JinkoSolar freezes plans for module assembly plant in Brazil

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JinkoSolar has frozen plans to build a 200-300MW module assembly line in Brazil, due to uncertainties in the Brazilian marketplace and currency risks, a senior figure from JinkoSolar has confirmed to PV Tech.

Alberto Cuter, general manager for Latin America and Italy at JinkoSolar, said that one reason for delaying the plans is the Brazilian real being “really unstable” with little certainty around the exchange rate with the US dollar.

The Brazilian Development Bank, BNDES, is only offering financing to PV players that follow a progressive nationalisation plan for equipment manufacturing:

  • From 2014 all modules must be assembled in Brazil
  • From 2018 junction boxes, inverters and support structures also need to be nationalized
  • From 2020, all photovoltaic cells must be produced in country

However, Cuter said that the inclusion of cells in the local content rules presents more risk as Jinko Solar had only planned to produce modules.

Cuter added that while there is a lack of clarity over what the government is offering to manufacturers in terms of tax reductions, the government also lacks a long-term commitment to installing a specific amount of PV capacity. This means it is unclear how much demand there will be for panels within Brazil.

Moreover, the cost of producing modules in Brazil is 25% higher than in China, which means modules produced in Brazil must be sold in-country.

Cuter added that there is “no way to sell the modules out of Brazil to Chile, Mexico, Panama and other countries in Latin America, so it is extremely risky to open a factory in Brazil”.

This risk is increased further by the fact that some of the awarded companies in the latest solar auction do not need the local content tax credits, said Cuter. In that auction held on 28 August, 1,043MW of solar energy was sold on top of the 1,048MW taken on the previous year.

JinkoSolar had been in communication with the state governments of Pernambuco, Minas Gerais and Sao Paulo with a view to building the factory in the country.

However, Cuter said: “Everything now has been frozen. We are waiting to understand the real capacity of Brazilian market and the real commitment by the government.”

JinkoSolar’s decision to freeze its manufacturing plans comes shortly after Rodrigo Sauaia, executive director of the Brazilian Association of Photovoltaic Solar Energy (Absolar), warned in September that without industrial policy, “manufacturers who want to settle in Brazil will not be able to compete in terms of price”.

“The equipment produced in Brazil without the support of an industrial policy is much more expensive than international equipment because of excessive tax burden on inputs and machinery,” Sauaia said.

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