Brazil to Boost Funding for Solar, Cut Loans for Coal, Gas
Brazil’s development bank, the world’s biggest backer of renewable energy, will focus on clean energy while cutting support for fossil fuels as the country’s economic slump limits its resources. The bank will boost its participation in financing for solar energy, maintain incentives for wind and reduce support for big hydroelectric plants and thermoelectric plants fueled by natural gas, according to BNDES’s infrastructure director Marilene Ramos. The bank will no longer invest in thermoelectric plants fueled by coal or oil.The new strategy prioritizes renewables as part of Brazil’s effort to fight climate change. The country has set a goal of getting 23 percent of its energy from clean power by 2030, and has to set priorities as it contends with an historical fiscal crisis that’s dried up government resources.
“We have more limited resources now, so we must make choices,” Ramos said during a conference call with reporters Monday. “The bank wants to privilege projects with environmental, social return. We are choosing power sources that don’t emit pollution, given that we have a pledge in the Paris agreement.”
Energy Strategy
The shift comes after Banco Nacional de Desenvolvimento Economico & Social, as the development bank is formally known, conducted a review of its energy strategy. For some technologies, the lender is seeking to provide less financing on its own while encouraging more borrowing from banks as it seeks to reduce reduce developers’ reliance on its low-cost financing. For others it will continue to offer cheap loans. The Rio de Janeiro-based bank will provide as much as 80 percent of the financing needed for individual solar farms, up from 70 percent now. It will continue to offer as much as 70 percent of the financing for wind, biomass, cogeneration and small hydroelectric projects, and 80 percent for energy-efficiency measures.
“Solar energy is still a source under development in Brazil, which justifies our participation increase, to further strengthen the industry,” said Carla Primavera, superintendent of energy at BNDES. The bank has arranged almost $25.9 billion in financing for clean energy to date, more than any group or organization in the world, according to Bloomberg New Energy Finance.
‘Committed to Solar’
“The 10 percentage points increase are enough to celebrate,” said Rodrigo Sauaia, executive director of the Brazilian Photovoltaic Solar Energy Association. “More than that, it shows BNDES is committed to solar power development.” That type commitment “can also attract more solar panel suppliers to the country,” said Helena Chung, an analyst with Bloomberg New Energy Finance. Brazil has contracted 3,200 megawatts of solar projects in three federal auctions to date, though BNDES hasn’t approved financing for any solar projects.
BNDES will reduce its participation in big hydropower projects and gas-fired power plants to 50 percent from 70 percent. It will no longer offer low-rate loans to finance transmission lines, though it will provide financing at market rates. The new policies will be in effect for a transmission-line auction later this month a clean-energy auction in December. BNDES wants more financing from private banks for transmission, distribution and big hydropower plants, according to Ramos. “The bank doesn’t want to finance certain sources such as coal anymore, to open the opportunity for clean power sources and increase their share in Brazil’s energy mix,” said Ramos. “We are aligned with the government’s objectives.”
Source:Bloomberg
