Global Solar PV Market Report

Brazil accounts for almost 7% of the planet’s renewable energy production – outpacing its 3% share of the global population and 2% share of global GDP – and has long been a leader in biofuels and hydropower technologies. The country is now seeking to expand its energy innovation into new technological areas. To accelerate solar deployment, the government is working towards ramping up the participation of solar operators through implementation of new policy frameworks, liberal net metering policy, and PPA promotions.

The Brazilian energy sector is undergoing a transformation. This is a reaction to the recent energy crisis, in which dry summers caused a reduction in hydro reservoir capacity at a time of rising electricity demand. In recent years, the government has gradually realized that the power sector needs diversification to reduce its over-dependence on hydropower and increase the share of other renewable sources like solar and wind in its energy mix. As part of this strategy, attractive legislation is being introduced to unlock investment and enable increased adoption of solar. Solar PV’s  value  proposition  has  strengthened  in  recent  years due to the country’s attractive climate and solar irradiance characteristics, high electricity costs, and a fall in solar input prices.

The country updated the solar regulatory framework publishing the long-anticipated Law 14.300 that came into force on January 1st, 2023. In broad terms, the law introduces a new framework for distributed generation in the country (>60% of installed grid connected solar capacity), with a key feature lowering the eligibility criterion for net metering (to any solar PV systems below 5MW). The anticipation of this law has seen a recent surge in new small- scale solar project developments. The framework will remain in place until 2045, ensuring regulatory and legal certainty for owners of small-scale solar PV systems. For this small- scale distributed generation segment multiple financing options are also available from Brazilian public banks such as Banco Nacional de Desenvolvimento Econômico e Social (BNDES) and Banco do Nordeste.

Solar PPA agreements have gained traction in the Brazilian market and there are growing instances of corporates being involved in long-term PPAs to secure energy prices and meet sustainability goals. Scatec ASA signed a 20-year PPA with Equinor ASA and Hydro Rein for the Mendubim 531MW solar project. Additionally, in 2023, Brazil saw the longest corporate renewable PPA ever signed in Latin America. Atlas Renewable Energy has signed a 21-year PPA with Albras, the largest aluminum producer in Brazil for its 902MWp PV project. The solar farm is expected to begin commercial operations in 2025 and generate approximately 2TWh annually.

Solar distributed generation capacity in Brazil is growing rapidly. As of March 31, 2023, home and building owners have installed more than 1.8 million renewable distributed generation systems in Brazil, totalling about 19GW of capacity, the vast majority of which (99%) is solar. This sector is expected to maintain its dominance aided by the enactment of Law 5829, which sets out a seven-year transition period to introduce grid access charges in a phased manner. As the grace period ends in 2023, this year is expected to be flooded with installations. In this regard, energy storage is likely to play a crucial role in shaping the growth trajectory of the next phase of the distributed generation market in Brazil. Behind-the-meter energy storage market is starting to take off as this segment is already competitive in several Brazilian states.

On the other hand, grid connected utility scale energy storage development is still in its infancy. In 2022, Brazil launched its first large-scale energy storage system with a total capacity of 30MW/60MWh. The project is sited at an ISO CTEEP substation in São Paulo and required a total investment of US$27 million. With more than 8GW small and medium scale diesel generator sets connected to the grid, the replacement opportunity for battery storage is massive.

The government has announced its investment plan of US$9.5 billion in new transmission lines and infrastructure to boost solar and wind deployments. The plan is to hold at least three major transmission auctions in 2023 alone. The new transmission investment is set to unlock new wind and solar capacity and allow for greater renewables penetration across the country. Particular focus has been given on hybrid solar and wind projects, whose dual generation is believed to add greater stability to the country’s grid. This will be supported by simpler approval and interconnection processes so that the two distinct facilities operate under the same network and grant.

Brazil has seen multiple sizeable PV development announcements of late, validating its position as a fertile emerging market for solar PV. Cubico Sustainable Investments announced its acquisition of a 1GW PV plant in January 2023 whilst Atlas Renewables secured a loan in excess of US$200 million to fund a 438MW Brazilian solar PV project.