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Brazil Renewables Key View
- 20 Jun 2022
Key View: The non-hydropower renewables market in Brazil remains one of the most attractive in the fast-growing Latin America region, while also outperforming on a global basis. A series of well-subscribed energy auctions have contributed to a robust project pipeline and we expect further expansion over the coming quarters in line with the country's ambitious renewable energy targets. Solar and wind power will continue to be the technologies of choice for Brazil going forward, supported by power project auctions, supportive government policies and legal frameworks to support distributed generation facilities.
Renewables Headline Forecasts (Brazil 2021-2026)
|Indicator ||2021e ||2022f ||2023f ||2024f ||2025f ||2026f |
|Generation, Non-Hydropower Renewables, TWh ||141.346 ||161.618 ||180.333 ||192.223 ||204.376 ||216.091 |
|Generation, Non-Hydropower Renewables, % y-o-y ||12.9 ||14.3 ||11.6 ||6.6 ||6.3 ||5.7 |
|Capacity, Non-Hydroelectric Renewables, MW ||47,979.8 ||56,210.9 ||63,634.2 ||68,452.6 ||73,602.3 ||79,170.7 |
|Capacity, Non-Hydroelectric Renewables, % y-o-y ||17.8 ||17.2 ||13.2 ||7.6 ||7.5 ||7.6 |
|e/f = Fitch Solutions estimate/forecast. Source: National sources, Fitch Solutions |
Key Forecast And Latest Updates
- Non-hydropower renewables capacity will increase by an annual average of 7.8% per annum between 2022 and 2031, totalling over 100GW. This will take the contribution of renewables to nearly 32% of total electricity generated in Brazil.
- Solar and wind power will continue to be the technologies of choice for Brazil going forward, supported by power project auctions, supportive government policies and legal frameworks to support distributed generation facilities. Solar and wind power will continue to provide significantly cheaper growth opportunities compared to other renewable energy generating technologies. As the solar and wind equipment manufacturing sector matures in Brazil, this will boost the cost-attractiveness and convenience for developers to expand the solar and wind power sectors.
- Brazil is Latin America’s top performer in the biomass and waste power sector and we expect it to continue to be so over the coming years, rivalling top global markets such as Germany, India and the US. Upside risks are present for Brazil’s biomass and waste power sector, as investors also look to capitalise on the market’s ethanol production industry as biofuel for electricity generation. While the market sees large potential for electricity generation from biomass, its growth will be dwarfed by growth seen in the solar and wind power sectors.
- It was announced in May 2022 that Eletrobrás filed a share offering request with the securities and exchange commission (Comissão de Valores Mobiliários), seeking to offer 627,675,340 new shares in a primary offering and 69,801,516 shares currently held by Brazilian state-owned development bank BNDES in a secondary offering. The group expects to raise BRL 30.69bn from this privatisation bid, which will be priced on 9 June 2022. Moreover, the offering may be increased by 15% through a green shoe option, raising the transaction to BRL 35.18bn.
- President Jair Bolsonaro has continued to sideline market-friendly reforms, instead enacting more populist measures as he turns his attention towards the October 2022 presidential election. We maintain our view that Bolsonaro will be at a disadvantage against his main competitor, former president Luiz Inácio Lula da Silva, underpinning greater risks to policy continuity in the coming quarters. Additionally, elevated inflation and an increasingly polarised electorate will threaten social stability in 2022.
This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.