GlobalData analysis indicates that rising import prices, reduced energy demand, and indefinitely postponed auctions are likely to affect the momentum of the Brazilian solar photovoltaic market, with installed annual capacity forecast to decline from 1.3 GW in 2019 to 0.7 GW in 2020.
The weakening of the Brazilian economy due to the pandemic is causing a rise in import prices, which would affect the profitability of projects that have received funding.
The slowing of the economy would make it impossible for developers to close the funding deals and halt the growth of the sector.
A significant driver of Brazil’s solar photovoltaic market is the A-4 and A-6 auctions, which late resulted in vital PV capacity being contracted.
Until the COVID-19 outbreak, the government planned to introduce the A-4 public auction in the 1st half of 2020 and the A-6 auction in the 2nd half and replicate the same in 2021.
Such auctions are to be conducted with the end of the pandemic when normalcy is restored which is difficult to predict.
“Brazilian solar PV developers generally procure most of the PV components from China. With the outbreak of the pandemic, the delivery of the PV components is experiencing delays because of disruption in the global supply chain. Although the country has a domestic manufacturing industry, the manufactured panels are on average 20 percent more expensive than imports, due to the taxes and the lower production scale in comparison to China.
“Added to this, the Brazilian Real has experienced a significant drop against the USD going from 4.1 in December 2019 to 5.3 in April 2020. The depreciation of the local currency will make it difficult for project developers and owners to seek financing from international capital markets.”Somik Das, senior power analyst at GlobalData.