Brazil solar investments expected to hit over US$9bn this year

Solar power will retain its upward trajectory in 2023, after becoming Brazil’s second largest electric power source.

"In 2023 we likely see the expansion of solar energy by 10GW of operational installed power, which will represent a volume of new investments worth 50bn reais [US$9.4bn]," Rodrigo Sauaia, president of solar association Absolar, told BNamericas. 

This week, solar energy reached 23.9GW of operational installed power, compared with 23.8GW of wind power, according to Absolar. Of the total, 16GW corresponded to distributed generation by small-scale plants, run by households or small businesses, while 7.9GW related to centralized generation sold through the regulated and free markets.

Solar now represents 11.2% of the country's electric power matrix, after hydro power, with 51.3%. 

"Solar energy has become increasingly efficient and cheaper to be installed by people and companies and is a friendly solution to the environment. This tends to encourage the continued expansion of this energy source in the country this year and in the medium and long term," Camila Ramos, CEO of clean energy consultancy Cela, told BNamericas.

Financial incentives facilitated especially the installation of small-scale photovoltaic plants.

However, on January 6, a fee exemption for using the grid for consumers who file requests with energy distributors to connect micro and mini generation systems will expire.

"Although there are changes in the model, the advancement of technologies in the production of solar energy on a large scale is reducing the cost of projects, which is why these projects remain competitive," said Ramos, highlighting that solar will become the country’s main energy source some time between 2030 and 2040.

Persistently high interest rates hurt the sector more, however, making project financing more expensive. "Development banks in Brazil need to understand the importance of solar energy generation for the environment and work to offer a special line of financing for the sector," said Sauaia.

In 2022, installed solar capacity expanded heavily. A driver will be green hydrogen projects, which demand solar or wind power.

"In Brazil, we have 92mn energy consuming units, which are residences, commercial and industrial facilities. Of this total, only 2mn consume some form of solar energy, so the potential for expansion is still huge," added Sauaia.

President Luiz Inácio Lula da Silva, whose term started January 1, has also pledged to implement an ambitious clean energy agenda, which is expected to boost the solar sector.

Since 2012, when Brazil implemented a regulation promoting the use of renewable energy, 121bn reais have been invested and 33.3Mt CO2 emissions have been avoided, according to Absolar.