Faro Energy believes ‘distributed solar generation is here to stay’

Brazil’s Faro Energy builds, operates and maintains PV solar power plants since 2016 and plans to invest US$60mn in distributed generation units by 2022, CEO Pedro Mateus told BNamericas. 

The goal is to add another 70MW to its portfolio, which currently comprises 33MW in operation and 50MW in construction. 

In this interview, Mateus talked about the business outlook and challenges the sector faces in the country.

BNamericas: When did you enter the Brazilian market?

Mateus: We started in Brazil in 2016, right after the regulation of distributed generation went into effect. When the public sector gives clear signals, the private sector reacts. There have been 5bn reais (US$980mn) invested since then and more than 12,000 companies are operating in the segment. We are present in 13 Brazilian states.

BNamericas: What are the main projects in progress? Are there any new contracts in sight?

Mateus: Between the end of 2020 and the beginning of this year, we obtained US$60mn in funding and, with this, we will seek 150MW of installed PV solar plants by 2022, investing all of this capital by then. We are talking to companies in sectors with high capillarity and energy consumption, such as sanitation, telecom, and drugstores.

Today we have about 33MW in operation and 50MW under construction, including the TIM and Oi plants. So we still need to add 70MW. The commercial team has been working hard on this purpose. 

BNamericas: How do you evaluate the current scenario and perspectives for the Brazilian electricity sector?

Mateus: Distributed solar generation is here to stay. Having the capacity to generate your own energy is a paradigm shift, and this is very hard to stop. There has been a discussion for more than a year between [regulator] Aneel and the distributed generation sectors about the regulatory change. This brings uncertainties for present and future projects and is very bad for the sector.

In the last three years, 200,000 jobs were created in the PV solar power sector. We haven't stopped hiring since the pandemic started. We were nine, now we are 40. And we are on the verge of an energy collapse, with reservoir [levels] down. The distributed generation sector is very fast, with construction works quickly executed, it contributes to the reduction of losses in distribution, and is a source that generates energy at peak consumption, which could help to reduce the use of polluting and expensive thermal plants. 

BNamericas: What are the main challenges?

Mateus: Clear regulations and predictability for the investments that will be made. These are long-term investments, with payback periods of 20, 30 years. It is necessary to solve the fight between distributed generation and the distributors [concessionaires].

And the financial sector needs to mobilize more and more so that there are instruments to raise funds. We have already made two debt issues in Brazil. We recently closed a large operation with a bank that will be announced soon, of more than 100mn reais for distributed generation, but it took a year to be worked out. It is important to have more speed. 

BNamericas: How do you view the carbon credit market and renewable energy certificates (RECs)?

Mateus: Brazil has enormous potential for carbon credits, because of its vast forests or agricultural management. But I believe more in RECs, since carbon credits are the basis for enabling projects that are not economically viable. Faro is following this market.