Extension Request For Brazil Solar Farm Development Hits Roadblock?

According to Bloomberg, Brazil has rejected requests from developers seeking more time to complete the country’s first large-scale solar farms.

Brazil’s energy regulator Aneel reportedly sent a statement to a group of solar developers scheduled to completing solar farms by 2017, denying their request for extensions of as long as two years.

Brazil coconut cart shutterstock_395981182

Brazil economy blamed

Financing appears to be the primary stumbling block for deploying solar on timely basis.

“Brazil’s weak currency, tighter credit markets and political instability are making it difficult for developers to arrange financing and line up supply deals, according to the people. The companies are now adjusting their schedules to meet the deadline. Aneel submitted the technical recommendation to the Energy Ministry, which will make the final decision and usually accepts Aneel’s recommendations.”

In sa 2014 auction, solar developers agreed to sell electricity at an average price of 215.12 reais a MWh. This was worth about $87 at the time. However, with Brazil’s currency falling in value, that total is now worth only about $62. This value makes it more expensive to import solar panels.

Additionally, financing is presenting a tough obstacle. Brazil’s development bank BNDES hasn’t approved any backing for solar developers to date, in part because the lender requires that developers use components produced within the country to qualify for cheap loans. Local banks which are exposed to loans from the energy industry are also becoming more cautious.

It remains to be seen if solar developers will meet their 2017 deadline, a deadline further complicated by the scheduled summer Olympics taking place in the midst of a Zika virus epidemic.

Solar developers include Renova Energia SA, Rio Alto Energia, Fotowatio, and Canadian Solar.

Image via Shutterstock

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