In 2019, the first The smarter E South America took place. How did business opportunities in Brazil change around that time?
Brazil’s energy system is in steady change. Despite renewable energy already presented the main share in the energy mix, the consequences of climate change forced further deployment of solar and wind energy sources. In 2019, Brazil raised into the world top 20 solar markets. The rapid expansion of solar and wind energy has transformed the structure of the energy supply system. As energy from renewable sources is not always uniformly available, the generation, storage, distribution and consumption of energy must be intelligently interconnected. This is why The smarter E South America came in.
In 2021, Brazil was hit by a massive drought accompanied by an electricity crisis. In the same year, The smarter E South America attracted a record number of visitors. How was this reflected in the Brazilian solar market and public and political support for alternative energy solutions in the country?
The drought of the century in Brazil has marked the relevance of the massive expansion of alternative renewable energy sources. Price decrease per kilowatt-hour solar electricity, the abolishment of the import tax on foreign products of the solar value chain and the new distributed generation law that has brought more security and predictability to the market are key drivers for the industry. Now Brazil is set to become one of the top five global markets in the next five years.
What are the perspectives for The smarter E South America in 2023? What market developments do you expect and what topics will be crucial at the anniversary event this year?
We expect 2023 to be another record-breaking year: 450+ exhibitors, 50,000+ visitors. Special focus will be on green hydrogen, electro mobility and jobs in renewables. Brazil has the potential to become one of the largest producers and exporters of green hydrogen in the world. Electric vehicle trend picks up in Latin America. Renewable energies is a job engine: Brazil ranks second worldwide among the countries with the most employees in the field of energy generation from renewable energy sources.
The world is moving towards 100 percent electrification, and solar PV is at the forefront of this transformation. Some 40-50 years ago, when France decided to go nuclear for most of its electricity production and in the USA nuclear energy was touted to be “too cheap to meter”, the term "toutélectrique” (allelectric) was used to propose a shift of all heating technologies to electricity. Cost was the only driver and environmental pressure was small. Nowadays, with the pressure of global warming, it refers to the political, energy and technological change that aims to replace fossil fuels with electricity as part of the energy transition. The expression is today mainly used in the context of the automotive industry (electric vehicles) but can be used wherever fossil uses are replaced by electrical appliances, processes and vehicles, at home, in the industry, commerce, everywhere. The electrification of everything will lead to double or triple demand for electricity, and solar PV will be able to assist in meeting these new loads. In fact, solar PV has dominated the annual global net new deployment of electricity generation for over six years now, and is currently larger than all the other energy generation technologies, both renewable and conventional (including wind, coal, natural gas, nuclear, biomass, hydro, solar thermal,
geothermal) combined.
Solar PV in Brazil has evolved fast in the past 10 years, and with the largest hydropower plant Itaipu completing 50 years of age this year, demonstrates how this benign and costcompetitive solar energy conversion technology will soon be dominating the electricity market in the country. Early this year, solar PV has surpassed wind, after surpassing biomass and natural gas last year, becoming the second largest electricity generation installed capacity in Brazil, as shown in the figure on the right. While Itaipu took over 10 years to be built, and another more than 10 years to ramp up to full capacity, solar PV took 10 years to install, in over 1 million rooftops spread all over the country, the same capacity, and most importantly, with the financial investment made directly by each consumer who opted for the technology. No government debt was incurred by the solar PV uptake in the country.
Last year solar PV has surpassed 1 TW of installed capacity worldwide. Deployment of solar PV is increasing exponentially everywhere. Global installed solar PV capacity grew by a factor of 500 over the past 20 years. In 1985, when the current PV industry workhorse PERC technology
was still an innovation that would take another 20 years to flourish, the total annual production of PV modules was less than 25 Megawatt peak (MWp). Today, many of the individual Tier 1 PV module manufacturers produce 25 MWp/day! The growth rate in annual deployment rate in recent years has been about 18 percent worldwide. Projecting this growth rate forward shows that solar PV installed capacity will pass the combined total of nuclear, hydro, natural gas, and coal in 2031.
In 2013 when Intersolar South America was first promoted in Brazil, the situation was quite different, but efforts and mechanisms were in place already to pave a safe way for solar PV to flourish. It was the combined effort of all the actors involved (industry, system integrators, event promotion companies, academia, and associations), which resulted in this vigorous development which will be further accelerated with the assistance of the energy storage, green hydrogen and electrical mobility sectors, which are also more and more becoming important components of Intersolar South America.
After an incipient period from 2012 to 2015, PV solar generation in Brazil reached 1 MW in 2016. From 2017 on, growth was more substantial, initially with the help of energy auctions and later through investments in Distributed Generation (DG), particularly from 2020 to 2022. A momentous increase happened in 2022, after the publication of the Legal Framework for DG introduced new rules for this industry, including a deadline for allowing consumers a more attractive way to offset credits arising from self-generation.
The evolution of PV solar generation has been pushed forward mainly by progress in DG, which accounted for 68% of grid capacity added in 2022. Microgeneration stands out in this modality in the last ten years, having grown to 86.6% of all connected DG capacity, with more than half of that in residential applications.
As for Centralized Generation, whose installed capacity reached 8 GW in early 2023, there has been a change in its share in energy auctions in the Regulated Contracting Environment (ACR). After large sales between 2014 and 2018, recent years have seen a decline due to a reduced need for contracts by power distributors and a Free Market surge. Currently, 96% of the licensed plants are in the Free Contracting Environment (ACL).
Solar energy was included in the rosters of Reserve Energy Auctions (LER) and later in those of New Energy Auctions (LEN) from 2014 to 2022. Its prices for contracted power went from R$215.12/MWh in 2014, down to R$67.48/MWh in 2019, and up again to R$171.41/MWh in 2022.
The drop in prices for photovoltaic systems over the years helps explain the growth of solar power in Brazil. In the case of DG, the price of 4 kWp residential systems was R$8.77/Wp in June 2016 and dropped to R$4.39/Wp in January 2023 – a 50% drop. 50 kWp commercial systems had a reduction of 47% in the same period, from R$ 7/Wp to R$ 3.73/Wp. The price drop brought in 17.8 GW worth of imports of photovoltaic modules
in 2022, which meant investments of more than R$64 billion for both DG and CG. Imports grew more than threefold since the 4.8 GW of 2020. In 2022, Brazil was the second largest importer of modules from China, behind the Netherlands.
The growth of this industry can also be attested by the significant increase in the number of its players. A market survey on DG carried out by Greener with systems integrators from all over Brazil identified more than 31,000 integrator companies in activity by 2022, a substantially higher number than the 2,500 companies in 2017.
The figures above make the solar industry a remarkable job creator in Brazil. Ten years of solar PV power has reached the 750,000-job milestone. According to the International Agency for Renewable Energy (IRENA), the Brazilian solar PV industry was one of the ten largest solar job creators worldwide in 2021.
With more than 26 gigawatts (GW) of operational installed capacity, considering both large-scale power plants and small and medium sized systems installed on rooftops, facades or small plots of lands, solar PV has become the second largest electricity source in Brazil, representing 12% of the electricity mix.
According to ABSOLAR, in a decade solar PV has already brought to Brazil more than BRL 129.6 billion in new investments. In addition, solar energy avoided the emission of 34.5 million tons of CO2 in electricity generation and brought more than BRL 39.7 billion in public taxes.
This growth has not gone unnoticed by international players. Numerous foreign and domestic companies have established a presence in the country, contributing to the growth of the sector and increasing the technology’s competitiveness.
One of the key drivers of this success has been the country‘s favorable regulatory environment for distributed renewable generation. The approval of the long-awaited distributed generation Law no. 14,300/2022, which brought more legal certainty, stability, predictability and transparency to the market will further accelerate this growth. For 2023 and beyond, solar PV distributed generation is expected to keep growing due to the combination of rising electricity prices and falling system prices.
ABSOLAR foresees a very robust growth in solar this year, driven by the high cost of electricity and the benefits provided to consumers as a strategic solution to reduce electricity spences and strengthen the country’s sustainability. PV has become increasingly popular, reaching all economic classes, with a positive multiplier effect in the society.
Brazil has also made significant progress in large-scale solar PV power plants. Since 2020, a record pipeline of new centralized generation projects was registered at the Brazilian Electricity Regulatory Agency (ANEEL), most targeting the free electricity market.
Large-scale solar PV plants generate electricity at prices up to ten times lower than emergency thermal plants or electricity imported from neighboring countries. Thanks to the versatility and agility of the technology, it takes less than 18 months from an auction for a solar PV facility to be operational. Thus, solar PV is recognized as a leader when it comes to the speed of adding new generation plants to the system.
The advancement of solar is essential to Brazil‘s social, economic, and environmental development. Solar PV helps to diversify the country‘s electricity supply, reduces pressure on limited water resources, and helps to mitigate increases in electricity prices. The expansion of solar also accelerates the sustainable energy transition of Brazil.
Despite its impressive progress, there are still challenges facing Brazil‘s solar PV feature. One of the main bottlenecks is the lack of transmission infrastructure in certain regions, which has constrained the development of large-scale projects. Similar situation is reported by distributed generation, which started to present difficulties in the connection to the grid.