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With the increase in tax on solar panels by more than 160%, the renewable energy sector in Brazil is on alert.
Solar energy, a symbol of sustainability and the promise of a green energy matrix, faces an unexpected obstacle.
At a time when the energy transition is gaining momentum around the world, Brazil has decided to significantly increase the import tax on solar panels.
This decision by Gecex-Camex, the executive body of the Foreign Trade Chamber, could impact not only the clean energy market, but also threaten investments, jobs and the competitiveness of the sector.
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Taxes on solar panels increase by over 160%
The Executive Management Committee (Gecex) decided this Monday, November 11, to increase the import tariff for photovoltaic modules from 9,6% to 25%, representing an increase of 160,4%.
According to the Ministry of Development, Industry, Commerce and Services, the measure meets two demands from national manufacturers who requested an adjustment to the rate. As a result, the tariff will come into effect after publication in the Official Gazette of the Union (DOU).
The decision, taken at the 220th Ordinary Meeting of Gecex, raises concerns among businesspeople and entities in the sector.
The Brazilian Association of Photovoltaic Solar Energy (ABSOLAR), for example, strongly criticized the measure.
According to the association, the increase in tax could make solar energy more expensive, cause capital flight, increase inflation and even the closure of companies.
In a note, ABSOLAR pointed out that the action threatens the competitiveness of the solar sector, and could lead to the cancellation of projects and the compromise of future investments.
For the National Institute of Clean Energy (INEL), the new tariff worsens challenges already faced by the sector, which include limitations in distributed generation (GD) and generation cuts in large projects (GC).
“The solar sector is already dealing with a series of restrictions, and the increase in costs will penalize the entire supply chain, both for imported and domestic modules,” said Wladimir Janousek, Secretary of Industry and Commerce at INEL.
Environmental impact and contradictions in international events
The decision comes amid global events focused on sustainability, such as COP29, which discusses emissions reduction and global sustainability measures.
While Brazil presides over the G20 and hosts the Leaders' Summit in November 2024, the increase in the tax on solar energy puts the country in a contradictory position on the international stage.
Brazil, which stands out for its adoption of renewable energy, is now facing criticism for appearing to hinder the advancement of the solar sector at a crucial time for the fight against climate change.
Practical consequences and corporate resistance
Companies in the sector, which until now used photovoltaic modules as a basis for distributed and centralized generation, may face barriers to maintaining the economic viability of their projects.
For João Paulo Muntada Cavinatto, lawyer at the Lefosse law firm, Gecex's decision has no practical effect until the official publication of the decision in the DOU.
However, companies can seek tax exemption or take advantage of the import quota set at US$ 1,01 billion until June 2025, according to Gecex Resolution No. 541 of 2023.
Insufficient national production and market insecurity
According to ABSOLAR, the national industry is unable to meet the domestic demand for solar panels, with an annual production capacity of just 1 GW, while the country imported more than 17 GW in 2023.
According to the association, the measure threatens more than 281 projects with a total capacity of 25 GW and investments of R$97 billion until 2026.
These projects could generate more than 750 jobs and avoid 39,1 million tons of CO₂ emissions.
ABSOLAR warns that the lack of alignment between government discourse and practice may discourage investment and make the solar energy market less attractive, putting job creation and the advancement of clean energy.
“Without demand, there is no market for imported modules or for national modules,” Janousek highlighted, emphasizing that high costs are added to other limitations that currently affect the sector.
Contradictions and expectations for the solar energy sector
At the same time that Brazil positions itself as a leader in global sustainability forums, this tax policy casts doubt on the country's commitment to a robust and affordable energy transition.
The inconsistency between internal actions and international targets generates uncertainty and puts pressure on the government to seek alternatives to prevent the tax increase from affecting the sector's growth.
Do you agree with the increase in taxes on solar panels, even though you know that this could make clean energy more expensive and compromise investments in sustainability in Brazil?
