A report from Frost & Sullivan finds Brazil's stable economy and booming energy sector are drawing investors away from what it terms the stagnant North American and European solar photovoltaic markets. This market excitement is likely to fuel even higher foreign investments, the report says, as solar project developers from around the world are finding various entries into Brazil through partnerships.
Frost & Sullivan estimates the Brazilian PV market, which earned revenues of $29.3 million in 2012, will reach $431.1 million in 2017 – a compound annual growth rate of 71.2%. The 2014 FIFA World Cup is expected to give a huge boost to the market, with PV anticipated to account for 25 MW of power in the event's solar stadiums. The opportunities from mega events are backed by Brazil's natural advantage of extremely high incidence of solar radiation throughout the year, the report says.
While the country holds several attractions for investors, it also grapples with regulatory challenges, the report says. Both enterprise and residential clients are hesitant to implement PV systems due to solar energy's high prices and the lack of a specific line of financing. As such, market participants are heavily dependent on government support.
‘Existing and potential participants are looking forward to the impending solar auction to define contract prices,’ says Vinicius Vargas, a Frost & Sullivan energy and environmental research analyst. ‘These auctions will also affect the entire supply chain and help leverage market revenue.’
Currently, Brazil has different energy tariffs across the country, which creates pockets of opportunities for companies, the report says. The market received a boost from Resolution 482, which mandates net energy and serves to mitigate the effects of high electricity rates on consumers.
‘Resolution 482/2012 will expand the use of mini- and micro-generation and the products/credit instruments for acquisition and equipment installation,’ Vargas says. ‘Centralized and distributed generation is tipped to overtake the isolated generation segment, and participants are targeting the former since the government is more likely to back these niches.’
All factors taken into account, Frost & Sullivan concludes that the Brazilian market will be best served by targeting medium- and large-voltage consumers (retailers, shopping malls and large infrastructure clients) and encouraging them to generate energy for their own consumption.
