Why Brazilian fiber optics distributors are increasingly jumping on the solar bandwagon

Commercial ties with Asian manufacturers and growing domestic demand for renewable equipment are increasingly driving traditional Brazilian fiber distributors to add solar gear to their portfolio.

One of the latest players to do so is Dicomp, a Parana-based distributor with 24 years’ experience in supplying the local telecom segment.

Less than two years ago, the company started to sell photovoltaic panels, inverters and related solar equipment, betting on the growth of the segment in the country. Now, roughly 40% of sales come from the solar/renewable business.

“In 2020-21, the segment that grew the most was telecom. The pandemic greatly boosted the market, with sales of fiber optics and other network assets. In 2022, telecom saw a certain slowdown, more due to the boom the previous year, while renewable energy grew a lot,” Dicomp CEO Filipe Favoto told BNamericas.

Since 2020, Dicomp's sales of solar equipment have increased 335%, partly because the segment was new, partly because of heated demand. 

The distributor's revenue mix is currently 40% telecom, 40% solar and 20% industrial automation and security solutions, said Favoto.

OIW Telecom Solutions, which claims to be among the biggest fiber optics importers in Latin America, also turned to solar. Sales started in July, and the goal was to leverage the established distribution network and direct channels with Asian suppliers to become a significant importer and distributor of solar equipment, OIW's CEO Fabricio Ferreira told BNamericas in June.

In May, OIW also inked a partnership with Huawei to incorporate the Chinese firm's telecoms equipment into its portfolio.

"The expansion potential [for solar equipment] is very strong. We've been looking to enter this market since 2018, and now we understood it was the right moment to use our distribution structure and launch the operation," Ferreira said at the time.

Dicomp, for its part, distributes solar panels made mainly by Canada’s Canadian Solar and China’s JA, and solar inverters, among others, by Hoymiles and Epever, which are both Chinese.

The company also represents players such as Ubiquity, HTGT and Microtic.

In telecom, Dicomp has its own line of optical passives, called Nazda, which is 100% made in China by an original equipment manufacturer, said Favoto. Dicomp has a unit near Shanghai to serve as a warehouse and for quality control for the manufactured equipment, he said.

Between mid-2021 and mid-2022, close to 15% of Dicomp's stock was affected by the component crisis, which Favoto deems a "success" considering the overall market situation.

Dicomp's sales in Brazil target primarily resellers and integrators, which are responsible for the installation of the equipment for end-customers, or internet service providers in telecom.

OUTLOOK

For 2023, the company projects little growth for the telecom business, in line with 2022 levels, and another sound expansion in solar, although not as strong as in past years.

Dicomp expects to grow 20-25% in revenues next year, compared to 12% projected for 2022.

The CEO cites two reasons for a small deceleration in solar: the increased competition, with new entrants, and a bill passed in congress and signed into law by President Jair Bolsonaro this year.

The law introduces distribution costs for those who generate their own solar power in systems connected to the grid (on grid) starting in January. Previously, these investments were exempt, which provided incentives for the acquisition of solar equipment.

A new bill being debated in congress, though, would postpone these charges.

“Perhaps, and I’m 80% confident of this, the deadline will be extended until July. The lower house already approved this extension, and the text went to the senate. If the charges are delayed, we believe this will give new impetus to sales. Consumers will want to take advantage of that and our sales will be higher.”

Among Dicomp's chief telecom customers are the largest ISPs in Brazil, such as Alloha, Unifique and Brisanet, which acquire fiber optics, Wi-Fi assets and some network assets.

Last year, the company sold 70,000km of fiber optics, compared to 600,000km by OIW.

Dicomp is betting on GPON networks and intends to launch new products in the coming months, said Favoto.

In solar, the bet is on hybrid products – on-grid and off-grid – for homes and companies looking to have batteries for solar energy storage. “2023 is going to be the start of that and we see stronger momentum in 2024 and 2025.”

According to Favoto, Dicomp has 14,000 customers, of which 4,000 are monthly buyers.

The company invested 10mn reais (about US$2mn) in its headquarters in Santa Catarina, which are due to open in mid-2023. It also opened a new distribution center in Contagem, Minas Gerais, and is mulling a new site for 2023, either in Espírito Santo state or in the northeast region, he said.