With the rise of the Dollar, Ex-tariffs for solar panels lose effect

With Ex-tariffs published this year, the federal government allowed certain models of solar panels to have a 12% reduction in the import tax, zeroing the tax. However, Brazilian companies, service providers and consumers did not benefit from this measure due to the rise in the Dollar.

Ex-tariff: what it is and what the real impacts are on the solar energy sector

Fernando Castro, sales director at Risen Energy, explains that this occurs due to the limitation of the CIF (Cost Insurance and Freight) value in Reais, determined in Ordinances 309 and 324, which govern Ex-tariffs.

As a result, the growing devaluation of the Real in relation to the Dollar, with an exchange rate above R$5, and the federal government's measure establishing limit values ​​made Ex-tariffs unfeasible.

“This limit means the maximum value in Reais of the cost, insurance and shipping of photovoltaic modules, using the PTAX on the day the claim is filed. For example, a 400 W bifacial module with a CIF of US$ 106,80 from a claim submitted on November 14, 2019, whose PTAX was US$ 1 to R$ 4,23, determines the CIF limit of R$ 451,78 .03 in the approval text of EX XNUMX of the  Resolution 15. As PTAX rose more than 30% over the last year, the current CIF is R$574,00, well above the limit of R$451,78. This example happens with all approved Ex-tariffs for modules, which ultimately became useless”, explained Castro.

“Currently, a single-face solar panel is arriving in Brazil, on average, for R$500. However, resolution 70 of the Ex-tariff establishes an average value of R$380 per module. To use the Ex-tariff on a panel, the Dollar should be a maximum of R$4,80”, added Aldo Teixeira, president of distributor Aldo Solar.

Wladimir Janousek, specialist in technologies and production processes for photovoltaic modules, commented to Canal Solar said that “the unfeasibility of using Ex-Tariffs disappointed companies in the segment, leaving local industry dissatisfied, due to the fact that they were approved, and importers who are unable to benefit from the measure”.

“With the Dollar at today’s level, the high prices of photovoltaic modules abroad and the increase of approximately 700% in freight costs, we are unable to keep prices below the maximum allowed by the Ex-tariffs published”, added Leandro Martins, president from the distributor Ecori Energia Solar.

Janousek also highlighted that a large part of this problem was caused by the government itself, due to the delay in approving the elections. “Remember that we had claims that were approved and published after 12 months of submission. It is a very long period to support the exchange rate variation and the reference prices of the modules that had been informed”.

“The market is waiting for the government to review ordinances 309 and 324. Mainly, increasing the percentages used in comparative analyzes and which determine the price differences of modules from the national industry with those imported. Furthermore, greater speed is expected in the analysis processes and that new rules for converting prices into Reais are defined, with the application of an updated and more realistic exchange rate, so as not to make analysis, approval and, finally, unfeasible. full use of the ex-tariffs already approved”, added the expert.

Márcio Mitsunaga, customs broker, highlighted that another factor that must also be considered by the government is the energy efficiency of photovoltaic modules. “Local manufacturers compete with imported products, most of the time, with solar panels with inferior performance and capabilities. When we talk about solar panels, power and energy efficiency are of paramount importance. Therefore, it is not possible to compare prices for a 600 Wp module with national 395 Wp panels. Sales values ​​are negotiated in watts, meaning that imported modules will necessarily have a higher value on the market. This analysis should consider these differences that are fundamental in product pricing”, emphasized Mitsunaga.

How are importers dealing with the unfeasibility of Ex-tariffs?

In an interview with Canal Solar, representatives of distributors and importers commented on how they are dealing with the unfeasibility of ex-tariffs for photovoltaic modules.

“The Ex-tariffs will not have an additional impact on the prices of solar energy equipment until the end of the year. However, for 2021, the hope for the photovoltaic sector is the arrival of new lines of solar panels with new powers – whose inclusions of rate reduction within the ex-tariffs are already being filed”, assessed Aldo Teixeira.

Leandro Martins stated that the time is now to wait. “We have to wait for the world economy to resolve this problem of supply and demand mismatch, for ship travel to return to the level it was before the pandemic and for factories to return to production without problems with raw materials. Only after this normalization will we know where the sector will stabilize.”

“I believe that we will have other waves of contamination and I hope that, by December of this year or January 2021, the pandemic will have ended here in Brazil. But, as we are in a globalized world, we depend on the mechanisms of each country for everything to return to normal”, added Martins.

Camila Nascimento, Commercial Director at Win Energias Renováveis, commented that there were exceptions. “We were able to take advantage of the Ex-Tariff on some shipments of JA Solar modules that arrived in August. All other imports are being left out. In view of this, we continued with normal pricing without passing on the Ex-Tariff benefit because it was not enjoyed. The expectation is that the scenario will continue in this way, with an increase in product prices due to the current circumstances until the first quarter of 2021”.

Integrators are unable to take advantage of Ex-tariffs

Professionals who provide installation services and carry out photovoltaic projects told the Canal Solar that did not use the Ex-Tariffs published recently. The reasons were the same as those given by distributors and importers: the rise of the Dollar and the determination of a limit value.

“The Ex-tariffs were very specific, covering only part of the components. This reduction came at a time when the market has supply restrictions and we have an unfavorable exchange rate. It is difficult for us to notice any reduction until the end of the year”, highlighted Tiago Fernandes, managing partner of YES Energia Solar.

Agenor Pillonetto, Commercial Director at GereSul Energia Solar, also highlighted the unfeasibility of the Exs and also commented on possible sanctions for those who request the Ex-tariff. “These Ex-tariffs did not help at all, as we were unable to use them, due to the prices being listed in CIF in Reais where it was done with the Dollar price in the range of R$ 4,00. So, with this current CIF price, our company and not other companies will be able to use the Ex-tariff, as they run the risk of the Ex-tariff being denied and heavy fines being applied by the tax authorities and this occurs with practically all items that were published with Ex -tariff”.

Cleidismar Pinheiro, owner of the company Cowboy Serviços Energia Solar, reinforced the unfeasibility of the recently published Ex-tariffs and highlighted the increase in demand for materials. “It was not passed on to us, mainly due to the rise in the Dollar. But, also due to market supply and demand factors.”

“Currently, we are having a problem with the availability of equipment at the main distributors in the country, something cyclical, which is affecting everyone. According to distributors, they have a very high demand for equipment and are having difficulty purchasing and shipping from China to Brazil. I know a distributor who has already sold the entire import batch before the equipment arrives and who does not have equipment on the shelf for immediate delivery. In my view, given this entire scenario, my expectation is for prices to be maintained or increased”, he added.

What about Ex-tariffs for inverters?

Currently, Ex-tariff claims for photovoltaic inverters do not have CIF limitations for photovoltaic inverters. “In the case of inverters, the ex-tariffs did not establish a price limit like solar panels. With this, Aldo managed to reduce 14% on inverters, even with the rise in the Dollar”, explained executive Aldo Teixeira.

“At Ecori we already benefit from Ex-tariffs on most of the inverters in our portfolio. So, in any case, this reduction in our costs has already been passed on to our customers since 2018”, added Martins.