Tiempo Climate Newswatch

Solar Water Heating in Brazil

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	Steven Kaufman, Samuel Milton and Délcio Rodrigues describe the potential of solar water heating and the role of the Clean Development Mechanism in Brazil.
Steven Kaufman is Executive Director of the nongovernmental organization Green Markets International, Inc., based in Arlington, Massachusetts, in the United States. Samuel Milton is a Research Associate, also at Green Markets International. Délcio Rodrigues is a Research Associate at the Instituto Vitae Civilis, based in São Paulo, Brazil.

Small-scale renewable energy projects can make significant contributions to global climate protection while playing an important role in improving the quality of life for people in poor countries. Solar water heating is particularly promising in this respect. It is one of the simplest and least expensive ways of harnessing renewable energy and can be a comparatively cost-effective way of reducing greenhouse gas emissions. If carbon trading and other mechanisms can help disseminate solar water heating technologies, they could become an important component of climate change mitigation efforts.

Water heating typically constitutes a large proportion of energy consumption in homes and businesses, in some cases 30 per cent or more. When solar water heating systems supplement or replace conventional water heaters they displace some or all of the fuel that would have been used in those systems. The amount of greenhouse gasses emitted when these fuels are burnt varies, but for water heating in many locations, it is generally high. Using solar water heating systems also reduces emissions of other pollutants, thereby improving local air quality.

In addition to providing environmental benefits, solar water heating can also contribute to economic development. For example, manufacturing solar water heating equipment need not be very capital-intensive, and can, therefore, occur in many poor nations, small and large alike. Greater adoption of the technologies can provide substantial new job opportunities in manufacturing, sales and business administration, as well as in system design, installation and maintenance. Additional local economic benefits include financial savings from the reduced need for conventional fuel, and payback periods of three years or less in some locations for the equipment.

Despite the potential environmental and economic benefits of solar water heating, many barriers still hinder the adoption of these technologies. These include high upfront system costs compared to conventional alternatives, a lack of available financing for solar water heating businesses and consumers, insufficient quality control and a lack of awareness about the favourable lifecycle economics of the technologies compared to conventional water heaters.

In Brazil, electric showers are the main way of heating water in the residential market. According to the federal electric company, Eletrobras, electric showers are installed in more than 67 per cent of homes, and account for between six and eight per cent of Brazil’s total electricity consumption. It only costs around US$10 to install an electric shower heater in a home, but this then necessitates an investment of around US$900 in electricity generation and distribution. One reason for this expense is that water heaters are used primarily during peak hours, and this affects generation capacity requirements and transmission and distribution infrastructure. The use of electric showers is responsible for more than 18 per cent of Brazil’s national electricity demand during peak hours.

The use of electric shower heaters is likely to increase under a business-as-usual scenario. There is a clear relationship between rising income and energy consumption for heating in Brazilian households connected to the grid. The roughly 30 million people currently without electricity will likely also demand electric hot water systems when they eventually receive electricity.

This trend towards greater use of electric showers is of concern from the point of view of the investments needed for new electricity generation, and also from an environmental perspective. Increasing electricity generating capacity in Brazil often results in extensive environmental destruction. It commonly involves construction of new hydroelectric facilities, where the greatest remaining potential is in the Amazon, or hydrocarbon-fired thermoelectric plants that contribute to local pollution, global warming and other environmental problems.

At the same time, Brazil has an average of 280 days of sunshine per year, which could generate up to 15 trillion MWh, or 50,000 times the amount of electricity consumed nationally in 1999. The country’s domestic solar water heating manufacturers generally produce high quality equipment at a reasonable price, and given Brazil’s ample solar resources, investments in solar technologies for water heating enable relatively fast guaranteed returns.

The use of solar thermal technologies is, however, not widespread in the Brazilian market, despite certain current tax exemptions. Brazil’s existing solar thermal collectors total approximately 1,800,000m², which is small compared to countries like the United States and Canada. It is also far less than Barbados, where nearly 40 per cent of homes use solar water heating systems, and Israel, where the use of solar energy is obligatory for newly constructed homes.

There are several barriers to the increased use of solar thermal technologies in Brazil. The main obstacles stem from high up-front system costs, a failure to appropriately account for the social and environmental costs of conventional electrical generation, non-supportive building codes and constraints on the availability of financing (housing financing bodies are often unfamiliar with solar thermal technologies and have little sensitivity to energy and environmental issues). There is also a lack of awareness amongst architects, engineers, builders and other decision-making professionals in the building construction sector about the technologies’ multiple advantages and characteristics, and ways to meet aesthetic challenges.

In response to concerns about climate change and the social and environmental impacts of current trends in electricity generation, transmission and use, the Vitae Civilis Institute in São Paulo is leading an initiative to promote the use of solar thermal collectors to replace electric showers for residential water heating in Brazil. Through a dialogue between different stakeholders, Vitae Civilis has identified and is working to promote strategies for public policy interventions in the water heating services market to eliminate the obstacles to increased use of solar thermal technologies.

At the same time, Green Markets International has been assessing the potential contribution of solar water heating to climate protection and development. As part of this it has launched an initiative to boost solar water heating markets in selected locations, for example by facilitating access to carbon finance. With support from the Blue Moon Fund, the Renewable Energy and Energy Efficiency Partnership and the Oak Foundation, Green Markets and Vitae Civilis are working together to promote innovative financial mechanisms such as carbon finance, and business structures involving energy services companies and fee-for-service arrangements. The aim is to accelerate the use of solar water heating in Brazil, and, in collaboration with other organizations, in the Caribbean region and elsewhere.

For developing nations such as Brazil, the Kyoto Protocol’s Clean Development Mechanism provides an opportunity for carbon trading to support both environmental protection and economic development. The emerging international market for greenhouse gas emission reduction credits offers an important opportunity to provide funding and help to overcome obstacles to the use of solar water heating technologies. Even using conservative values of US$5 per ton of carbon dioxide and a ten-year crediting period, solar water heating projects under the Clean Development Mechanism could generate revenue equal to over ten per cent of the original cost of a solar water heating system. With higher carbon prices and longer crediting periods, the potential contribution could be far greater.

Revenue from emission reduction credits can help overcome many of the obstacles to wider use of solar water heating technologies. Foremost, carbon finance can help to increase the affordability of solar water heating systems for their users and to enhance the viability of solar water heating projects and businesses. Financial arrangements that help make systems more affordable, such as third party financing, and energy services company or fee-for-service operations, could also support increased use of solar water systems with additional financing from the sale of certified emission reduction credits to creditworthy buyers.

Carbon trading also has the potential to help overcome institutional, technical and other barriers to the development of solar water heating markets. Solar water heating projects could use carbon finance for market development, training, awareness raising and other activities that could help overcome the obstacles to broader use of solar water heating. Depending on the outcome of Clean Development Mechanism Executive Board deliberations regarding the eligibility of projects involving public policy measures, a variety of public sector interventions such as the establishment and enforcement of quality standards and revisions to building codes could also potentially benefit from Clean Development Mechanism participation. But even without these benefits, given the substantial contribution of water heating to energy use and levels of carbon used for water heating in many countries, improved solar water heating markets can generate significant climate protection benefits.

Further information
Steven Kaufman and Samuel Milton, Green Markets International, Inc, 691 Massachusetts Avenue, Suite 7, Arlington, Massachusetts 02476, United States. Email: skaufman@green-markets.org and smilton@green-markets.org. Web: www.green-markets.org.
Délcio Rodrigues, Vitae Civilis Instituto para o Desenvolvimento, Meio Ambiente e Paz, Caixa Postal 1908, São Lourenço da Serra, São Paulo 06890-970, Brazil. Fax: +55-11-46861965. Email: delciorodrigues@uol.com.br. Web: www.vitaecivilis.org.br.

On the Web
The Tiempo Climate Cyberlibrary presents a listing of theme sites on alternative energy.

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