Data show that there are 1.67 million consumer units of power generated by their own photovoltaic systems
Silvio Inada — Foto: Silvia Zamboni/Valor
In November 2021, when the water scarcity flag weighed on electricity bills and contributed to raising double-digit inflation, shop owner Silvio Inada was experiencing a different situation. Newly installed photovoltaic panels had already begun to capture the sunlight that poured onto the roof of his children’s clothing store in São Paulo. Today, the panels allow Mr. Inada to virtually reduce to zero the store’s electricity bill and cut his home’s bill by half.
Two or three years ago, the man said, he wanted to stop being a hostage, at least in electric power, of tariff increases, determined by the government or not, of exchange rate impacts, water issues, and the higher cost of thermoelectric plants. “I wanted to get away from that and have a more secure source of power.”
Mr. Inada’s store and home are part of the 1.67 million consumer units of power generated by their own solar photovoltaic systems, according to the Brazilian Photovoltaic Solar Energy Association (Absolar). Solar panels have been taking over roofs, facades, and terrains of homes, businesses, industries, rural producers, and public buildings in the country almost at the speed of light if compared to the evolution of the country’s total electric power capacity.
The power installed on rooftops totaled 13.7 gigawatts by October 15, a 48% growth in comparison to the 9.21 GW of production capacity that existed at the end of 2021. Installed power is projected to reach 18 GW by the end of this year, said Barbara Rubim, Absolar’s vice president of distributed energy. According to the 10-year power expansion plan of Empresa de Pesquisa Energética (EPE), this installed capacity is expected to reach 37.2 GW by the end of 2031. Today, photovoltaic power represents 98.1% of this type of generation.
The “power produced on the roof” is like the work of “little ants,” with their own generation of solar power spread throughout the country, said Daniel Pansarella, national manager in Brazil of Trina, a Chinese manufacturer of photovoltaic modules and cells for plants and residential systems.
He recalled that in 2017, just five years ago, solar power was predominantly coming from centralized production from large plants. At the time, distributed generation — power production for self-consumption — was still in its infancy. Today, there is growth on both sides, and the “ants” power is leading, said Matheus Rodrigues, product manager at Trina.
According to data from Absolar, the installed capacity of solar power in 2017 was 1.16 GW, with 84% in a centralized generation. By 2020, this outlook was inverted, and today distributed generation represents 68% of all installed solar PV capacity. The advance of distributed generation resulted in investments of R$25.9 billion from January to October, and totaled R$73.9 billion in amounts invested since 2012. The result is 54% higher than the investment in the decade ended in 2021.
The solar source, including power centralized in large plants, reached 20.25 GW in installed capacity in October, which represents almost a tenth of the country’s power generation mix. The share was 7.4% at the end of last year and 4.5% in December 2020, according to Absolar and the Brazilian Electricity Regulatory Agency (Aneel).
The fast growth of the “ant” projects is credited by consumers and companies in the sector to factors such as the expensive electricity bills, a perception intensified by the recent water crisis that Brazil went through, and Law 14.300, which was signed in January and is considered the legal framework of micro and mini generation.
According to this law, Ms. Rubim says, consumers who request access to the grid for their own solar systems until January 6 of next year will be free of the so-called “solar tax” until 2045. Because of this, she said, people are bringing forward the decision to install the systems.
Rodolfo Meyer, a partner of Portal do Sol, a company that installs photovoltaic equipment, says that the deadline for more beneficial taxation is expected to still make a difference until the end of this year, although from April to mid-September he has noticed less enthusiasm in the demand for solar power. In his view, this is due to the uncertainty concerning the presidential elections and also to the high key interest rate, which makes credit more expensive.
According to Mr. Meyer, more than half of acquisitions are financed. Photovoltaic equipment has become more affordable over time, but there is also the exchange rate effect since the main components are imported, said Ms. Rubim.
Even though the sunlight still comes for free, the decision to produce one’s own photovoltaic power took a while to get off the drawing board because “the costs were prohibitive,” said Mr. Inada. The shop owner decided to make the investment last year. The R$40,000 invested in the installation of the 800 kW photovoltaic equipment still cannot be considered a low price. “The equipment is still expensive, but the cost of electricity has become too high as well.”
Mr. Inada did not take out a loan to bet on solar power, but he calculates that the credit terms he would get at the time would result in a monthly obligation with amortization and interest close to the discount he sees today on his electricity bills.
Brazil’s key interest rate Selic at 13.75% per year changes this equation a little, but, according to Mr. Meyer, part of this impact seems to have been absorbed by consumers, who have already made the calculations with the new interest rate and are studying photovoltaic projects again since September. Regardless of this scenario, he says, the company expects to more than double its revenues this year in comparison to 2021, and also double the number of franchisees.
In his view, the change in tax generated by Law 14,300 may bring a hiatus to the market next year, for a few months, but in the long term, the sector is likely to remain heated. According to him, the effect of the change in tariff collection for the recovery of investment is “marginal” and depends on how much of what is generated of power will be consumed simultaneously and how much will be injected into the network.
The effect of inflation on the electricity bill also needs to be factored into the bill and ends up offsetting this, said Mr. Meyer. “This market is growing because it makes financial sense. It is a green economy with gains.” It must also be remembered, he says, that the ongoing technological change points to an ever-increasing demand for electricity. He exemplifies the market evolution of electric cars and batteries.
Technological evolution also allows for payback in shorter timeframes today, Mr. Pansarella says. “In 2012 or 2013 the payback was in 10 years. Today, payback is already possible in five years.”
Data from Absolar show that the energy from the roof is led by homes, which represent 48.5% of the installed power. Commerce and services come right after, with 30.1%.
About 70% of the residential public demands a system capable of generating between 500 kW and 700 kW monthly, with an investment between R$25,000 and R$30,000, generating savings of R$6,000 to R$7,000 annually. If it is a place in Minas Gerais, the payback is faster. If it is in a rainier region, like Santa Catarina, for example, it takes longer.
In his store, Mr. Inada does the math. By virtually reducing to zero the electricity bill, he cut the costs of his business, and the possibility of compensating for the surplus in his home’s bill also helps to make ends meet. He expects to recover the investment in four years. The seasonality of solar power generation is already priced. At the current moment of the year, with cloudy days and rain, he said, his system has been generating something like 60% of the installed power.
If the equipment were more affordable, he could also install solar panels on the roof of his house, he said. But for now, the shop owner is waiting for the thermometers to indicate warmer days in the coming summer when his own power generation will probably peak.
*By Marta Watanabe — São Paulo
Source: Valor International