The Brazilian solar energy market is growing, but only very slowly. While other emerging economies such as India and South Africa have introduced programs or supporting schemes at a national level that led to the development of a solar market this hasnt yet been the case in Brazil. On a national level there is basically only one supporting scheme in place, a net metering regulation that hasnt been very successful up to now. There is also a national pilot program for megawatt-scale solar parks, but only for about 25 MW of solar projects. On the other hand, overall high taxes had negative effects on the development of solar energy in Brazil, although there are tax discounts on the transmission and distribution of solar electricity. All this has led to the fact that the on-grid photovoltaic capacity in operation stood at only 5.9 MW at the beginning of March, according to official data. A few dozens of solar projects currently under construction add up to no more than 30 MW. However, this could change soon thanks to the initiatives of a few states that could help to achieve a certain growth of the solar market.
The most important step in the development of photovoltaics in Brazil to date has come from an initiative of the state of Pernambuco, in the northeast of the country, where irradiation levels are generally better than in the east and south of the country. Last December, the state government coordinated a call for tender for solar energy projects, the first of its kind in the country. Six solar projects totaling almost 123 MW were awarded: the German company Sowitec was awarded a 30 MW solar project, Italian company Enel Green Power won bids for two projects with five MW each, the Brazilian companies Kroma Comercializadora de Energia and Cone Concierge were awarded contracts to develop 29.25 MW and 22.82 MW projects, respectively, and the Chinese-Spanish company Sun Premier Holding has been commissioned to build a 29.75 MW project. The average solar power price of the 20 year contracts was BRL 228.63 ($98; 71) per MWh.
Since these solar projects are not linked to domestic content, they will have to start operations by July 1 next year at the latest. If they were linked to local solar module production the start of operations could have been postponed by up to 18 months. Pernambuco is seeking to encourage the development of a local solar energy industry as has happened with wind energy. According to Energy Secretary Eduardo Azevedo, there have been three proposals from companies to set up solar module factories in the state. Therefore in the next call for tender there could be solar parks linked to industrial projects. This year another call for tender for solar is expected to follow in Pernambuco. The level of interest is high. For the first round last December, over 30 solar projects totaling 1.041 MW registered to participate.
Along together with Pernambuco, other states such as Minas Gerais, Tocantins and São Paulo are aiming to support the development of solar energy through specific programs and tax exemption initiatives. Last February, the state of São Paulo agreed to exempt the value-added tax (ICMS) for a 6.5 MW solar project that will provide electricity to a shopping center. The project also has the support of the municipality of Votuporanga that is helping to obtain the land for the solar park. The companies involved in the BRL 32.5 million ($14 million; 10 million) project are the renewable energy company Solatio Energia and the firm SGPar, which operates the shopping center. With the exemption, Solatio expects the price of the electricity of the solar park to be about 20% lower than the price of electricity sold by the utility, according to a statement of Votuporanga.
This is the first large-scale project that has been made public that could receive an ICMS tax exemption in São Paulo, but more could come. Last December, Secretary of Energy José Aníbal announced during the event Solar Power Generation Brasil that he intended to introduce an exemption of the ICMS tax for photovoltaic equipment as was done a year ago with solar thermal systems. At the beginning of March the proposal that contains different tax exemptions that would benefit solar energy projects was submitted to the Treasury Secretary of the state of São Paulo. At that time, the proposal contained, among others, different grades of tax exemptions for owners of microgeneration systems, which pay a tax of up to 25% depending on consumption, but also for solar projects that would sell the electricity in the free energy market. According to the Ministry of Energy of São Paulo, solar companies are also interested in projects that would sell the electricity through bilateral power purchase agreements on the free energy market. With the tax exemptions there could be possibilities for solar on the free market in the state of São Paulo, which is one of the main economic hubs of Brazil. The state also aims to increase its share of renewables from 55.5% in 2010 to 69% in 2020. São Paulo located in the southeast of the country has a population of about 43 million.
Another state that intends to introduce an exemption of the ICMS tax, for both solar electricity and solar equipment, is Tocantins, a state located in the center of the country. Currently the ICMS tax on electricity production stands at 25%. The new Secretary of Energy Joaquim Guedes intends to boost distributed generation. We expect the ICMS tax exemption to be introduced in a month, said Guedes in March.
In Brazil there has been a net metering scheme in place since 2012 for systems up to one megawatt. However to date only a few dozen small systems have been installed all over the country. Besides a 967 kW solar park at a soccer stadium in Pernambuco, the largest operating PV installation under the net metering scheme in the country is smaller than 30 kW. Due to high electricity taxes and a lack of specific funding this segment has not grown much yet. Because PV systems are still scarce the prices are generally high. The utility of the capital, Companhia Energética de Brasília (CEB), which announced the connection of the first system under the net metering scheme to its grid last February estimated the price of small PV systems at between BRL 8,000 ($3,439; 2,493) and BRL 10,000 ($4,298; 3,116) per kilowatt.
While São Paulo and Tocantins are planning to introduce tax exemptions to promote PV systems under the metering scheme, the state of Minas Gerais has already introduced them. In this southwestern state with a population of 20 million, a program for renewable energy was launched last year. Besides different tax exemptions, like ICMS for installations under the net metering scheme, the program also includes funding through the Development Bank of Minas Gerais.This one megawatt installation near the stadium of Itaipava Arena Pernambuco and connected to the grid of Celpe is one of the largest solar parks in Brazil. In the northeast of the country, the state of Paraíba also has plans to promote solar energy under the net metering scheme, but in a different way. Paraíba intends to include PV systems in new homes of the national housing program Minha Casa Minha Vida, which is aimed at low income people. This would not be the first time photovoltaics is installed in houses of this program. In a housing complex in Juazeiro, in the state of Bahia, local company Brasil Solair recently commissioned a 2.1 MW solar project under the net metering scheme. Although consisting of different small systems, this is the largest photovoltaic project installed to date in Brazil.
However, perhaps the state that could become a second Pernambuco in Brazil is Piauí. The government there is reportedly considering launching a call for tender for solar projects. According to local media Cidade Verde, the government asked the Brazilian Wind Energy Association ABEólica in March to assess the possibility of launching a call for tender similar to the one carried out last December in Pernambuco. Like Pernambuco, Piauí is also located in the sunny Northeast of Brazil.
We see that above all the states here in the regions in the northeast of Brazil are moving forward. The northeast of Brazil has a great opportunity to lead in renewable energy in solar and wind, says Jens Raffelsieper of the company Renergy, which has its Brazilian office in the state of Ceará, in the northeast of the country. The states of Pernambuco, Paraíba and also Alagoas, which in February approved incentives for a solar module factory, have initiatives to support solar energy. Raffelsieper regrets that overall there is still a lack of specific funding for solar installations for private persons. However the company is currently carrying out several small solar projects under the net metering scheme and has plans for a few one megawatt solar parks, one of them for a municipality in the state of Piauí.
Many Brazilian states are currently very active in developing initiatives to promote solar energy in Brazil, but the position of the central government is still unclear.
The government has been considering launching solar auctions at a national level as it happened for wind energy a few years ago. But a date has not yet been officially set. Instead of organizing specific solar auctions, last year for the first time the government allowed solar to participate in auctions in the regulated market. A few gigawatts of solar projects were registered for the auctions A-3 in November and A-5 in December. However, by setting a very low price ceiling at the auctions of BRL 126 ($54; 39) and BRL 122 ($52; 38) respectively, the government limited the possibilities resulting in no solar projects being awarded.
It is clear that BRL 126 per megawatt hour doesnt remunerate solar energy. We knew that the government was using the call for tender A-3 to evaluate the interest and to get to know the photovoltaic companies interested in solar auctions, says Leonidas Andrade, the President of the solar division of Abinee (the Brazilian Association of Electrical and Electronics Industries), an association which has proposed specific solar tenders to the government many times over the last years and has informed the government extensively on the topic.
The main program for solar energy at a national level in Brazil is currently a pilot program launched in 2011 by Aneel, Brazils National Electricity Regulatory Agency. It sums up to about 25 MW of solar installations each smaller than 3 MW. Recently, the engineering company Tractebel announced that a 3 MW solar project, which is being developed under the program, will start operations in the first half of this year. It could then become the largest solar park in Brazil.
With the projects that have been awarded in the Pernambuco solar call for tender, more capacity could be added soon. And with the support of several states, net metering solar installations could also increase. Until the long awaited national solar energy auctions are launched, it seems that support for solar is coming from the regions.
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