For years, Chinese solar panels They reigned in Brazil. In 2022, about 99% of all photovoltaic units purchased in the country were imported from China, which leads manufacturing of solar energy equipment worldwide. Only 1% was produced in Brazil. Now him Brazilian government has decided eliminate the tax exemption that reduces the cost of importing solar energy equipment that has been in force since 2020, so this panorama may begin to change.
The explanation for the extensive use of Chinese products is multifaceted. Partly it is due to taxes: until recently, solar panels imported from China were exempt from import duties, making them 50% cheaper than those produced in Brazil. Another reason for Chinese dominance is that this sector of the Brazilian market is underdeveloped, it has not grown due to lack of incentive programs and government policies.
Chinese solar panels are not only cheaper in Brazil. According to estimates According to the European Commission, the total cost of photovoltaic manufacturing in China is 35% lower than in Europe, 20% less than in the United States and 10% cheaper than in India. And even in recent years, the price of manufacturing in China has been continuously decreasing. According to Info Link, solar energy news agency, in 2023, the average price of modules in China was about 0.25 euros per watt. A little more than a year later, at the beginning of March, that value was below 0.10 euros per watt.
Globally, China has a great advantage over local manufacturers thanks to its solid industrial chain, the result of more than 15 years of investment to perfect this technology. The solar PV sector in China was initially built according to a bottom-up pattern, and has gone through three stages. First, until 2009 and with the help of subnational governments, the sector fundamentally developed a policy to manufacture export goods. Second, China’s central government intervened, creating domestic markets to save the PV sector. Third, since 2015, and with some success, the Chinese central government began removing domestic subsidies and rededicated itself to technological efficiency, production cost, and grid integration with local solar PV.
The low cost of acquiring panels made in China has allowed countries like Brazil to begin a transition to renewable energy. At the moment, 18.2% of Brazil’s energy It is produced with photovoltaic panels. But today this may be threatened by the decision of the Brazilian Government to apply new taxes on Chinese imports. This could lead to a reconfiguration of the sector, which may not be entirely positive.
Solar energy is one of the cleanest and lowest impact sources of production, and is at the forefront of environmental justice. Ensuring that the cost of equipment remains low means that the population could purchase and install panels, which would lead to democratizing the use of solar energy. Dependency on other non-renewable forms of energy would also be reduced.
In January 2024, the Brazilian Government advertisement that made the 10.8% tax effective again for importing Chinese solar panels. “The production of equipment that generates solar energy is strategic for our country,” he said. Geraldo Alckmin, vice president and minister of Development, Industry, Commerce and Services. “It contributes to our energy security and is aligned with the transition program for a low-carbon economy,” he said in a government publication.
The Brazilian Photovoltaic Solar Energy AssociationAbsolar opposes any new import tax. “The increase in taxes on the equipment that is used today only makes technology more expensive for the consumer; access to technology is hindered, and could even destroy the ‘green jobs’ that Brazil has for those who install these systems,” said Rodrigo Sauiaia, president of Absolar. Today, the photovoltaic sector in Brazil generates about 1.2 million jobs.
Sauaia added that the markets that insisted on increasing import taxes observed a reduction in technological development and a delay in the transition to green energy, due to the difficulties that consumers face in accessing these technologies.
How to support the domestic solar sector?
In telephone and online interviews, experts in Brazil and China told Global Voices that there are measures other than taxes that could potentially support the domestic industry. He Jijiang (何继江), deputy director of the Research Center for Energy Transition and Social Development at Tsinghua University, explained to Global Voices that the Brazilian Government could finance the location of “derivative industries,” such as factories that produce supports and accessories, train personnel for assembly, and establish large-scale local photovoltaic energy production plants. These measures would create jobs in the Brazilian photovoltaic sector, Jijiang added.
Sauaia, from Absolar, said that one of the first steps that the Brazilian Government should take is to establish a national policy for the sector, with a series of incentives for local factories, with reductions in taxes on raw materials used in production. of photovoltaic modules. A second measure would be for the Government to purchase solar equipment made in Brazil and install it in government buildings, as part of housing programs. You could also purchase equipment for emergencies caused by extreme weather events, such as the one that occurred in Rio Grande do Sul, south of Brazil. Sauaia expressed that:
«The Government aims to decarbonize the Amazon, replacing diesel-based power generators, which are expensive and pollute. Instead, renewable systems with energy storage in batteries, such as solar and wind, could be used. “Why not use locally made equipment for this program?”
But even these measures may be insufficient to counter Chinese prices. Bloomberg New Energy Finance (BNEF) PV analyst Tan Youru (谭佑儒) believes that a continued decline in PV input chain prices could hamper the region’s local sector growth ambitions. According to Youru, despite government efforts to promote local manufacturing plans, there would be pressure exerted by the fall in prices that would present difficulties for the profitability of local factories.
He Jijiang says the best path forward is one that contains division of labor, where countries develop different sectors that complement Chinese experience at the core of the photovoltaic sector. He stated that Brazil’s participation in the early stage of the sector would require many years, in addition to a large capital investment, which would inevitably delay the transition to green energy and increase its costs.
Note: This is an article republished from Global Voices under the Creative Commons Attribution 3.0 license. Link to original article.
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