One of the main topics when we talk about sustainability on a large scale is the discussion about renewable energy. This is a topic that involves both the public and private sectors and that is becoming increasingly more and more a reality. It wasn't long ago that we suffered from an energy crisis that made production costs in the country much more expensive. And the government has already realized the importance of seeking alternative sources: the growth in renewable energy generation has been 25% per year over the last decade.

But what is renewable energy? Why is there still little private investment in this area? What are the goals of large companies in relation to this topic? These are the answers you will get in this text. Check it out!

What is renewable energy?

Renewable energy is generated by resources that are naturally replenished and considered inexhaustible. It can be obtained through hydroelectric power, wind, solar and biomass. Hydroelectric power is no longer a focus because it can cause negative impacts on the environment. Biomass still requires further studies and is a little further away from becoming a reality. Therefore, current efforts are focused on wind and solar energy, which are abundant in Brazil.

The challenges of financing renewable energy in Brazil

The challenges can be classified into three main factors: credit, information It is investment size. There are other details that are also barriers to financing renewable energy in Brazil, but these sum up the issue well. Now, let's understand each of them:

Credit

The biggest obstacle faced by companies is finding new ways to explore Brazil's energy potential. The problem is that almost all financing for investments in this area is provided by the government, with support from the BNDES. One of the problems with this single-track approach is that it does not take advantage of the expertise of private banks in modeling projects, combining credit instruments and loan alternatives.

In this sense, the challenge is to create a private investment group or fund that can expand the exploration of these resources in the country. Finding other instruments and financing funds that allow leveraging the growth of exploration of these sources in Brazil.

Information

Furthermore, there is also a difficulty in terms of information. The investment in renewable energy generation is very high. Obviously, managers need a well-defined survey with cost and benefit projections to take on the project.

Investment size

The lack of accurate studies means that there is a discrepancy between the renewable energy generation budget forecast and reality. And the values are too high for this margin of error to be disregarded. See these examples with the amount to be invested according to the types of property:

• – Residences: R$ 12 thousand to R$ 100 thousand;
• – Commerce and industry: R$ 600 thousand to R$ 6 million;
• – Plants: R$ 20 million to R$ 120 million.

The best solutions to encourage financing

In Brazil, despite some incentives from government projects, there is still no definitive plan to promote the financing of programs focused on renewable energy. However, the dialogue between large entrepreneurs concerned with the cause is opening up a new horizon of solutions that encourage its development. Among the main possibilities, the following stand out:

Investment funds

In this case, interested companies would create partnerships – including with the public sector – to generate exclusive funds for projects dedicated to renewable energy. This initiative would also seek to reduce the typical fees of the sector, which are usually high.

Green Bonds

The Green Bond works like this: the stock exchange or other financial institution creates special debt securities, with a “green seal” – hence the name. Companies that take on these bonds to raise capital can only invest the amount raised in sustainable projects. However, with the exception of the seal and the requirement for environmental compensation, green bonds are similar to conventional titles.

More and more large companies in the country are reaching out to develop partnership ideas, assess opportunities to implement changes and propose solutions to these barriers. The discussion is moving forward and those who remain on the sidelines could miss out on a great opportunity.

So, do you still have questions about renewable energy? Want to know how your company can learn more about this topic? Read the other content on our blog!