Economic performance and policies for grid-connected residential solar photovoltaic systems in Brazil

We analyze the economic competitiveness of grid‐connected, distributed solar photovoltaic generation through small‐scale rooftop installations in five Brazilian state‐capitals. The locations represent a comprehensive set of the two essential parameters for the economic viability of PV–solar irradiation and local electricity tariffs. Levelized electricity costs (LEC) for PV generation and net present values (NPV) for a specific PV system are presented. The analysis comprises three different interest rate scenarios reflecting different conditions for capital acquisition to finance the generators; subsidized, mature market and country‐specific risk‐adjusted interest. In the NPV analysis, revenue flow is modeled by the sale of PV electricity at current residential tariffs assuming net metering. Using subsidized interest rates, the analysis shows that solar PV electricity is already competitive in Brazil, while in the country‐specific risk‐adjusted rate, the declining, but still high capital costs of PV make it economically unfeasible. At a mature market interest rate, PV competitiveness is largely dependent on the residential tariff. Economic competitiveness in this scenario is given for locations with high residential tariffs. We demonstrate the high potential of distributed generation with photovoltaic installations in Brazil, and show that under certain conditions, grid‐connected PV can be economically competitive in a developing country.