Brazil sets local solar PV content

New regulations and financing rules for Brazil's 31 October solar power auction will favor projects with higher amounts of locally produced equipment, according to the National Development Bank (BNDES).

Auction participants will be initially required to have at least 5% domestic content for more sophisticated items such as backsheets, junction boxes and wafers; 10% for acrylic components or glass; 30% for the solar PV cell, and 60% for modules and module frames.

By 2020, BNDES financing will be available only to developers who buy solar equipment with 60% domestic content in cells, modules and frames. The bank will now allow solar PV manufacturers to choose different components they will buy or produce locally, but forces a gradual increase in local content by that date.

While other existing local content requirements will remain the same through 2020, companies that opt to increase the amount of Brazilian-made components will be able to finance up to 65% of a solar module’s value through BNDES.

The new BNDES financing is patterned on rules for the wind power sector, even though domestic content levels for solar are lower.

Solar developers will be allowed to combine the bank's credit lines with money from Brazil's Climate Fund  R$560m ($245m) that BNDES manages, confirming an earlier story by Recharge.

Combining the two credit lines will allow financing up to 80% of the module's value based on the proportion of local content.

The final cost of the Climate Fund's 16-year financing line will range from 1.4% to 3.9% a year, while BNDES's 20-year credit lines will range from 6.4% to just under 9% a year.  

Both start well below the country's base interest rate, which currently stands at 11% annually.

A spokesperson says the bank has enough money to finance 3.5GW in expected demand for new solar PV over the next three years. It wants to attract solar power investments including from cells and module manufacturers.

“The insertion of solar power in the Brazilian power mix also paves the way for the development of a local supply chain and the BNDES wants to take this opportunity to develop the solar industry”, the bank says in a statement.