Brazil
Q&A

Distributed solar generation: A power for the good

Bnamericas Published: Thursday, September 22, 2022
Distributed solar generation: A power for the good

Present in 30 municipalities in the state of Rio de Janeiro, energy tech company Reverde is expanding its solar power contracting services to Minas Gerais state and is also targeting business in São Paulo and Alagoas. 

The objective of the Brazilian company, created in April, is to simplify the use of a cleaner and cheaper source of power for consumers of any size through the distributed generation model. 

CEO Felipe Mattos told BNamericas that Reverde's goal is to end 2022 with approximately 1,000 clients, compared to about 200 today.   

In this interview, he explains how Reverde's business works and comments on the outlook for the local distributed generation market.

 

BNamericas: How does Reverde's business work? Is any consumer able to contract your services, regardless of their level of consumption?

Mattos: Brazil is starting to allow small consumers to choose their energy suppliers via distributed generation. So, we were born with this purpose: to help millions of Brazilians to have the option of consuming clean and cheaper energy. 

If I live in a house, I can put a solar system on my roof and consume less power from the distribution utility. But this system works during the day, and putting in a battery to have electricity at night is not cheap. So a credit and debit system was implemented, to combine your energy with the power consumed from the utility. 

A farm or ranch can also do this, but it will have to deal with greater costs of installation and maintenance of the equipment. 

What Reverde does is to rent solar plants and allocate this credit to consumers, who won’t have to deal with installation and maintenance costs or worry about taking out insurance for the equipment, for example. This is valid for any consumer, including those who live in a rented apartment. We only don't accept social tariffs [applied to low-income consumers], because they’re too low, too subsidized by the government.  

BNamericas: Are the solar plants then leased?

Mattos: Yes, we look for plants that are being built to partner with their owners, who don’t want to get involved in the commercialization business. 

BNamericas: Today, there are many solar projects under development in the country.

Mattos: Yes, this is incredible. From large to medium and small groups. And these entrepreneurs are getting excellent returns. It's a great venture, even for small and medium investors. 

Solar generation is more modular, you can do smaller projects, and you don't have to go to the capital market, for example. Everyone consumes energy, so the investor can protect himself from inflation. 

BNamericas: In addition to acquiring clean energy, do your clients tend to gain economic advantages? Why?

Mattos: What moves most customers is the discount. The expenses with fixed bills, such as gas, electricity, telephone, and electricity represents 9% of the average Brazilian's income, and accounts for half the bills. This is a heavy burden for Brazilians. At Reverde, we’re paid by the solar plant owners, not by the clients. It’s a similar case to Booking.com, which identifies empty hotels and finds clients for them. We do the same with solar power. 

The Brazilian electric system is formed by several plants with different efficiency levels, and when you’re billed, you pay for everything, including existing inefficiencies, since many plants have old technologies, besides gatos [illegal power connections], projects with political-electoral bias, etc. With Reverde, we’re talking about new plants, with solar panels in a country with very high solar incidence.

BNamericas: Could this scenario change with the gradual taxation of distributed generation starting in 2023?

Mattos: There will be a natural accommodation of the market. We believe that in the future the consumer will have the power of choice over their energy provider. Regardless of the regulatory instrument, we want to be the brand of choice in energy. Using energy for good, to improve the world, with simplicity and transparency. 

Shared generation will suffer the effects of this change, but I think this is healthy, because there needs to be a harmonious coexistence with the distributors. In any case, the projects will continue. There will be a decrease, but this is not necessarily bad. There is a huge queue of distributed generation projects requesting access to the distributors. And the chain tends to become more professional. Today, with such a high return, there are many adventurers, for better or for worse, as in any race, such as the gold rush, coffee or sugar rush that we have experienced in Brazil.  

Editor’s note: The DG regulatory framework was approved in January. Under the new law, the current rules for holders of already-connected micro and mini generation units will be maintained until December 2045, without charging fees or tariffs, such as for the use of the distribution network. 

That will also be valid for new installations implemented in the first year of the law, that is, until January 5, 2023.

After that, distributed generation units that enter the system will be subject to the gradual application of the fee over six years, until they reach the full amount in 2028.

BNamericas: How many solar plants does Reverde currently rent? Where are they and what is their installed capacity?

Mattos: Today we have seven micro plants in Rio and Minas Gerais, with total installed capacity of around 1MWp, serving approximately 200 clients. Our goal is to close the year with about a thousand clients. 

BNamericas: Do you plan to expand your portfolio of solar plants? Which states are you looking at besides Rio de Janeiro and Minas Gerais?

Mattos: We’re looking very carefully at the interior of São Paulo, in order to serve CPFL Paulista. Alagoas is also on our radar.  

BNamericas: Are you looking for commercial and/or financial partners?

Mattos: We’re closing a fundraising round. As for commercial partnerships, our model works as a network. Individuals who are interested in the business and use their local influence to bring in new clients. Today we have about 30 commercial partners. And we’re now closing a partnership with a large pet shop chain to offer discounts in their stores and on our services. 

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