Brazil’s 1-5MW solar sector ‘hidden gem’ for 2016

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Deployment of 1-5MW solar systems in Brazil is forecast to more than triple in 2016, after new net-metering proposals, according to a leading analyst on the Latin America region.

GTM Research forecasts that 6MW of projects in the 1-5MW range will be deployed in the country in 2015, rising to 20MW in 2016.

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Meanwhile Brazil’s PV sector overall is expected to triple from 55MW in 2015 to 145MW next year.

GTM Research solar analyst Adam James told PV Tech that Brazil’s energy regulator National Electric Energy Agency (ANEEL) has proposed expanding net-metering capabilities for up to 5MW systems, from its current remit of just two tranches from 0-100kW and 100kW-1MW systems.

James said above 1MW consumers are currently able to use self-consumption, but this is not as good a deal compared to under the net-metering scheme.

ANEEL are also proposing to allow residential and commercial retail customers to directly purchase power from micro-generators up to 5MW, which would also allow for direct marketing by operators of up to 5MW plants.

James said this would help drive demand for the 1-5MW market under a model reminiscent of community solar where operators can sell not just to industrial clients but also residential and commercial.

The net-metering value proposition also has the best opportunities in the six states that have an ICMS tax exemption on gross electricity consumption: Ceara, Tocantins, Rio Grande Norte, Goias, Pernambuco and Sao Paulo.

James added: “When you look at the pipeline of projects in the 1-5MW category and the number of PPAs that are getting signed, there’s been a notable uptick in that department as well.

“Over the last quarter several project announcements in the 1-5MW indicate that this an area where industrial customers are willing to sign PPAs and where developers are making progress and inroads.”

For example, PV developer SunEdison has announced a 3MW project and signed a PPA, while Brazilian power company Petrobras has also signed a contract for a 1.1MW project, said James.

On Twitter James also remarked: “the 1-5 MW solar market in Brazil could totally explode in 2016. Hidden gem, that.”

GTM’s latest quarterly report on Latin America comes out on Tuesday. In its previous report, Brazil fell out of the top five countries for forecast installations in 2015 with vast deployments expected in Central America taking over: Honduras (460MW), Guatemala (98MW), and Panama (62MW).

ANEEL recently set a cap price at BRL349 (US$104)/MWh for its solar-only auction to be held on 28 August. It was widely reported that this cap was 33% higher than for the previous solar auction held in October 2014, however, James noted that since that time, there has been 30% devaluation of the real against the dollar.

He added that ANEEL had to adjust the cap to reflect the market value, but said that the news was still positive for the industry.

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