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).

Renewable energy development in Brazil

Brazil currently has one of the cleanest energy matrix in the world  with 77% of all electricity supply coming from renewable energy sources, where 62% of all electricity supply coming from hydro power. However, currently Brazil is experiencing their worst drought since 1930 and going through the water crises, which put in danger the generation of electricity from hydro. This and many other factors are pushing the government toward the diversification and increasing of investment in the development of new green technologies.

Total energy consumption by type in Brazil

Source: ANEEL banc of information on generation, actualised on 28/01/2015

Accordingly to the IRENA country profiles the targets in Brazil were set to achieve 

In addition it has plenty of new energy resources to develop. Apart from huge deposits of offshore oil, gas and hydro power, it disposes huge potential for solar and wind energy. The world’s largest sugarcane crop provides bagasse, a fibrous residue which burns in high-pressure boilers. The country may also have shale gas (the Economist, 2013).

Accordingly to the IRENA country profiles the targets in Brazil were set to achieve increase by 16% of electricity generation from renewables (except hydro power) by 2020:

·           16% of electricity generation from renewables (excluding large hydro) by 2020

·           11.5 GW of wind capacity by 2020

·           9.2 GW of biomass-fired capacity by 2020

·           6.4 GW of small hydro capacity by 2020

Nowadays small hydro stations generates already 4.7 GW and 2.3 GW are planning or under construction. Wind energy accounts for 5GW in operation and 10.2 GW planning or under construction. Solar energy however hangs behind with 20 MW in operation and 50 MW planned (ANEEL data, 2015).

In 2012 ANEEL (National Energy Agency) established the normative resolution Nº 482, which represents the general conditions for net-metering system for mini and micro electricity generation. The idea of this system is to enable the distribution and use of self-generated energy, e.g. when the electricity generation system produces more electricity than current electricity consumption, the surplus is injected in the electricity network which could be used later when the consumption is higher than generation. Thus houses and small commerce could generate their own electricity and get the credit for this generation to use it after when they need the energy from the greed.

Brazil has the experience of organising the “solar only” energy auction, firstly made for Pernambuco region and in 30 October 2014 for the Federal Reserve energy. (EPE, 2014). However, the initial price was very low for current electricity companies, which was set in average at R$228.63/MWh (ibid).

Brazil currently has no solar feed-in tariffs policy, while this policy could help as well solar energy to reduce its cost. From 2002-2006 due to help of feed-in tariffs integrated in the programme “PROINFA“, the cost of wind energy dropped from $150 per MWh to $53 per MWh in 2011 auctions (Chadha M., 2014).

Despite high costs of solar energy Brazilian government decided to support its use for certain social projects. There are several joint projects between electricity distribution companies and institutions for electrification of rural regions. The Program “Light for all” (“Programa Luz para Todos”) was implemented in Minas Gerais by Electricity Company CEMIG, which installed photovoltaic systems for 285 000 consumers in rural areas from 2004 till 2011, the same program substitute Sunlight Program (“Programa Luz Solar”) in the Northeast Region and the National Program for Rural Electrification.

Moreover, some states introduced the tax incentives for solar energy. According to the Agreement ICMS 75/11 (Tax on Circulation of Services and Goods) solar modules become a tax exemption on ICMS that exclude the double taxation of consumer. In addition, Brazilian government together with Germany started the researches in new solar energy technology as concentrated solar power (CSP) and plan to construct the first CSP plant in Petrolina (Schlipf, 2014).

The development of solar energy use is gaining momentum in Brazil. Once successfully implemented program aimed at increase in use of solar energy for water heating in houses (“Minha casa, minha vida”), opened new perspectives for the following use of solar panels to produce electricity. According to the Brazilian National Department of Solar Heating (DASOL), the production of water heating solar collectors grew by almost 19% in 2009 and more than 21% in 2010. Same results are likely to be achieved with new photovoltaic legislation and incentives, thus creating great opportunities for the emergence of a strong photovoltaic industry in Brazil.