Powering up: How Brazil's Unicoba is growing sales of energy storage systems

Brazil’s Unicoba is seeing rapid growth in its sales of energy storage systems, with revenues rising by more than 20% year-on-year. 

To help the firms support this growth, last year it raised 125mn reais (US$24mn) in green debentures and another 70mn reais through a green receivables investment fund (FIDC) coordinated by Banco Fator. 

More recently, Unicoba announced a partnership with distributor Amazonas Energia to deliver solar generation systems with batteries for the federal program Mais Luz para a Amazônia (More Light for the Amazon). 

Unicoba's CEO, George Fernandes, tells BNamericas about the company's business outlook.

BNamericas: How will the green debentures and the funds obtained from Banco Fator be used?

Fernandes: We’re reorganizing our cash flow. We made investments in our Manaus plant [in Amazonas state] and we’re replacing them with these resources. It was a decision made by the former CEO to make the investments with our own cash, as there was a matter of timing. 

BNamericas: What was the purpose of the investments made in the plant?

Fernandes: They were for the robotization of the plant. We expect to reduce the errors in the production of batteries in relation to our more manual lines. And we’ve observed some gains, but it requires time to improve the use of the lines and optimize the results. 

BNamericas: Does the company plan to seek new financing in 2023?

Fernandes: Yes, not for 'business as usual', but for new investments to grow in the urban mobility market, for example, and other issues related to energy storage. 

In the current pipeline, we wouldn’t need investments to grow further. We’ve delivered revenue growth of about 25% per year, and we imagine growing 20% by 2023 without any new business. If we grow more than that, we’ll probably seek new lines of capital.

BNamericas: How many batteries will be supplied for the Mais Luz para a Amazônia program?

Fernandes: I don't have specific data on this program at the moment, but we’ve already supplied approximately 150mn reais in batteries for the Luz para Todos [Light for All] program [another federal initiative, which is connected to Mais Luz para a Amazônia].

BNamericas: Are there logistical challenges? How will the systems reach isolated locations in the case of the Amazon? 

Fernandes: This varies, because there are contracts in which we're only the supplier of the batteries. In others, however, we're responsible for building the entire isolated system. In Rondônia, for example, we build the system and monitor the situation of the batteries remotely. It depends on the project of the energy distributor. 

We had a recent case of an engineer who traveled four hours by commercial plane from São Paulo to Manaus, then took a hydroplane for four hours and finally a boat for six hours to reach the isolated community. Meanwhile, the equipment is sent by boat. The logistics are complicated, and this is one of the factors why we’ve become a reference, as we know how to set up these operations. 

BNamericas: Are there concerns regarding river piracy?

Fernandes: Battery theft is a problem, but as our batteries are lithium-based and their use is more restricted, perhaps there's less predisposition to steal them compared with lead batteries or diesel fuel, because even charging a lithium battery isn't a trivial matter.

BNamericas: What other projects and contracts are in your portfolio? 

Fernandes: We have contracts to exchange lithium batteries in the changeover from 4G to 5G systems for telecom operators, since 5G requires better power availability. We have talks to supply batteries for urban mobility, especially motorcycles and scooters, in addition to the traditional portable battery contracts for cell phone and laptop manufacturers. 

BNamericas: Do you believe in the expansion of the battery market in Brazil, including for centralized generation?

Fernandes: We have an eye on this sector. We’ve developed solutions that we already use in our plant in Extrema [a company plant in Minas Gerais state]. But we see little market demand seeking help for this yet. 

We’re aware of a recent project done by a competitor to stabilize cargo on the coast of São Paulo state. A very smart project to secure cargo during the vacation period. 

I think that engineering companies should seek more storage solutions. Our energy matrix is already very clean, but if we had set it up with wind and solar power associated with batteries, we’d have a better system. There's still time to fix this.

But to stimulate the market, we need to have auctions involving energy storage solutions.  

BNamericas: Last year, a backup capacity auction that was scheduled for November was postponed. One of the reasons for the postponement was the fact that the energy research company EPE was studying the inclusion of projects associated with energy storage solutions in the tender. Is this a trend for future backup capacity auctions?

Fernandes: I don't have very precise information about the theme. But this should be a trend, because the cleaner the energy, the better. 

Take the case of hydrogen, for example: its production depends on clean energies, such as wind and solar. And to keep these plants running, batteries are essential. 

BNamericas: On the other hand, there are environmental impacts associated with lithium mining. What precautions does Unicoba take with respect to that?

Fernandes: We try to minimize the impacts by reducing water consumption and using solar energy in our plants, for example. 

This is an important issue that needs to be studied in depth, and there are solutions. For example, we collect used lithium batteries and put them to good use, extending their useful life. 

After 'x' number of cycles, a battery's performance will decline, but for certain cases, such as someone who uses an electric motorcycle to travel 10km per day, the battery doesn't need to be at 100% performance. 

There are dozens of solutions to try to mitigate the need for more lithium. And we build batteries. If the cell changes to a sodium or hydrogen cell, we’re prepared to assemble them in the same way. 

Our company is almost 50 years old. It was founded by a visionary and we’re prepared for the changes. 

The biggest difficulty for us to grow and carry out the revolution of electrification is people. We have difficulty in finding willing and capable people who want to work on this. Today there are private equity groups and banks interested in the topic, but there’s still a lack of engagement. It’s not easy to send an engineer to the middle of the Amazon.