Can Brazil become an industrial hub for the global solar market?

Brazil is well known as a solar energy powerhouse and now wants to become an industrial hub for the inputs that the sector needs.

Amid a turbulent geopolitical scenario, with the US and Europe reviewing their supply chains, the Brazilian government is looking to position the country as a reliable equipment supplier.

Adalberto Maluf Filho, secretary for urban environment and environmental quality at the environment and climate change ministry, speaks with BNamericas about Brazil's prospects of becoming a global player in the solar equipment industry.

BNamericas: Does Brazil have the potential to develop a local industry to meet the need for inputs in the global production of solar energy equipment?

Maluf Filho: We believe that Brazil has a real possibility of being a major hub in industrial production, first for Latin America because of our historical ties in the region, including through trade agreements such as the Mercosur [the bloc formed by Argentina, Brazil, Paraguay and Uruguay].

But beyond that, we have the possibility of being an industrial hub to serve developed countries as well.

BNamericas: What would be Brazil’s appeal for developed countries like the US and Europe?

Maluf Filho: Brazil has a highly decarbonized electrical matrix, with more than 90% of our energy being clean energy and this means that the Brazilian industrial production generates lower levels of greenhouse emissions.

A solar panel produced in Brazil has a carbon footprint that is 40% lower than a solar panel produced in China. A car produced in Brazil has a 30% lower carbon footprint than a car produced in Europe or the US.

As of 2024, Europe will start to tax trade based on the carbon footprint. Given the characteristics I mentioned and also because we have all the strategic minerals for this production and the productive capacity in terms of engineering and installed industrial park, I believe Brazil has ample capacity to meet this demand from developed countries.

BNamericas: Do today's geopolitical conflicts impact Brazil's plans to become an industrial hub for the solar segment?

Maluf Filho: We are seeing international industries wanting to be in more stable countries and in view of the current conflicts in the world, we see a big impact for the production of inputs in general and also in the case of energy.

In Germany, for example, factories are being closed because of the energy issue and this can make companies that produce there, but with subsidiaries in Brazil, to opt for production here.

This is just one more element that makes us believe that we can indeed become an industrial hub for the export of products related to the photovoltaic solar segment.

The US has anti-dumping [tariffs] for photovoltaic modules and cell production from China and even those that are produced by Chinese companies in other countries, while Brazil is outside these restrictions if we produce them here.

Within our objective of being an industrial hub in the solar segment, it is therefore an important frontier for us to produce photovoltaic cells here to export to the US and Europe.

BNamericas: Some analysts say that the evolution of green hydrogen will guarantee a long period of demand for Brazil’s renewable energies, including solar. Are these expectations realistic in your view?

Maluf Filho: Brazil is betting heavily on green hydrogen. Both in terms of being a source of decarbonization for industry, with the production of green steel, production of fertilizers, and also for the export of green hydrogen via urea.

Our estimates indicate that we have all the elements to become one of the leaders in green hydrogen, attracting billions of investments.

If we today think of other places with great potential for green hydrogen, such as the US, North Africa, Brazil stands out with an advantage because it would have the capacity to produce green hydrogen that is cleaner and at a lower cost than those places.

BNamericas: Are there any government plans to encourage the installation of solar panels in existing homes under low-income housing program Minha Casa, Minha Vida?

Maluf Filho: There is a law that provides a discount on energy generation for those who are part of the program.

[Editor’s note: Families that are part of Minha Casa, Minha Vida can install solar panels in their homes and the installation cost is offset by the reduction in the price of energy that they used to pay, with the difference used to pay for the panels] 

This is good both for [federal lender] Caixa Econômica Federal and for home builders, as it increases the financial capacity of people who live in houses that are part of the program.

In addition, the federal government and local governments can make calls for the purchase of solar energy from those people who are registered so that this energy can be sold to the government, further developing the program’s social aspect and creating new ways to upgrade old solar installations. With this, we will make the model viable with the support of local governments.

We do not have an exact calculation of how many houses already exist in all of Minha Casa, Minha Vida that could be targeted by this new incentive, but it is a large number. Just to give you an idea, the government's plan is to build another 2mn homes in Minha Casa, Minha Vida in the coming years. If we think about what has already been built in the past, we are talking about more than 10mn existing houses.