Developing Brazil's Market for Solar Distributed Generation
CPI study highlights the need to address demand-side factors in policies to promote renewable energy
Brazil meets almost 45% of its energy demand through renewable resources.1 While this makes the nation’s energy supply one of the least carbon-intensive in the world, the increase of non- renewable sources in the Brazilian energy matrix from 2005 to 2015 highlights the challenge the nation faces in meeting its climate goals.
Renewable resources are at the center of the discussion on how to move towards a clean and reliable energy system around the world and are seen as a key instrument in combatting greenhouse gas emissions and climate change. Analysis to date points to the availability of renewable natural resources as the main determinant of a nation’s ability to reduce climate risk.
However, new analysis by researchers at Climate Policy Initiative/ PUC-Rio (CPI) shows that the development of the renewable energy sector occurs not only through the availability of natural resources, i.e., determinants of supply, but also through aspects of demand, such as income, population and electricity tariffs.
Measurements of solar radiation indicate that Brazil receives more than enough sunlight to meet the nation’s projected energy demand through the use of photovoltaic (PV) energy generation, which converts sunlight to electricity.3 Given this supply of sunlight for Brazil, the challenge to reaping its benefits lies in the nation’s ability to develop demand-side opportunities that encourage reliable solar generation and active markets.
Brazil especially holds potential for advancing its level of solar energy through distributed generation, which generates power on-site at the point of consumption, i.e., in a decentralized way, and has a small, but established market in parts of the country. By moving away from large, centralized plants, the country could reduce the costs, complexity, interdependencies, and inefficiencies associated with transportation.
In this new study, CPI researchers analyzed 5,563 municipalities in Brazil and show that demand- side factors drive consumer uptake of PV distributed energy generation. This effect is so relevant that municipalities with lower annual solar radiation have, on average, more consumer units of distributed solar photovoltaic generation than municipalities with higher levels of radiation.
This CPI study is one of the first to examine the decentralized solar generation market at a municipality level, yielding unique insights to this emerging industry.