Intersolar panel calls on investors to act fast to reap Brazilian PV rewards
The panel at Intersolar discussed Brazil's smart local content requirement policy. Source: Flickr/Charlie Phillips.
Brazil’s emerging PV market poses significant opportunities for foreign investors as it is still at a stage before consolidation occurs and the market becomes more saturated.
A panel of experts at Intersolar Europe discussed why now is the right time to penetrate the Brazilian market:
Although Brazil’s PV industry is nascent – with 3GW of utility-scale solar installed to date, it yields attractive prospects.
“The underdeveloped Brazilian currency makes projects cheaper for foreign investors,” said Miguel Lobo, Brazil director of Martifer Renewables. He also cited the country’s “stable and reliable regulation” and “20-year government-backed PPAs” as further reasons why Brazil is an ideal market.
Eduardo Tobias Ruiz from Clean Energy Latin America (CELA) attested the “competiveness and great business environment” of the market as “imperative to growth”.
Notably, Brazil does have one of the highest interest rates in the world but “if companies know how to exploit the significant tax burden, there is lots of potential for the Brazilian PV market,” said ASBZ Advogados lawyer Alexandre Gleria.
The country is also currently enduring a fiscal crisis but still has “solar as a priority” according to Felipe Guth, manager of the department of renewable energy for BNDES (Brazilian Development Bank), who also emphasised the strength of the margins and returns.
Brazil has two PV auctions scheduled this year – for July and October respectively.
Maurício Tolmasquim, president of EPE, Brazil Ministry of Mines and Energy, said that the two auctions may be combined, but the total amount of PV awarded would be the same. The country’s last auction in November awarded 1.5GW, with the preceding auction in August seeing 31 PV project wins.
“The first auction saw the chicken-and-egg problem,” said Tolmasquim. “If you put strong [local content] requirements, then there is the risk of having a failure of an auction. Anyone can import anything; but if you want to have the financing you need local content.”
“Auction winners are not obliged to follow local content requirements,” added Guth. “It is important to be flexible with content requirements.”
To this end, products can be assembled in Brazil to fulfil the requirement.
“Instead, create a market first and then increase the local requirement,” said Tolmasquim. "This is a smart policy because low level of content to receive BNDES money, with a bonus available if you have high content. Nowadays you may import everything and assemble it in Brazil and still have access to vendors’ money."
“Maybe in future we will increase the content requirement but now is not the time. The first to arrive are those that win more – the time to invest is now.”
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