Replacing diesel by solar in the Amazon: short-term economic feasibility of PV-diesel hybrid systems

Energy planning in the Brazilian Amazon faces two major challenges. One is that of helping the off-grid population improve a situation of discomfort, environmental risks and high lighting costs. Another is that of cutting fuel subsidies in the local utility grids supplied by diesel generators. Simulation shows that PV systems with energy storage connected to existing diesel generators, allowing them to be turned of during the day, provide the lowest energy costs. Implementation potential of that choice is evaluated for local grids up to 100 kW, where transportation costs cause maximal wholesale diesel prices for Northern Brazil to be increased of 15% and more, it is economical to convert diesel systems up to 50 kW peak power into hybrid systems. In locations where the costs increase is of 45% and more, systems up to 100 kW turn economical. A new legal mechanism for subrogation of diesel subsidies to renewable energy projects changes those limits to 0% and 21%, respectively. Therefore, the actors in power generation are motivated to consider solar energy. A program with the scope described should give the Brazilian photovoltaic industry a relevant push and launch a transition towards a sustainable power supply for the region.