• Brazil seeking to develop domestic solar manufacturing
  • Plant will have 350 megawatts of production capacity

Canadian Solar Inc., the world’s second-largest solar manufacturer, is building its first plant in Brazil.

The facility in Sorocaba, in the state of Sao Paulo, will be able to assemble about 350 megawatts of panels a year, according to Wladimir Janousek, general manager of the company’s Brazil unit. The Guelph, Canada-based solar company is expected to announce Friday that it’s investing about 80 million reais ($23 million) in the facility.

It’s expected to begin production in September and will initially supply panels for power plants Canadian Solar is developing in the country, according to three people familiar with the plans. For the first six months, the plant will provide panels only for Canadian Solar projects, according to the people, who asked not to be identified because the information isn’t public. After that, the company will be able to supply about 100 megawatts of components a year to other developers.

BNDES Financing

Canadian Solar has won contracts to sell power from 400 megawatts of solar farms it’s developing in Brazil. Opening a factory will help it pursue financing from Brazil’s development bank BNDES, which offers cheap loans for solar projects that use locally made components. The country is seeking to create a domestic manufacturing industry and has announced plans to ban solar-cell imports by the end of the decade. BNDES has yet to approve any financing deals for solar projects.

The plant will help Brazil meet a goal of having 3.5 gigawatts of solar systems in operation by 2023, producing about 1.8 percent of its total energy. The country gets less than 1 percent of its electricity now from solar and has almost no domestic photovoltaic production. Developers have won contracts to deliver more than 3 gigawatts of solar power since 2014. 

The factory will use manufacturing equipment that Flextronics International Ltd. made using Canadian Solar’s technology, according to the people. 

Canadian Solar has plans to double the factory’s production capacity to meet growing demand for solar power and will also continue participating in Brazil’s auctions as it develops solar farms in the country.

Other companies, including SunEdison Inc. and Weg SA, have shelved plans to open solar factories in Brazil as the slumping economy affected the emerging solar industry. The plunging local currency, along with economic and political instability, have created uncertainty about the solar farms under development.

Developers including Renova Energia SA, Enel Green Power and Rio Alto Energia agreed to sell electricity at an average price of 215.12 reais a megawatt-hour in 2014, in Brazil’s first auction with a specific category for solar projects. That was worth about $87 then, and at current exchange rates is about $62, making it more expensive to import panels.

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