Rooftop PV battles the odds to register growth in Brazil

IN DEPTH | Despite an unhelpful policy landscape, Brazilian consumers are getting the message that solar arrays mean cheaper power, writes Alexandre Spatuzza

Brazil could end 2017 with 25,000 rooftop PV arrays installed, an increase more than fourfold from the 6,600 in operation at the end of last year, despite a lack of adequate financing and the fallout from the cancellation of solar power tenders last year.

“I am an optimist and expect that we’ll reach 25,000 arrays by the end of year,” Barbara Rubin, co-ordinator of Greenpeace’s renewable energy campaign in Brazil told Recharge, pointing out that the NGO is finalising its projections.

With arrays averaging 7kW – mostly residential – capacity which is now at around 50MW should top 170MW by the year’s end.

Although small in relation to the 80 million power consuming households and businesses in the country, the projection shows an acceleration in installations since the net-metering regulations were revised at beginning of 2016.

Implemented in 2012, the net-metering rules saw a slow start, rising from zero to just over 1,000 arrays by the end of 2015. But from 2016 onwards there has been a surge. Power regulator Aneel expects rooftop solar to reach over 1.2 million arrays in 2024.

Even so, said Rubin, the speed of installations has been stalled by a lack of pro-activity by the government.

“Distributed power generation would have grown faster had the government put its weight behind solar power through awareness campaigns and offering adequate financing,” she claimed.

Since December 2015 the government has been working on a R$100bn ($31.3bn), 14-year distributed generation power programme (ProGD), but although the government-led task forces have concluded their work, the Mines and Energy Ministry has been postponing its inauguration.

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“The work is all done, there is nothing else to do but to implement ProGD,” said Rubin, who participated in some of the discussions.

Her optimism comes from a recent poll commissioned by Greenpeace Brazil which showed that 80% of the Brazilian population is knowledgeable about solar PV power generation – up from around 30% three years ago – and that 72% would invest in arrays if there was adequate financing.

Around 80% of those polled understand that PV arrays would save them money in the long-term as power bills have risen over 50% in the 2015/2016 period, and are expected to continue upwards.

“The cancellation of the tender for utility-scale solar last year was a hard blow to the solar industry. Although it's a different market to rooftop solar, one pulls the other. Then there is also the effect that had the tender been held, more people and the media would be talking about solar PV,” she said.

Recent political and economic turmoil in Brazil, which culminated in the cancellation of last year’s tenders due to a slump in power demand, have also adversely affected investment plans by solar players.

Out of an expected half-dozen, Brazil today has only one Tier 1 solar module assembler – Canadian Solar – in operation which, together with a handful of lower-quality module makers, adds up to a capacity of less than 1GW a year, making imports the main supply of panels for rooftop arrays.

Nevertheless, according to Rubin, local installation costs are aligned with other countries at around R$8,000 per installed kW.

“This means that for a family of four to five people, the cost would around R$10,000 [with a] payback of about seven years,” she said.

The problem, therefore, is adequate financing in a country where average monthly earnings are around R$2,000 and falling, while interest rates on personal loans are at best 5.4% a month, and rising.

That is why Greenpeace’s poll showed that over 50% of Brazilians consider rooftop solar as a convenience “for the rich”, whose monthly incomes allow them to avoid high interest rates.

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Although some banks like the federal savings bank Caixa Economica Federal and the government’s Banco do Nordeste (BNB) have special credit lines, with interest rates at around 2% a month and 6.5% to 11% a year respectively, they have limited reach, and private banks are not ready to offer cheaper credit.

“There is a cultural resistance among Brazilians who don’t see solar power as an investment, while banks don’t yet know how to work guarantees for loans for rooftop arrays. Unlike cars, if banks take the array back in case of default there is no ‘secondary market’ for them,” said Rubin.

Greenpeace is betting on growth, and hopes that in 2017 the PV rooftop sector will be boosted by the implementation of its 'Solar Power in Schools' programme in partnership with local and regional governments, and through the approval of a bill in congress that would allow workers to use their share of the R$14trn workers’ savings fund FGTS – a mandatory 8% savings on pay-cheques – to buy solar arrays.

Again, the roadblock is the government. “The bill has been going through congress for almost two years, if there was political backing from the government it would have been already approved,” Rubin said.

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