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Companies eye Brazil's distributed generation market growth
March 11, 2019, 11:15 a.m.

A series of new firms have recently announced that they are entering Brazil's growing distributed power generation market.

Energy efficiency firm Ledax announced it would expand its operations to provide solar generation systems for clients that wish to generate their own electricity. So far, the company has focused on providing lighting solutions for large consumers, such as retail firms and shopping centers.

CEO Rodrigo Travi told BNamericas that the goal is to use the expertise acquired from importing Chinese LED lamps to buy photovoltaic equipment at low cost.

"Currently, solar panels are produced mainly in China and we found an attractive supplier. In addition, Brazil has good rules that favor companies that want to generate their own electricity," Travi added.

Another firm that recently debuted in the market is Japan-based Shizen Energy, which in February began building a solar power plant in Brasília in partnership with local company Espaço Y. The 1.1MW unit is due to come online in mid-2019 and the firm is already planning to start construction of new plants in the coming months, focused on the Center-West region, mainly to supply rural areas.

According to Shizen's business development manager in Brazil, Bruno Suzart, the goal is to reach installed capacity of 200MW in the country by 2021 and later expand operations to the wind power market.

"In Brazil we see a very large potential for distributed power generation. Argentina and Mexico, for example, have fewer opportunities for new build projects, and in Brazil we can develop the units from the core," Suzart said in a phone conversation with BNamericas.

Currently, consumers can install small generation systems of up to 5MW and connect them to the distribution grid. Data from federal energy planning company EPE show that between the beginning of 2016 and the end of 2017, the installed capacity of micro and mini distributed generation systems tripled to 250MW and as of July 2018 it had surpassed 400MW.

EPE estimates that Brazil will have 1.35mn such systems in place by 2027, with 11.9GW in capacity. This expansion would require 60bn reais (US$15.6bn) in investments between 2018 and 2027.

"In the last two years, the small distributed generation market grew significantly in Brazil, surpassing projections, including those made by EPE," the federal company said on its decennial power expansion plan published at the end of 2018.

One of the main challenges for market growth is regulatory stability. The first rules for small distributed generation systems in Brazil were published in 2012 and were updated in 2015. In January 2019, regulator Aneel began a public consultation process to discuss new changes in the regulations.

"It's hard to make long-term plans when regulation can change and that's even more difficult for our clients than for us. Today, there is also an imbalance between the generation firms and the power distributors, which is complicated," Suzart added.



By Gabriela Ruddy

Article originally published on BNAmericas site, in English.