April 1, 2020
Retail store which introduced a solar power system with support from the Sicredi group
On Mar. 31, the Japan International Cooperation Agency (JICA) signed a contract with Sistema de Crédito Cooperativo (Sicredi), one of the Brazil’s largest credit union alliances, to provide up to US$100 million in financing for “Distributed Solar Power Generation Project” in Brazil. This Project is co-financed by Citibank, N.A. and also marks the first time JICA has extended private sector investment finance to a local financial institution in Brazil.
At present, Brazil relies on hydroelectricity for about 60% of its electrical power requirements. But the dependence of such power is resulting in instability of power supply, such as power outages and spikes in prices, caused by droughts due to the climate change. In order to stabilize the power supply while maintaining its clean power matrix, the government of Brazil aims to raise the percentage of renewable energy excluding hydroelectric power from 19% in 2019 to between 28-33% in its power matrix by the year 2030 under the Paris Agreement(*). To achieve this, the government has been proactively promoting distributed power generation (private power generation based on resources such as solar energy, biomass and wind) in situations such as households, commercial facilities and factories, in addition to development of large-scale power plants by power companies. However, residents and small farmers in rural areas have been faced with scarce access to financing required for the purchase of facilities for the distributed power generation.
Tracing its ancestry to a credit union founded in 1902, the Sicredi group is Latin America’s oldest credit union alliance, and currently includes 114 member credit unions. It has over 4 million members who are served by about 1,700 branches in 22 states and 1,300 municipalities. It has a particularly broad network in rural areas, and credit unions belonging to the group are the sole financial institutions in about 15% of the municipalities in which it has branches. In 2016, the alliance began offering a “Solar Energy Financing”, small loan program to support the introduction of solar power systems. To date, it has delivered about 250 megawatts. While the group needs to secure long-term funding according to the payout period of the solar power generation systems, it is a challenge to secure such funding in Brazil’s current private financing market. By responding to the group’s need for long-term funding, JICA is contributing to the widespread adoption of solar power systems in Brazil.
By helping to stabilize Brazil's energy supply in a manner consistent with efforts to counter global climate change, this project contributes to SDGs goals 7, 13 and 17. The Sicredi group also actively promotes employment of women and making its workplaces and systems female-friendly, thereby contributing to the “G7 2X Challenge: Financing for Women” initiative that was announced at the G7 Charlevoix Summit of June 2018, during which agreement was reached on mobilizing funding in the amount of $3 billion.
JICA will take this opportunity to establish a broad partnership with the Sicredi group, which has an over 100-year history and a widespread network in Brazil.
(*) The commitments are Nationally Determined Contributions (NDCs), which are determined by individual countries. NDCs are self-determined goals established under the framework of the Paris Agreement by individual countries to reduce and control greenhouse gas emissions through measures taken at the domestic level.