Brazilian PV rooftop company wants local-content rules removed

Brazil should remove local-content requirements for rooftop solar until 2020 and introduce high certification standards for installations and equipment, says the boss of Engie Solar.

“The local-content policies are good policies, but we have to ask to what level it can be taken and we have to think differently about distributed generation,” Rodolfo Pinto, chief executive of Engie Solar's Brazilian arm said during a panel on new business models for rooftop solar at the Brasil Solar Power conference in Rio de Janeiro.

Engie Solar recently bought control of a local installer as it tries to tap into the growing rooftop market. With more than 2,000 units installed and capacity exceeding 30MW, the Brazilian sector has grown fast from 1,000 arrays at the end of 2015, and is expected to top 5,000 by the end of this year.

Government projections put the sector at 4GW by 2025. Although Pinto recognises that lack of financing is the main constraint on reaching this figure, he says the country's current economic woes do not allow it to solve this problem immediately.

With commercial interest rates topping 20% a year, the national development bank, BNDES, is about the only bank to offer accessible retail rates to finance the purchase of PV modules, but its rates are linked to local content, much like the bank's project financing lines for utility-scale solar.

To make things worse, the government's plan to attract module assemblers has been slow, with only one Tier 1 panel maker, Canadian Solar, so far confirming investments in Brazil. Other world players have decided to import panels to sell in the market as the utility-scale sector stalls because of economic and political uncertainty.

Pinto points out that while the utility-scale sector faces its own complexity, rooftop needs to seek alternative solutions because it is based on different concepts.

The local-content waiver would allow rooftop to grow faster — avoiding the low quality and small capacity of local module makers — because tapping the cheaper BNDES financing would reduce return rates and increase demand.

The standard of installations is another issue. “In Australia, solar power lost credibility because of bad quality of installations.”

So Pinto proposes that the industry or the government subsidise training for installers and certification for equipment at the highest possible levels, using US standards as a reference.

“We don't want to protect the big companies, we want to protect the good ones,” he added.

In the past three years, Brazil has seen the number of rooftop installers surge from about 200 to more than 800. The new Brazilian Association of Distributed Power is studying implementing a minimum-quality programme.