of the brazilian electricity generation comes from renewables
Approximately USD 20 billion
in FDI for renewable energies from 2009 to 2018
44% of the matrix
will employ electricity generated from wind until 2040
of FDI in renewables in Latin America - 2009 to 2018
USD 150 billion
in investments are expected in renewables until 2050
Renewable Energy and Environmental Solutions in Brazil
Brazil has one of the cleanest electricity matrixes in the world with renewables representing over 80% of the country’s power generation capacity. The country is the 9th largest power consumer and producer in the world, having a competitive and well-established regulatory and legal framework in the power sector, with long term Power Purchase Agreements (over 20 years), track recorded incentives, and a balance between Stated-owned and private-sector initiatives. The opportunities go from the Regulated Market, with a successful auctions model, to the Free Market, an increasing and flexible corporate sourcing model, which currently corresponds to 30% of Brazil´s power demand. An increase of 1,000 TWh in electricity consumption is expected, which will generate the need for USD 150 billion in investments in renewable energies until 2050.
Favored by the country’s size, plentifulness of resources, conducive policies, and legal security, Brazil hanks as the 1st in Latin America and 3rd in the world in terms of the share of renewables in the energy matrix. More than that, Brazil´s power market is massive: the country, in terms of power generation and demand, is also the largest player in Latin America and stands among the top 10 in the world.
- Renewable Energy represents over 80% of the country’s electricity generation capacity - #2 in the world
- Electricity generation from wind and solar PV sources is estimated to increase to 150 GW until 2040, representing 44% of the Brazilian matrix
- Ethanol output grew 17% from 2017, reaching 32.3 billion litters in 2018, a new production record.
- Brazil attracted about USD 20 billion in FDI for renewable energies from 2009 to 2018
- 1st Recipient of FDI in renewables in Latin America from 2009 to 2018 – 35.2%
- 3rd recipient of FDI in renewables in the world from 2009 to 2018 – 11.6% *
- Brazil is expected to sum USD 150 billion in investments in renewables until 2050
* This information refers to the countries included int he BNFE-Climatescope ranking, e.g. emerging countries, including China, India, Mexico, Argentina and Chile.
The Brazilian Energy Sector – 10 years forecast
The National Energy´s Plan 2029 (PDE 2029) forecasts that Brazil´s installed capacity will grow from 176 GW, in 2019, to 251 GW, in 2029. Especially solar and wind sources will have a considerable increase in the next 10 years, from 2% to 8%, and from 9% to 16%, of the country´s electricity matrix, respectively. Finally, the country´s power demand will grow over 20% until 2029.
In short, by 2029:
- Brazil´s power demand will grow over 20%
- The government plans to increase wind installed capacity to 40,16 MW (16% of the Brazilian electric matrix)
- The government plans to increase the solar energy output to 20,08 MW (8% of the Brazilian electric matrix)
BNEF forecasts that 98% of the investment to be made in New Power Capacity in Brazil until 2050 will be directed to Zero Carbon sources.
Where to Invest
Brazil´s renewables sector opportunities are mainly concentrated on the Northeast, part of the Southeast and South of the country. These regions together, in terms of wind and solar, represent over 90% of installed capacity and new projects of power generation are developed there. Also, the sector has two complementary models, the Regulated Market and the Free Market, and there are business opportunities in both.
Brazil´s Regulated Market is an auction model for power generation supply, including renewable sources, which is planned, implemented and hired by the government. The success of this model is explained by strong incentives, 20-year or longer Power Purchase Agreements, and clear and reliable regulation.
Only in the A-6 auction, held in 2019, 1GW for wind and 530 MW for solar were traded. The energy to be traded in auctions from 2018 to 2022 will represent approximately 5-10% of Brazil´s installed capacity. Finally, big auctions are expected for 2021, bringing excellent opportunities for the sector.
The Free Market is a B2B model, a type of corporate sourcing in which the main advantage for the parties is the possibility to negotiate the power price. It is estimated that, from 2003 to 2017, 29% of savings were made due to this model. Currently, the Free Market represents 30% of Brazil´s entire power demand and approximately 80% of the industrial consumption. Today, a demand of 2000 MW is necessary to play in this model, but in order to open the Free Market for more players, the Government will gradually reduce this demand to 500 kW until 2023. The government is already studying ways to open the Free Market even more after 2023. Finally, the Brazilian Development Bank (BNDES) has created a reference price (Preço de Referência) for the Free Market, diminishing the risks and incentivizing investments in this model.
Government Programs and Incentives
- BNDES (Brazilian Development Bank): Brazil attracted almost USD 57 billion in new asset finance for clean energy plants in 2010-17, by far the largest amount in Latin America over the period. Wind alone accounts for 56% of the total, while solar attracted only 6%. However, solar participation is due to increase as solar developers have secured almost 2GW in contracts in the 2017-18 auctions. BNDES has played a major role in the development of the country’s renewable energy market. The bank is the top global lender to clean energy, having disbursed USD 27 billion for renewable energy (excluding large hydro) projects between 2008 and 2017. In addition, BNDES applies a strict local content requirement in granting wind and solar PV project loans, spurring equipment manufacturers to build factories in the country.
- Renovabio: RenovaBio is an initiative of the Ministry of Mines and Energy, launched in December 2016, which aims to expand biofuel production, based on predictability and environmental, economic and social sustainability by improving policies and regulatory aspects of biofuels, including ethanol.
Apex-Brasil and the Covid-19 crisis.
Roberto Escoto, Apex-Brasil’s Head of Investment, has a message for you. Learn how Apex-Brasil is supporting foreign investors during the Covid-19 crisis. Click here to watch it on LinkedIn.
Our message to international players or investors in the renewable energy sector
Our message to international players or investors in the renewable energy sector
Daniel Prates, our Investment Officer for Renewable Energy, would like to share with you some ideas about why it is still time to invest in the renewable energies in Brazil. Click here to watch it on LinkedIn
Executive Summary of the 10 Year Expansion Plan
The 10 Year Expansion Plan (PDE in the Portuguese acronym) is an official annual study carried out by the Brazilian Energy Research Company (EPE), linked to the Ministry of Mines and Energy. Its main goal is to forecast the energy sector expansion, in Brazil, in the upcoming 10 years. Thus, PDE provides a qualified and reliable source of information on energy segments, such as renewables, electricity, O&G, among others.
Apex-Brasil, in cooperation with EPE, has translated the Executive Summary of PDE 2029 to English. The Summary highlights the most important points of PDE.
Investment Guide to Brasil 2019
The Investiment Guide to Brasil combines essential information from various government sources with the objective of facilitating your understanding of Brazil, its economy, productive sectors, business climate and investment framework. This guide is designed to meet the needs of investors in different degrees of maturity when it comes to investing in Brazil. First, for potential investors, who may be unfamiliar with Brazil, the guide can be the perfect gateway to the myriad of investment opportunities currently available. It contains useful, fact-filled information, profiling Brazil’s economy and providing snapshots of major business opportunities in different productive sectors. Second, for investors ready to do business in Brazil and for existing investors seeking to expand their Brazilian operations, the guide also serves as a reference companion to Brazil’s investment framework, including guidelines on how to establish and run a business in the country and on government incentive programs to help expand businesses in selected industries.
Brasil Investment Forum
Brasil Investment Forum (BIF) is a federal government event hosted by the Brazilian President which aims to highlight investment opportunities in strategic industries in the Brazilian economy, such as infrastructure, energy, agribusiness and technology.
Visit the official website.
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Apex-Brasil has been successfully assisting foreign investors in the renewables sector for over 10 years.
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