You’d think Brazil would be a “hot” market for solar energy, with a growing base of companies operating along the solar energy value chain. The solar energy potential is there, but in a vast country rich in a diversity of resources, Brazil, in addition to having pioneered the market for ethanol (from cane sugar) and flex-fuel vehicles, continues to focus on centralized, large-scale hydro power and developing its fossil fuel resources. It’s been slow to focus on realizing its solar energy potential. That looks like it’s about to change.

The Brazilian government is readying enactment of a pair of regulations designed to promote solar energy resource development, according to a Bloomberg News report.

Agencia Nacional de Energia Electrica, Brazil’s national electricity regulator, in two weeks said the new regulations will offer solar energy tax breaks to utilities and enact net metering, which would allow consumers and businesses to sell electricity from renewable sources to grid operators. Utilities would receive an 80% discount on taxes paid for distributing electricity generated from large solar photovoltaic (PV) systems, according to the new rules.

Renewable Energy Brazil

The large majority of its land area in the tropics, Brazil’s estimated solar incidence ranks among the highest in the world. Solar insolation levels (measured in kWh/m2/day) are relatively high and promising across the country, from Belem in the north– an average 5.02 — to Porto Alegre in the south– an average 4.30. Large urban metro areas, such as Sao Paolo– an average 4.54 — and Rio de Janeiro– an average 4.32– likewise hold promise.

With a large and fast-growing economy and population, Brazilians consume more energy than any other South American population. Despite its vast energy resource potential, Brazil, as a whole, is a net importer of electricity. Total installed capacity was 96.3 GW as of end 2007, with 94.3% produced domestically. Hydropower accounted for 83% of Brazilian electricity production as of 2007, nuclear 4%.

The Brazilian government and private sector have focused on realizing the country’s wind power potential, which has driven the cost of wind power below that of natural gas-fueled electricity plants. It’s also resulted in wind power becoming the fastest growing source of power generation in the country, according to Brazil Windpower 2012, with approximately 1.5 GW of installed capacity as of year-end 2011 and another 7 GW of projects extending out to 2016 in the development pipeline.

Wind energy projects accounted for more than 80% of bids at the National Electricity Agency’s power auction in late December. The state-owned energy agency signed contracts for the development of 42 new power plants, 39 of them wind power projects with a total capacity of 976 MW. Bids to develop wind energy facilities, having fallen below the cost of those for natural gas-fueled power plants in August, fell further in the December auction.

Brazil: Huge Solar Energy Resource Potential

To date, solar energy has been a renewable energy orphan in Brazil by comparison. In fact, it’s almost non-existent. MPX Energia operates the country’s only solar power facility of any scale, a 1 MW solar power plant in the northeastern city of Taua. GE in September announced that it is adding another 1 MW of solar power generating capacity to the facility, and is considering expanding to a utility-scale 50 MW.

In July, newly formed Sistema de Energia Renovavel (SER) announced plans to build a total 600 MW of solar power capacity in Brazil by 2020. SER said it expects the new solar power capacity will be competitive as compared to other electricity sources within six years. Its first project, a 5 MW capacity solar power installation, is currently being built in a 50/50 joint venture with Brazilian construction company Manserv Montagem e Manutencao.

Lacking a domestic solar PV manufacturing base, the need to import all the components of solar PV systems adds to their cost in Brazil. That’s likely to change, and fast, as Brazil moves forward with its efforts to realize its solar energy potential.