Large-scale PV faces long battle to be competitive in Brazil

A study predicts that large-scale PV projects are years away for Brazil, but considers distributed generation projects to be competitive already.

“Today, solar, in terms of tenders, is not competitive,” says Maurício Tolmasquim, president of the national energy research centre, EPE, which produced the study for the Energy Ministry.

The current price for electricity generated from large PV arrays is estimated to be R$405 ($198) per MWh without subsidies, compared to prices of about R$100/MWh for wind energy in the most recent power tender and an average of R$151/MWh over the past few tenders.

Under theoretical scenarios with special financing rates and tax exemptions, the price falls to R$300/MWh.

The government has two options to promote solar on a large scale, explains Tolmasquim.

Either it can hold a special tender for PV, knowing that the price will be high, creating the conditions for a new market, or “wait for the price to drop until it is at a more competitive rate”, says Tolmasquim, who is personally “divided” over which is the best option.

However, Tolmasquim does believe that allowing solar projects into existing power tenders would be a good start. He says it is the only way to discover whether it is possible “to have situations where you could have good prices”.

He notes that developers have approached the EPE with the idea of creating hybrid wind and solar projects, taking advantage of the infrastructure developed for the wind farm. “At some point, we need to allow [solar developers] to compete with other power sources, even knowing that it’s unlikely to work out,” says Tolmasquim. “But it’s a way to start understanding the market, the potential and the realities. You never know what the developers might come up with.”

Meanwhile, PV is already competitive for distributed generation, and the electricity regulatory agency, Aneel, recently approved a resolution permitting net-metering schemes.

Installing PV on homes would be advantageous for some consumers who pay more than R$650/MWh for power. With additional incentives, such as preferred financing rates and tax exemptions, 98% of the residential electricity market would benefit from using solar panels.