Brazil remains a good investment destination for renewable energies
Brazilian economy has been facing a number of setbacks in the past years due to a serious economic recession. Demand for utility-scale renewable energy has been hurt, but there are signs of recovery.
Renewables Now discussed the prospects for the sector with Juliana Vasconcelos, Investment Coordinator at the Brazilian Trade and Investment Promotion Agency (Apex-Brasil).
Q: How is the renewable sector doing amid the economic crisis?
A: Apex-Brasil has seen signs of growth, including the upcoming tenders, but also discussions about the signing of more energy supply contracts in the future and expectations for increasing demand. According to us, both wind and solar have a bright future. Some foreign investors working with Apex are already making steps to assess Brazil's solar demand.
Q: How do investors see the Brazilian renewable energy market?
A: The Brazilian energy sector has a solid foundation, given its history, regulatory structure and integrated system, so the country offers stability for the green industry. Quite naturally, a certain degree of uncertainty has been created by the changes in demand on the market, due to the recession.
Q: In the previous months, the government cancelled energy auctions and even created a termination tender to resolve the issue of excess energy. How did renewable investors respond to this situation?
A: There was a natural fear on part of the investors, due to the change in what had been a stable cycle until then, but those in the energy sector are always looking at the medium to long term. So in this regard, investors are more inclined to observe what is happening without rushing to halt activities. They are keeping an eye on, among other things, the regulatory calibrations and whether there will be any changes in policy concerning net metering.
Investors are also observing the adjustments the government is making, including the move to correct some mistakes and scrap projects that would have never been realised, thus opening up space for new competitive offers. Brazil is still a good investment destination for renewables, when compared to the rest of the world level.
Q: How do foreign investors approach the Brazilian market?
A: As usual, investors are betting on strategic partners, both among domestic firms and internationally, for the creation of joint ventures. In energy generation, investors are focusing on opportunities for private equity participation and project acquisitions. When it comes to manufacturing, more and more opportunities are arising with the establishment of new factories and introduction of new technologies in the country.
Q: How does Apex-Brasil promote the renewable area in the country?
A: The agency has been working with renewable energies since 2009, most strongly with wind energy. At first, we started with the mapping of technologies and gaps for the promotion of wind power. At the moment, we focus on productive investments for the country, working in partnerships with associations and governments to boost the market.
In 2012 we also ventured into solar energy and just as it was with wind, we did the mapping as well as elaborated comparative reports of labor costs, and so on. Apex-Brasil also eyes more opportunities in DG and the free market.
Q: In Apex's view, what are the future prospects for investments in Brazil?
A: We expect greater interest in the free market, which we see as a national trend. The launch of public consultations will help the country to develop a new model for its electricity market, stimulating not only distributed generation but also the free market and the increased use of renewable sources.
We are also optimistic about the new tenders scheduled for December. Overall, the sector is moving towards a maturity of both consumers and utility companies.
Before ending the interview, Juliana pointed out that research and development (R&D) is another important element of the renewable market. R&D has the potential to turn Brazil into a technological innovation hotspot, in addition to a hot market for renewable energy generation.