Brazil heads for solar energy rush – pv magazine International

The deployment in Brazil of distributed photovoltaic production (less than 5 MWp) has exploded from a total capacity of 500 MW in 2018 to 7 GW in September of this year. The trigger for this increase, along with soaring electricity prices, was Bill 5829 of 2019, writes IHS Markit analyst Angel Antonio Cancino. The proposal is expected to be enacted at the end of this year and will gradually introduce network access charges for owners of residential and commercial networks.

From pv magazine 12/2021

On August 18, a revised version of Law 5829 was approved by the Brazilian Chamber of Deputies. The new version of the proposed law is the result of a long negotiation process. It aims to remove some of the network access privileges held by distributed generation (DG) projects in Brazil. DG systems are currently exempt from network charges when benefiting from Brazil’s current net metering system. The program allows owners of DG systems to offset their energy bills with electricity produced on their roofs and delivered to the grid. Law 5829 is currently awaiting Senate approval and is expected to be released at the end of this year.

Although initially intended to put the brakes on the DG segment, the revised version of the law is expected to cause a rush to install to exceed the deadline after which fees will be applied. This is similar to other markets where such laws have been introduced with a specific grace period or connection period.

From January to September 2021, 2.2 GW of DG systems were connected, a significant increase from the 5 GW that were in service at the start of the year. High electricity prices exacerbated by the worst drought in nearly a century in Brazil, low interest rates due to the Covid-19 crisis and economic entities offering five to 10 year loans to finance solar projects make solar PV an attractive investment option. The ability to avoid paying network charges makes short-term installations even more attractive.

Project push

The new law guarantees that DG projects which are in operation or which have filed requests for access to distributors within 12 months of the publication of the law, will retain their current conditions until 2045. The new systems will pay the price. total network costs, with a gradual introduction from one year after the publication of the bill. This transition period is expected to last seven years. It is expected that by 2029, the energy development account will completely stop paying the tariff components related to distribution services.

For new projects, the law also requires the presentation to the Brazilian Electricity Regulatory Agency (ANEEL) of a guarantee of faithful execution within 90 days of the approval of access requests. Otherwise, the requests will be canceled. This performance guarantee will not be compulsory for production shared through cooperatives and consortia and framed in the form of multiple consumption units (such as condominium buildings).

Law 5829 also includes the creation of the Social Renewable Energy Program, the main objective of which is to finance the installation of photovoltaic solar panels and other renewable energy sources for low-income consumers through the program. energy efficiency.

As most developers and end users will be rushing to apply to build DG PV systems before the grace period ends, we expect annual installations for DG projects to peak in 2022 and 2023, with almost 6 GW. of annual DG additions. Due to the facility rush of the project, we anticipate intense installation activity in the PV sector which could result in up to 37 GW of new additions during the period 2021-2025. This should be split between 22 GW of DG projects and 15 GW in the utility market.

Several factors could limit this forecast. High system prices are a major threat, although the DG market is less price sensitive than the utility segment. Modules are already difficult to find in the Brazilian photovoltaic market, and suppliers of solar components are said to have increased their prices by 10-20% compared to 2020.

High shipping rates and the volatility of the local currency against the dollar in the short term are additional factors influencing prices.

Another risk for the projected growth is the lack of skilled workers. The rapid increase in the number of companies addressing the DG market is already making it more difficult to find workers with skills and experience in PV. A lack of resources can also impact the authorization process with distribution companies when they are inundated with access requests.

The approval of 5829 in its current form is a step towards decentralizing Brazil’s electricity system. In the current hydropower crisis, a rapid increase in distributed solar systems can be an important solution, contributing to reduced dependence on hydropower in the short to medium term. The phased transition to full network fees avoids the sharp drop in GM facilities that would have occurred with the passage of the original bill. The question now is how the Brazilian PV industry and distribution companies will cope with the explosion in demand in the near term, as a rapid influx of companies catering to this segment also raises issues regarding quality and profitability. projects.

By Angel Antonio Cancino

The views and opinions expressed in this article are those of the author and do not necessarily reflect those of pv magazine.

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