Find out about financing for photovoltaic projects

The high demand for solar energy systems has caused the demand for financing to grow rapidly. A photovoltaic system is seen as an investment with a quick return and a long profitability horizon. The life expectancy of solar modules is 25 years and inverter manufacturers offer guarantees ranging between 5 and 12 years old.

However, despite the reduction in equipment costs and the possibility of a quick return, the investment for purchasing a photovoltaic system is still considered high for most people. Bank financing becomes an interesting option, which has considerably facilitated access to solar energy for many consumers.

Investing in solar energy is considered safe, as electricity rates are certain to rise. By purchasing a photovoltaic solar energy system, consumers become immune to rate increases. The return on investment depends on the size of the system to be installed, and the payback period for larger projects can be three to seven years.

Financing rates have changed significantly, as has the credit approval process. What used to be bureaucratic has now become easier and with lower rates. Banks have created specific lines of credit for this type of investment, making it even more viable to acquire a photovoltaic system.

With the emergence of fintechs (financial startups), payment terms and processes have become even simpler, increasing the demand for financing. One strategy adopted by banks and fintechs is to make the financing installment equal as much as possible to the amount that the customer currently pays on their electricity bill.

This prevents the consumer from having two costs per month (financing installment and energy bill). Another way to attract consumers to finance is to offer packages with installation and civil liability insurance included.

Financing offered in the Brazilian market

In total, more than 60 lines of financing are offered for solar photovoltaic projects in Brazil, each of them suited to a specific client or project profile. Below we present the main lines of credit offered.

Amazon Bank

Banco da Amazônia encourages the use of renewable sources in the North of Brazil, with the mission “Developing a sustainable Amazon with credit and effective solutions”, targeting companies of any size.

Interest varies depending on the line chosen by the client and finances 100% of the project value. The payment term is up to 12 years, with a grace period of up to 24 months.

Bank of Brazil

Banco do Brasil works with some credit lines for financing solar energy, such as the Pronaf Eco line, which is aimed at rural producers. There is also the FCO line (Constitutional Financing Fund for the Central-West).

The Pronaf line targets small producers who have a declaration of suitability for pronaf. With interest of 2,5% per year, with a limit of 165 thousand reais for financing, the payment term is up to 12 years, with a grace period of up to 8 years.

The FCO line has several branches:

• Corporate FCO: Its target audience is legal entities governed by private law that are dedicated to activities in the industrial, agro-industrial, mineral, tourist, commercial, services and economic infrastructure sectors. Public companies that are not dependent on financial transfers from public authorities can even participate in the FCO;
• FCO Rural: It is aimed at rural producers, both individuals and legal entities, as well as cooperatives and associations with rural activity. The states served by this line are the Federal District, Goiás, Mato Grosso and Mato Grosso do Sul. Rates can vary from 6,75% to 10% per year, depending on the segment and the size of the company. The limit for financing is R$5 million for the services and commercial sectors and R$10 million for other segments.

Banco do Nordeste

The FNE Sol financing line (Constitutional Financing Fund of the Northeast) finances all components for centralized generation and distributed micro and mini-generation systems of energy from renewable sources, for the enterprises' own consumption.

This line of credit is not restricted to solar energy, and can also be used with wind, hydroelectric or biomass sources. It is aimed at all sizes of industrial, agro-industrial, commercial and service companies. It can also be used by rural producers and companies, rural producer cooperatives and legally constituted associations.

Since April 2018, the FNE has also started to serve individuals who wish to generate their own energy through photovoltaic systems connected to the grid (on-grid). The FNE serves the states of Maranhão, Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco, Alagoas, Sergipe, Bahia and the regions of northern Minas Gerais and northern Espírito Santos.

The investment can be financed 100%, with interest rates ranging from 6,5% to 11% per year, depending on the size of the client. The repayment term is up to 12 years, with a grace period of up to 6 months for companies and rural producers. The term for individuals is up to 8 years, with a grace period of up to 6 months and a limit of R$100.

BNDES

BNDES (National Bank for Economic and Social Development) has some financing lines for renewable energy. Are they:

• Inovagro: Its objective is to support technological innovation investment projects in the agricultural sector, benefiting rural producers (PF and PF) and cooperatives. There is a credit limit for individual ventures of R$1,3 million per customer and for collective ventures the limit is R$3,9 million, respecting the individual limit per participant. Interest rates are 6% per year with a payment term of 10 years and a grace period of up to 3 years;
• Pronaf Agroindústria: Its objective is to support investment projects in renewable technologies using solar, wind and biomass energy. Benefiting rural producers (PF), family rural enterprises (PJ) and cooperatives. The credit limit is R$165 thousand for individuals, R$330 thousand for legal entities with the exception of condominiums for rural milk producers and R$35 million for cooperatives. The interest rate is 4% per year with a payment term of 10 years with a grace period of up to 3 years;
• Pronaf Bioeconomy: Its objective is to support small hydropower plants and renewable energy technologies. Benefiting individual rural producers. The credit limit is R$165 thousand for individuals and R$88 thousand for rubber and oil palm trees. The interest rate is 2,75% per year with a payment term of 10 years with a grace period of up to 5 years;
• Pronamp: The objective is to develop the rural activities of medium producers benefiting rural producers (PF and PJ) with annual ROB (Gross Operating Revenue) of up to 2 million. The credit limit is R$430 thousand for individual enterprises, in the case of a collective enterprise, the aforementioned individual limit must be respected. The interest rate is 6% per year with a payment term of 8 years with a grace period of up to 3 years;
• Prodecoop: The objective is to increase the agro-industrial complex of cooperatives through the modernization of production systems, including the implementation of an energy generation and cogeneration system benefiting individual cooperatives and central agricultural, agro-industrial, aquaculture and fishing production cooperatives and also rural producers linked to cooperatives. The credit limit is R$150 million per cooperative in one or more operations, the interest rate is 7% per year with a payment term of 10 years and a grace period of up to 3 years;
• Renewable energy: The objective is to encourage the implementation of solar energy generating systems, wind turbines and solar heaters, benefiting individuals, companies and individual entrepreneurs. Unlike other credit lines, there is no credit limit, the interest rates are made up of the financial cost (TBF, TLP or Selic), the BNDES rate (0,95% per year) and the financial agent's rate, which is negotiated between the institution and the client. The payment term is 10 years with a grace period of up to 2 years.

Santander

Santander is a pioneering institution in this segment in Brazil and provides credit for 100% of the project value, with installments of up to 72 times. Financing is available to individuals and legal entities (account holders and non-account holders), with interest rates starting at 0,99% per month, varying according to the amounts, terms and other conditions chosen by the customer. Financing can be contracted through the platform Santander Financing.

Sicoob

Sicoob offers its members financing for equipment, assembly and installation. Interest rates vary between 0,95% and 1,10% per month. The financing term is 72 months with a grace period of up to 6 months.

Sicredi

Sicredi has a specific line of credit for this type of purchase, which is available to any individual who is a member. Interest rates vary between 1% and 3% per month, financing 100% of the project value, with a term of up to 60 months.

BV Financial

BV Financeira finances up to 100% of the project value, with pre-fixed rates. Interest rates charged vary from 0,75% to 1,54% per month and terms range from 12 to 72 months, with a grace period of up to 90 days. The credit limit for individuals is up to R$200 and for legal entities it is up to R$2 million.

Soleasy

O Soleasy is the first Brazilian fintech focused specifically on solar energy financing that finances 100% of the project value, with a fully digital platform, without the need to go to the bank. Terms range from 24 to 120 months, with interest starting at 0,79% per month. The customer can choose up to 90 days of grace for the payment of the first installment. The company also offers free installation and civil liability insurance for all financing.