São Paulo state to pull in up to US$1bn for solar projects

São Paulo state is expected to attract 4bn-5bn reais (US$770-965mn) for PV solar power projects in 2023, Pedro Drummond, the local coordinator of Brazil’s solar power association Absolar, told BNamericas.  

One of the drivers of these investments is the exemption of the state ICMS tax on solar equipment for projects with up to 5MW of installed capacity, which was passed last week by the São Paulo state government. 

In force until the end of 2024, the decree confirms a decision published by the national treasury policy council (Confaz) in 2022. 

Drummond said the exemption would align São Paulo legislation with that already in effect in Minas Gerais, which has made great strides in distributed generation (DG) capacity.

“São Paulo has just surpassed Minas Gerais in DG and the ICMS exemption will tend to improve the attractiveness of projects because it will reduce the time of return on investments, especially for large-scale projects,” he said. 

According to the Absolar representative, São Paulo recently reached 2,437MW of DG capacity, compared with 2,434MW in Minas Gerais. 

The two other states in Brazil’s southeast region, Rio de Janeiro (687MW of DG capacity) and Espírito Santo (378MW), already had ICMS exemptions for solar power equipment.

Guilherme Chrispim, president of the local distributed generation association (ABGD), believes that São Paulo will further increase its competitiveness in distributed generation. 

“São Paulo had been performing well due to a significant per-capita consumption, a high industrial level and a purchasing power that can better access the possibilities of DG. Now, with this decree, this should expand even more, with growing investments,” he told BNamericas.