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.

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.