Redefining the idea about solar energy

Have you ever thought why TED talk became so popular? There is one common think which connects all these different talks we could find at TED – ideas worth spreading. Then, why is the idea is so important? Usually, people would have many ideas through the day which won’t be taken of paper or will remain just in their heads. Why would we need these foreign ideas? How can they impact us? Basically idea is a pattern or guidelines we see the world. When we see a picture of a woman with a hijab many different people would probably have different ideas in their heads depending on the ideas they had about a hidjab. A Muslim girl will probably relate herself much easier to this picture than a Cristian or Hindu girl. And yet that confirmation comes from my own idea about how the identity and image of certain religions works.

 

Ideas about the world is everything, it’s our guidelines on how to live and what to do. The politics comes from a certain ideas that determines the identity of every think we have around us. Solar energy is as well a concept which is often associated with words as “expensive, environment, innovation, future”. These worlds itself determine the futurist idea of solar energy as something very distant, something that the future generations should engage in, but not yet affordable for us. As a Brazilian government would argue, we have indeed many challenges to resolve, as food security, infrastructure, schools, health and etc. We can’t yet afford to think about the issues as the climate change, environment and innovation. However, if we could redefine the idea which is built the identity of solar energy, we could redefine its development path. On my point of view, what lacks in this picture of solar energy concept is a social pillar. 

Solar energy is the most democratic source of energy, where every household could generate the electricity and improve their well-being, as well as health in case they have used the kerosene lamps before. The solar energy creates new employment opportunities directly and indirectly fueling the local economy.Why then it so undeveloped in many socially vulnerable places?

The most important is to reshape the idea about solar energy in people’s mind as something futurist, available only for rich people. We have this picture because we constructed it, based on the existing idea, that solar energy is something we don’t have to invest or subsidize, while we intensively have subsidized other energy sources for many years. 

People often would buy a car which is more expensive than solar systems and it will be depreciated over time. While solar system is an investment which would increase the price of the house and will bring the electricity for free in 5-7 years. The argument could be raised that people need the cars for everyday live, yet don’t they need an affordable source of electricity on everyday bases? We designed the city in such way, that we need a car and it's impossible to go everywhere fast enough with the public transport! If there will be a good public transport, people won't need to buy cars and they would have additional financial resources to buy the Photovoltaic (PV) system. 

The PV system could bring to the consumer the constant energy price and he could stop worrying about the rise of electricity costs. If the capital cost spread all over the life time of system, it will get stable payments for the next 25 years! If the banks would change their picture about solar energy as something futuristic and reduce their interest rates, it will be affordable for middle class households, while government could help the poorest one. Thus, we could start defining the solar system as an investments, rather than expenditure, which would bring a different view on technology.  

China, for instance, has a different very complex notion of solar systems as a tool for social policy. After a series of programs equivalent to Brazilian "light for all" they managed to lift up 30 million people out of darkness providing government subsidized PV systems. Currently, they have a new program “Poverty Alleviation by PV” – this time is not only about the energy access, but to alleviate the poverty and provide the income for vulnerable families through the selling of solar energy to the grid. 3 Million of poor households (about 10 million people) will get a stable income of 1500 reais  (3000 yuan) per year.  And they will keep receiving this for the next 20 years. Indeed, instead of just redistributing the income among the citizens, we could use their roof space and pay for the energy the households would produce. 

Solar energy at school. Photo made by Wang Sicheng

In South Africa, as in many other African countries, the solar energy became an important platform for social enterprises. The latter are eradicating the kerosene problem and encourage the private sector to compete with them. Solar Monney, Mobisol and others offer the households to rent the PV systems and just pay monthly for the electricity through their cellphones. The most amazing for me was the solar sisters movement, which empowers woman and give them an energy access. They argue that the income of self-employed rural woman with access to energy is twice that of their counterparts without access to energy. The NGO is arguing about a crucial role of woman in energy sector and how it’s important for them to have an access to energy. 

All these examples are to present the social changes solar technologies could bring to the everyday life of people. By making the PV technology affordable option for the poor population, we redefine the idea about the solar energy being something futuristic, available only for rich or expenditure rather than investments. By bringing the social pillar into the identity of solar we could start to have a completely different picture of technology and the concept as a whole. 

I believe that instead of leaving for the next generations our duties, we could focus on how to use these newly available tools to resolve the old problems.

How to finance environmentally friendly projects in Brazil?

As an emerging market Brazil has a lot of resources to invest in the development of environmentally friendly projects. Yet, accordingly to the experts’ announcement the problem is that “there are not enough decent projects to finance”. We hope that through the cooperation with German leading green companies and research institutions Brazilian project proposals could gain additional value to enable them to have more chances to obtain different national and international funds.
Brazil has different state programmes that aimed at supporting the innovation and sustainable project development

1. Federal funds

One of the low cost access to financing is confined to credit lines provided by Brazilian National Development Bank (BNDES), which offer rates between 2.5% - 5.5% under their climate fund (Fundo Clima) program,. The program provides a credit interest rate lower than the current reference rate (11%) stated by the central bank of Brazil. The financing is granted for products with nationalization (local content) index, in value and weight, higher than 60%, and what is making more difficult to obtain it for solar energy projects.
BNDES has also other funds such as Fundo Amazônia, Technology development fund (FUNTEC), support for energy efficiency projects (PROESCO) etc. All these funds are aimed to support  the innovation projects and differ in the project location or its specification.
More detailed information can be found here: http://www.bndes.gov.br/SiteBNDES/bndes/bndes_en/

Funding Authority for Studies and Projects  (FINEP)
According to the law about innovations (Lei de Inovação) companies might obtain public resources from 10% to 200% of applying amount (depending on the size of the company) to develop innovative projects. Generally projects should be from the strategic areas selected by the Federal Government to be able to receive such support. FINEP is responsible for this subsidy and it is publishing the information about the beginning of a tender on its site http://www.finep.gov.br/editais/vigentes.asp

In the process of selection foreign companies might take part only if they have partners in Brazil. However, for this purpose a company should be in a category of “leading companies”.  According to established for this program criteria a “leading company” should have gross operating revenue equal or higher than 4 926 790 Euro (R$ 16 000 000) or equity equal 1 231 699 Euro (R$ 4 000 000) in the latest fiscal year.

To apply for this program a company should send a note of interest.  After this leading companies will be selected to present their business-plans.  For selected business-plans will be elaborated an instrument of support with conditions of a credit and a financing amount.

2. Regional programs in Sao Paulo

Many regions in Brazil have the funds for the innovation projects financing and it is possible to negotiate the conditions with local government that depending on the projects. Regional autority are usually offering the place for free or under subsidies, special fiscal treatment and many other incentives in order to attract a foreign investor/company that could bring an economic development and jobs creation in the region. As an example we could see the offer of regional bank in São Paulo.

Desenvolve SP

The São Paulo state provides to investors credit facilities and specific tax incentives for activities related to the sector. There is the green economy credit facility, from São Paulo Development Agency – Desenvolve SP. The interests of this bank is a bit higher than the one of than BNDES, but it is easier to get, because it requires less bureaucracy and it allows to import material needed for the construction (while  to get BNDES credit company should guarantee to use at least 60% of materials produced in Brazil ).

Name of credit line	Interest rate/ per month	Repayment period (months)	Repayment period (months)
FIP	0, 57%	Up to 120	Up to 24
Linha Economia Verde	0,41%	Up to 120	Up to 24
Linha Economia Verde – equipment	0,41%	Up to 60	Up to 12

Concentrated solar power in Brazil

Solar thermal power plants for the production of electricity until now have been mainly built in Southern Europe, North and South Africa and the United States (GIZ, 2014). 

Power plants with concentrating solar power systems use the sun, instead of the fossil fuel, as a heat source. The steam from the boiling water spins a large turbine, which drives a generator to produce electricity (NREL, 2014). The key advantage of this system in compare with the other renewable energy sources is a possibility to implement a thermal storage system. This opportunity of energy storage makes this system a reliable and flexible energy generation unit (IRENA, 2012).

Brazil offers a great potential for the CSP technology. The data from NREL shows very good values of direct normal solar radiation. In addition the values near the equator showing the constant optical conditions for the plant operation that add the stability to energy producing (GIZ, 2014).

Furthermore, Brazil possesses a developed industrial sector that can be adapted to produce components of CSP plant, such as steel and glass industry, chemical and petrochemical companies. 

As part of the German Climate Technology Initiative (DKTI), Brazilian government together with GIZ (German Federal Enterprise for International Cooperation) are working on the creation of conditions for the development and dissemination of CSP in Brazil. The project consists of different components as training and education, research and development, building of the experimental plant, matching industry and universities etc. This cooperation is aiming at the creation of foundation for further CSP development in Brazil and the strengthening the German-Brazilian cooperation.

As CSP technology requires for the moment high investments. In Brazil it’s seen currently as a good opportunity for the steam generation. There are many industries that need the heat for the production processes. At the moment these companies use wood that sometimes favors illegal deforestation. Indeed, CSP technology could be already a competitive alternative for the steam production and clean energy producer in the future.

Where the energy is coming from?

When I was working at the International trade Center, I learned one very important rule: always ask in the shop where the product is coming from! This small action could influence the supply chain of that product as if the customers are asking then the shops will start to do the same.
Apparently, now I can ask even where the energy is coming from! IDEAL institute in Brazil introduced the solar energy label called "Celo Solar" in order to give visibility for solar energy. It's been a long time, Brazil needed something to encourages companies to install the solar energy at least for the marketing reasons. Yet, this label is unknown in Brazil even within the specialists in this area. Moreover, after I went through the guide to obtain this certificate, I got an impression that it's not so easy. Many papers are required including the marketing plan on how it's going to be promoted. Indeed, these criterias will provide a certain credibility for a label, yet it will require a long time to be well-known.

For more info: http://www.selosolar.com.br/en/selo-solar/

Ideal financial lines for PV system in Brazil

Yesterday, I participated at the defence of one Master's theses concerning the regulation measure for solar energy in Brazil. The objective was to identify the main regulation barriers to develop solar energy, which one of the most important is the lack of an appropriate financial support mechanism.

Indeed, in Brazil there are already some support mechanisms as auctions for solar energy, net-metering and even some financial lines for the energy plants provided by BNDES (development bank). Yet, there is no any adequate financial line for the distributed generation.  If I want to install the Photovoltaic (PV) panel on the roof of my home it will cost me around 20-30 thousand real (or $700-$1000) with the payback achieved in 10 years. There are some governmental banks, as Caixa that provides the credit lines for solar heaters and it's possible to take for PV energy, but still with very high-interest rates.

The work made by Helena Mian proposed the introduction of special financial incentive with the interest rates of 5% that could be adequate for the viability of solar energy in Brazil. However, when I talked with some of the financial sector representatives in Brazil and asked them about the possibility to open a special credit line, they were complaining about the lack of demand. They were saying that until the time when solar energy will be accessible for the majority of consumers they are unable to provide a special financial line for it. In other hand, we understand that without the adequate financial line for solar energy it will take long time before it will be accessible for a consumer.

Nevertheless, he agreed, that it would be possible to create a "consórcio" that is used very often in Brazil to finance concrete products as car or homes. Basically, it means that group of people who wants to buy the same product, without the immediate necessity to have it, make installment payments over a fixed period.  A bank could create this consórcio specifically for the PV system, that will bring the financial costs down and become a more budget-friendly product.

Why do we need a solar energy in Brazil?

Many people are asking me why I'm studying and working on solar energy in Brazil. Why solar and not biomass, where Brazil have so many successful projects or do not work with consolidated wind energy?

Let me try to explain you here why I'm so passionate about the solar energy and especially in Brazil:

First of all, Solar energy is growing much faster than any other renewables. Accordingly to Renewable Energy Network report growth rate in 2013 for Solar Photovoltaic (PV) was 28%, for Concentrated Solar Power (CSP) 26% and for wind only 11%.

Growth rate by renewable energy technology during past decade
Source: REN 21, 10 years of renewable energy progress 2004-2014

Nowadays, wind power accounts for the largest share of growth in renewables-based generation (34%), followed by hydropower (30%), solar technologies reaches only 18%. However, we can see more investments made in solar energy ($114 billion) rather the wind energy ($80 billion), (World Energy Outlook, 2014). 

Secondly, while wind energy sector employs around 0.8 million persons, the solar photov

oltaic sector accounts for 2.3 million jobs (2013), largely concentrated in China. The Chinese PV value chain employed 1.6 million people and shows an outstanding example of what solar energy could bring into the economy (IRENA, 2014).

Jobs in selected countries in 2013 (IRENA, 2014)

And finally -  the great potential of solar energy in Brazil. Currently in Brazil there are 5GW of wind energy in operation and 10.2 GW planning or under construction. Solar energy, however, hangs for the moment behind with 20 MW in operation, but 50 MW are already planned to be introduced (ANEEL data, 2015). Brazil has all the conditions to be one of the leading countries in solar energy sector and there are some of the criteria that could prove its potential:
• Germany is famous as one of the main solar energy producers with the solar irradiation between 900-1250 kWh/m2/year. In Brazil the south regions with the lowest irradiation are equal to the best spots in Germany and accounts about 1,500 kWh/m2/year, while in the north regions irradiation could achieve around 2,500 kWh/m2/year.
• Brazil has one of the most expensive prices of electricity in the world that could be profitable for the renewable energy development. High electricity prices help to achieve the grid parity when the renewable energy sources could compete with other fossil fuel sources in terms of generated electricity costs.
• Photovoltaic technology represents the opportunities to decentralize electricity production and bring it to the remote areas. Many people still live without electricity in Brazil and it’s very costly to extend the grid to these villages. PV panels with batteries could be rapidly delivered and installed in these areas; however, there are many other problems that were not resolved as the maintenance of technology, environmental problems and social acceptance of such innovation.
• Other technology that uses solar irradiation as a resource for energy generation is Concentrated Solar Power (CSP) that has the unique possibilities of 24 hours constant energy generation. Brazil offers a great potential for the CSP technology as it has a high direct normal solar irradiation, especially near the equator. Furthermore, Brazil has a developed industrial sector that can be adapt to produce the component of CSP plant, as steel and glass industry, chemical and petrochemical companies. Jointly with the German government, Brazil has started the bilateral technical cooperation project aimed to create the conditions for developing and disseminating CSP in Brazil.

New possibilities in the Brazilian solar energy market

Recently Senator Ataídes Oliveira proposed the bill in order to exempt the import tax on all equipment and components of solar energy. That bill was already approved in the Federal Senate and is under consideration in the Chamber of Deputies. If this bill will pass, that means that the prices for Photovoltaic (PV) systems will reduce by 10% and solar energy will spread in Brazil.

Currently, there are some taxes already exempted in Brazil, as State VAT, Import Tax,  Excise Tax (IPI) that acheive 0%  for PV modules, but not for other components of PV system. For exemple, Excise tax for inverters is about 15% and import tax vary till 25%. The introduction of this law could partially reduce the barrier with the importation of other PV sistem components and reduce the prices. However, this project of low gives the exemptions on taxes only if there is no similar product in Brazil, that could stimulate the national production.

It's been a while, while I'm hearing at the conferences about the chicken and egg problem: there is no market, thus it's not rentable to build a factory in Brazil; in other hand, if it would be a factory, the special lines of financement will be available and demand would increase. Many European and Chinese companies are negotiating currently to build a PV modules factories in Brazil, but for the moment only one company that montage the solar panels in Brazil exists with the prices far higher than the imported panels (Technometal).