will build a factory in Brazil, and Globo Brasil’s inauguration of a PV module factory in São Paulo in August. However, this may all be changing due to the recent economic crisis in Brazil.
At least one PV maker is already putting its plans on hold. On Friday JinkoSolar Chief Strategy Officer Arturo Herrero told Bloomberg that the company will delay its plans for a factory in Brazil, citing uncertainty and currency risks.
JinkoSolar did not respond to pv magazine requests for comment, but the company had already planned to supply the modules for 579 MW of projects awarded in Brazil’s last auction from its factories in China.
Brazil’s currency, the Real, has lost nearly 40% of its value versus the U.S. dollar over the last year, falling to a record low of 3.9 Real to the dollar last week. And while a devalued currency can be good for manufacturers who plan to export, the currency fall is an indicator of larger economic and political problems. This includes the downgrading of the nation’s sovereign debt and political crises including a corruption scandal at Petrobas.
Mercom Capital CEO Raj Prabhu says that there is also a danger that the value of any plant under construction could deteriorate before it is completed. Once the plant is set up, and you are putting out panels, there might be some advantage, but they are not there yet, Mercom Capital CEO Raj Prabhu told pv magazine. You don’t want to start a project, and by the end of the project it depreciates by 20%.
Prabhu declined to say whether or not this could affect other plants under construction in the nation. You need to look more company by company, explains Prabhu. You need to have financial strength before you go into a market where you know it is risky.