1 March 2016



Brazilian solar picks up the pace with net metering

Author: Jason Deign, Solarplaza

Brazil’s highly promising solar market looks to get a new boost from new net metering rules that favour distributed generation, Solarplaza has learned. The installation of systems between 1 MW and 5 MW was already being predicted to triple during 2016 in GTM Research analyst forecasts from last August, ahead of new regulations approved in November and due to be fully implemented from March 2016. But sources on the ground said even this anticipated level of growth could be on the low side for distributed generation in Brazil.

“Our business plan is more optimistic than the forecasts,” one insider told Solarplaza. A key element of the new regulation is ‘virtual net metering’, which means companies and individuals can install solar systems at a given site, inject energy into the grid and take an equal amount of power from elsewhere.

This means a homeowner can now put solar panels on a country house and use the power to offset energy bills in their city apartment. For larger energy users, meanwhile, there is the possibility of leasing a multi-megawatt plant and using it to feed a number of properties, from retail outlets to manufacturing centres.

The new law is expected to lead to a surge in demand for solar plants of up to 5 MW, according to Niels Kleer, commercial director at the installer Empresa Brasileira de Energia Solar. “Virtual net metering works well for customers that do not own roof space,” he said. The concept could also in theory serve consumers through community solar projects, although Kleer noted that in Brazil there is a cultural tendency for homeowners to prefer owning their assets rather than renting them.

Kleer said a further factor favouring the spread of distributed solar energy was rising energy prices, which mushroomed by an average of around 35% to 45% in 2015 (ANEEL’s latest figures).

The main restrictions on virtual net metering are that energy cannot be sold to third parties and cannot be exported to properties covered by a different distribution network operator. Credits for energy injected into the grid are valid for up to five years, two years longer than was the case under Brazil’s previous net metering rules. The new laws have prompted renewed interest in the Brazilian solar market: inverter maker SMA, for example, this month announced it was opening a new subsidiary in the country.

“Brazil is an attractive PV market because it offers federal energy contract auctions, net metering and tax exemptions on the consumed credits generated by net metering,” said the company in a press release.

And this is not just their view. EY’s latest RECAI ranked Brazil as the 8th most attractive solar PV market in the world, preceded only by Chile in the Latin American region. “Despite challenging economic conditions in Brazil, government proactivity in addressing key challenges such as low tariffs, and an increasing focus on its untapped solar market” are looked at with favour by investors.

EY´s report also highlights how “Favorable funding terms for renewables via BNDES (the domestic development bank) could help to create a strong value chain for solar projects, as it did with wind.”

Exemption from import taxes for monocrystalline and polycrystalline solar cells as well as PV modules are being discussed discussed in these weeks, and after the Chamber of Mines and Energy Committee’s acceptance, the proposal is now only two commissions away in the Chamber of Deputies before it will get a final Senate approval and become law.

SMA and other companies’ increased Latin American focus comes amid growing opportunities for solar developers not just in Brazil but also in a number of other markets. Neighboring Argentina, for example, is looking to procure 3 GW of PV and Uruguay is planning to install more than 200 MW.

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