27 July 2015
Chinese Manufacturers Head for Brazil with Solar Market Set to Soar
The Brazilian solar power market is set to be worth US$1.3 billion annually, according to exhibitors at the EnerSolar Conference. With the EU market now more tightly regulated, PRC manufacturers have been quick to seize the opportunity.
Last year, the Brazilian solar power market began to open up. This year and thereafter, it will be worth some US$1.3 billion annually, according to a number of industry insiders at the EnerSolar Conference and Exhibition in Sao Paulo.
Brazil is committed to rapidly expanding its solar capacity and China, the major supplier of panels, would seem its natural partner. It remains to be seen, however, how open the Brazilian market will be to Chinese solar panel manufacturers.
A key player in brokering the relationship between China and the local market will be ABSOLAR, the Brazilian Photovoltaic Solar Energy Association. ABSOLAR represents companies through the value chain in Brazil, and negotiates directly with the Brazilian government on better business conditions, such as regulations, incentives, financing and tax breaks. Since the 2013 launch of the association, the regulatory background for solar energy producers in Brazil has changed significantly.
Commenting on the progress to date, Dr Rodrigo Lopes, ABSOLAR's Executive Director, said: "In November 2014, we had the first auction of 1048 MW in photovoltaic solar power. This saw the National Electrical Energy Agency (ANEEL) entering into 20-year PPAs (Power Purchase Agreements) with more than 30 solar power producers. The sector is now building to start power delivery by 2017.
"Three new developments are having a big impact on market confidence this year. Most obviously, we have two electricity auctions planned for August and November 2015, where more than 1 GW of solar is expected to be contracted.
"Then there are the exemptions – for up to 20 years – from ICMS [a general tax on goods and services] that have been introduced or proposed in several states. Eliminating ICMS on metering could allow the supplier to increase the value of each injected KWh by 30%-40%. Thirdly, Brazil is now structuring industrial regulation for a local PV value chain.
"This year, EnerSolar is particularly exciting because there is much more interest from all types of solar consumers – residential, commercial and industrial – than last year, and also more support from the government."
With more than 8,000 visitors to the event this year, Lopes' optimism certainly seems well founded. Exhibitors included not only panel manufacturers and assemblers from China, Brazil and Germany, but also suppliers of inverters, mounting systems, batteries and power storage systems, tracking systems, switches and circuit breakers, as well as project planning and financing specialists.
Making its third visit to the show was Ulica Solar, a Ningbo-based panel manufacturer. Explaining its presence at the event, James Wang, the company's Regional Sales Manager, said: "We do not have too many customers in Brazil, but we believe the market here is booming, while Mexico is also very promising.
"The market is very competitive, but our key advantage is price. Our main markets, to date, have been in Europe and Japan. EU regulatory constraints, however, have shrunk our European market. Here in Brazil, we do not face the same issues.
"We offer products for all sizes of business, from household systems to solar power plants. We are not a big company but we are a primary manufacturer, while many of the other companies promoting solar panels here are just importers/exporters. We are expecting that, over the next few years, the Brazilian national and state governments will introduce a number of policies supportive to the photovoltaic industry."
Another Chinese visitor to the event was Narada, a Hangzhou-based specialist in stored energy solutions. The company is a global supplier of lead acid and lithium batteries, as well as ultra-capacitors.
Addressing Narada's role in the power supply chain, Miguel Ermann, the company's Director for Latin America, said: "We save energy and, luckily for us, solar energy is not reliable – it is only available in daytime."
Ermann was in Sao Paulo to promote the company's Home Energy Storage System, something that is seen as having particular applications in the Latin American market. He said: "The cost of energy in many South American countries is subsidised, but that will change. We have a stand-alone, plug-and-play product, incorporating a computerised device, which can decide when to use battery power or draw power from the grid. It can also choose when to feed power back to the grid, as prices vary during the daily cycle.
"I have no doubt that the Smart Grid system will be coming to Brazil. When it does, our monitoring and storage system will be invaluable."
Further Chinese representation came courtesy of Suntask, a specialist in solar heat collection systems and solar water heaters. One of its most popular products is an individual home-sized, roof-mounted solar water heater, which can use either heat pipes or vacuum tubes.
Explaining the appeal of Brazil, a representative for the company said: "Our main market is in Europe, but we want to expand to South America as Europe is not so good at present. We currently have customers in more than 60 countries worldwide, but this is the first time we have exhibited in Brazil.
"We believe Brazil will be a very big market. We already have a small number of customers here and, with their help, we hope to expand our client base."
Joining the Chinese contingent was Beny, a Zhejiang-based supplier of DC-supply solar energy safety systems, including fuses, surge protection, circuit breakers, isolator switches and fuse boxes. According to Cherry Zhang, the company's Latin America representative, its products are already a hit in Europe and it has high hopes for the Brazilian market. Its range primarily consists of small solar systems, ideal for a house or a small industrial building.
Zhang said: "Our Photovoltaic Array DC isolator is attracting the most interest here. This can be mounted on the outside of a building and is tested to IP66 standards."
While many companies were making their third or fourth visit to Brazil, Hefei Ruiyang Optoelectronics Technology, part of the Tibet Kincaid Group, was one of the debutantes at this year's show.
For Brant Zhang, Overseas Sales Manager of the company, this was very much an exploratory trip. He said: "We offer solar inverters and controllers for large and small solar systems and we are looking for a dealer to distribute our solar products in Brazil and a number of other countries. We had a lot of interest in just our first morning."
During the course of the show, Zhang was hoping to learn more about the exact needs of the Latin American market. He said: "At present, I can't say exactly what our strengths and key selling points are in this market. I will go back and talk to management about the most suitable products."
Overall, the number of overseas companies in attendance and, in particular, the size of the Chinese delegation, was a clear sign that Brazil is now seen as a primary target for the solar industry. Acknowledging this coming gold rush, Livia Neves, Renewable Energy Correspondent for Brasil Energia, one of the country's leading trade titles, said: "Solar energy is no longer just a promise in Brazil. In less than a year, it has become a market with a potential value of billions of dollars.
"The number of microgeneration systems operating in the country tripled from June 2014 to May 2015, rising from 189 to 670. The vast majority are solar power systems. If this continues, the national photovoltaic market will grow to be worth in excess of Reales $4 billion (US$1.3 billion) annually. That will be just in terms of the large installations and not taking into account distributed generation."
Despite the high expectations of the Brazilian market, some still remained a little cautious. Li Liang, Marketing Director of HT-SAAE – also known as Shanghai Aerospace Automobile Electromechanical – was one such cynic.
He said: "We are a state-owned company with a focus on aerospace and satellite technology. We provide the solar panels for satellites and space ships, and we moved into commercial production in 2000. So far, we have installed about 3 GW of capacity around the world, mostly in China, but also in Europe and the US.
"We are here to introduce ourselves to the Brazilian market and we have found considerable interest. Many people, though, are asking quite simple questions at this stage. It will be a while before they have the experience to start looking more deeply at the sector.
"The Brazilian market now feels similar to the mature markets back in 2012-2013. The government needs to support the sector, but they have to consider the most appropriate way to do it. The industry has a bright future here, but it may take two to three years for the opportunities to develop."
EnerSolar Conference and Exhibition 2015 took place from 14-17 July at the Centro de Exposições Imigrantes in Sao Paulo, Brazil.
John Haigh, Special Correspondent, Sao Paulo