Electric & electronics association sees the move as a first step to level the playing field for domestic manufacturers competing with products subsidized by the Chinese government
Por Marcelo Furtado
The increase in the import tariff rates for photovoltaic solar modules from 9.6% to 25%, effective from the publication of Gecex Resolution 666 in the Federal Official Gazette on Wednesday (Nov. 13), has pleased the Brazilian electrical and electronics industry, despite a backlash from the Brazilian Solar Photovoltaic Energy Association (Absolar). The Brazilian Association of Electrical and Electronic Industries (Abinee) said in a statement that the resolution "is a first step towards ensuring that industries based in Brazil are treated more fairly in relation to foreign manufacturers. The measure does nothing more than compensate for part of the direct and indirect subsidies for Asian products," it said.
According to Abinee (which represents local equipment manufacturers), it doesn't make sense to favor Chinese exporters who are subsidized by their government with low tariffs and, until last year, with ex-tariffs (which were lifted in December 2023). In fact, over the past two years, the Asian giant has gradually increased its overcapacity of solar panels, as well as various other manufactured products, systems, and energy transition equipment, in order to comply with the government's policy of compensating for a downturn in the domestic economy through an intensive increase in exports.
To this end, the People's Bank of China has disbursed US$70 billion to the country's industries, and billions more have been financed with subsidized loans from other state-owned banks.
In the specific case of modules, Abinee explained that export prices to Brazil and other markets have fallen by more than 25% in 2024 alone, following a drop of around 40% last year.
This represents a decline of more than 60% over the 24-month period. Even with the increase in the tariff rate, this means that module prices have not yet reached the level of two years ago.
Absolar forecasts see problems with price increases in systems for Brazilian consumers and possible disinvestments. In contrast, for Abinee, the tariff rate changes the competitiveness of domestically manufactured products, which could receive a boost. In addition, large contracted projects will not be affected by the increase in the tax rate, as they are still under the quota system established by the Ministry of Foreign Affairs.
Local market
Currently, the installed Brazilian production capacity of solar modules is estimated at only 1.6 GW, and most companies are working with high excess capacity, an executive from one of the only national manufacturers, Sengi, told Brasil Energy. There are five companies with module production lines, of which two are the most important: in addition to Sengi Solar, with a capacity of 500 MW in a factory in Cascavel (state of Paraná), there is the Chinese company BYD, with the same capacity in Campinas (state of São Paulo). It was these two companies that made the official request to Gecex-Camex to increase the import rates.In addition, there are Pure Energy (310 MW), Globo Brasil (180 MW) and Balfar (120 MW).
According to an Abinee study, of the 146 million modules sold in Brazil in 2022, just over 500,000 were produced locally and over 145 million were imported with zero import tax. In 2023, the scenario was repeated, with 99.8% of modules imported. This is the fourth largest imported product in Brazil, after oil, diesel, and potassium chloride for agriculture.
In 2023 alone, the exemption provided by the ex-tariffs offset a potential R$1.9 billion (US$364 million) in import tariffs for public coffers, Abinee calculated.