Cutting on diesel, boosting PV: the potential of hybrid diesel/PV systems in existing mini-grids in the Brazilian Amazon

The hundreds of mini-grids fed by diesel gen sets operated by independent power producers (IPPs) and public power utilities in the Brazilian Amazon all make use of a government subsidy that covers 100% of the fuel. This subsidy has recently been extended for another 20 years. Most of the sites where these mini-grids operate are not easily accessible, increasing cost and decreasing reliability of supply. IPPs willing to invest in renewable generation that displaces diesel can currently claim the cost of the fuel consumption avoided. We demonstrate that hybrid diesel/PV systems without storage can be the most competitive option, if the introduction of PV in this sector is intended. We discuss some changes in the existing subsidies in order to make the PV-option viable, evidencing the potential of PV insertion to a level that can justify a local PV module manufacturing plant in the country. Extending the model to a next stage includes the introduction of hybrid PV/fuel cells to rely completely on the local solar resource.