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Distributed solar

Distributed community solar generation technology

Photo by Shutterstock

Distributed community solar generation technology

Compare IOA
Country
Brazil
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Renewable Resources and Alternative Energy
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Alternative Energy
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
USD 100 million - USD 1 billion
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Affordable and Clean Energy (SDG 7)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Responsible Consumption and Production (SDG 12) Climate Action (SDG 13) Life Below Water (SDG 14)

Business Model Description

Invest in ground- or roof-mounted solar panels that are sold for household or business use

Expected Impact

Contribute to energy security in Brazil through increasing the share of renewable sources

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Brazil
Region
  • Brazil: Bahia
  • Brazil: Goiás
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Renewable Resources and Alternative Energy

Development need
Sustainability Development Report 2019 gives a score of 91.7 on SDG 13 (Climate Action) for Brazil, with 'Significant challenges remaining' subscores prevalent across indicators. (1) Brazil faces the risk of an energy blackout over the next decade due to increased energy demand driven by population and economic growth (2)

Policy priority
Brazil's National Energy Plan (PNE 2030) stresses the need to meet the increased energy demand over the next years and to diversify the electricity mix, favoring renewable energy (3) (4)

Gender inequalities and marginalization issues
Research in Brazil demonstrates that in rural areas, girls are 59% more likely to complete primary education by the age of 18 if they have access to electricity, and that rural women & men are 10.2% more likely to be employed if they have access to electricity in comparison to their counterparts without access. (23)

Investment opportunities introduction
Increased policy momentum creates a strong context for new and enhanced investment, with the contribution of solar and wind towards the Brazilian energy matrix expected to grow to 44% by 2040, up from 4.4% in 2015 (5)

Key bottlenecks introduction
The key bottlenecks include small-scale illegal commercialization in forestry management, the large amount of capital required to set up businesses, bureaucratic decision making durations, the immediate profit motive encouraging short-term exploitation over long-term sustainability and the reduction of existing subsidies.

Sub Sector

Alternative Energy

Policy priority
PNE 2030 and the 2030 National Determined Contribution (NDC) require Brazil to cut down its emissions by 43% until 2030, and increase the share of renewables in its energy portfolio. (5)

Industry

Solar Technology and Project Developers

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Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Distributed community solar generation technology

Business Model

Invest in ground- or roof-mounted solar panels that are sold for household or business use

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Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

USD 100 million - USD 1 billion

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

600,000 households and enterprises use on-grid solar energy, which has grown tenfold in one year

Over 600K households in Brazil, small businesses and other establishments like schools use distributed on-grid solar energy today (6), a number that has grown by 10X in the past year (7)

Solar energy sector is expected to generate US$ 1.3 billion in 2019 in Brazil, of which US$ 800 million will come from distributed solar (8)

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

10% - 15%

IRR of 10-12% observed in projects with ticket sizes of US$ 80 million (9)

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Short Term (0–5 years)

Distributed solar energy technology is available, adaptable and unsophisticated, making it rapidly and easily installable (10) (11)

Installation times range from one or two days for small, household-level panels to a month for business-level installations. It takes up to an additional month to secure and validate the paperwork, authorize the connection point and connect it to the off-grid network (10) (11)

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

> USD 10 million

Market Risks & Scale Obstacles

Capital - CapEx Intensive

Solar technology previously lacked the price/cost-efficiency levels it has quickly been able to arrive to

Capital - Requires Subsidy

Government policy is heading in the direction of subsidy reduction for distributed solar (12)
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Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Meeting NDC targets requires increased investment in renewables in order to achieve a 45% share of renewable energies in the composition of the energy matrix by 2030, up from 40% in 2016 (13)

Reducing greenhouse gas emissions by 76% by 2030 requires the integration of lower-footprint generation into the energy mix (8) (2)

Gender & Marginalisation

Research in Brazil demonstrates that in rural areas, girls are 59% more likely to complete primary education by the age of 18 if they have access to electricity. (23)

Rural women & men are 10.2% more likely to be employed if they have access to electricity in comparison to their counterparts without access. (23)

Expected Development Outcome

Provide clean energy at household- and small business-level

Lower electricity bills for households and businesses, as on-grid, distributed solar has seen improvements in its price-competitiveness (6)

Lower country's carbon footprint from electricity production

Gender & Marginalisation

Increase energy security for low-income households in Brazil

Increase employment and income generation opportunities for women

Primary SDGs addressed

Affordable and Clean Energy (SDG 7)
7 - Affordable and Clean Energy

7.1.2 Proportion of population with primary reliance on clean fuels and technology

7.2.1 Renewable energy share in the total final energy consumption

Current Value

95.59% (22)

43.79% (22)

Target Value

100%

Secondary SDGs addressed

Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production
Climate Action (SDG 13)
13 - Climate Action
Life Below Water (SDG 14)
14 - Life Below Water

Directly impacted stakeholders

People

Households

Indirectly impacted stakeholders

People

General population: Decentralized power reduces the strain on central electricity transmission networks that are overcapacity, benefiting end-users by reducing shutdown risks (14) (15)

Corporates

Small businesses

Outcome Risks

Solar panels often need to either cover as much as an entire household's roof to supply it with enough energy (15), or occupy a large amount of nearby land, lowering property value (16)

Impact Risks

Unexpected impact risk: The improper disposal of solar cells may lead to environmental degradation

Impact Classification

B—Benefit Stakeholders

What

The outcome is likely to be positive, important and intended because solar panels could provide clean energy to households that are not connected to the grid

Who

Off-grid populations are underserved due to a lack of clean energy sources

Risk

External factors such as a potential slowdown in solar component imports or a global increase in their prices may disrupt the ability of this opportunity to deliver the expected impact

Impact Thesis

Contribute to energy security in Brazil through increasing the share of renewable sources

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Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

(Brazilian National Energy Plan, PNE 2030): PNE 2030 and the 2030 National Determined Contribution (NDC) require Brazil to cut down its emissions by 43% until 2030, and increase the share of renewables in its energy portfolio. (5)

New administration is prioritizing the Northeast for clean and renewable energy generation (17)

Financial Environment

Financial incentives: BNDES's Finame provides financing for the acquisition, sale, installation services and associated working capital of solar and wind energy generation systems and solar heaters. Interest rates are ~1%, there is a 2-year grace period (19)

Financial incentives: Programa Fundo Clima also offers cheap credit to support the installation of solar heating systems and cogeneration systems (photovoltaic panels, wind turbines, biogas generators and necessary equipment) (20)

Regulatory Environment

(Resolution 482/2012): Free access to distributed solar energy microgeneration and distribution in Brazil is regulated by resolution 482/2012 (18)

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Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

BRAVIA, MOV Investimentos, EBES, Enel, Engie, Atlas Renewable Energy

Government

ANEEL is the Brazilian Electricity Regulatory Agency

Non-Profit

Absolar is the Brazilian Association for Solar Photovoltaic Energy- Associação Brasileira de Energia Solar Fotovoltaica (ABSOLAR)

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Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map

Brazil: Bahia

Bahia and Piauí are the states with the highest solar incidence in the country (5.7-6.1 kWh/m2/day) for over a third of their territory, as well as the lowest number of consumer units with photovoltaic distributed generation (1)

Brazil: Goiás

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References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.
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