The Sun Under Acid Clouds: The Collapse of Ex-Tariff Regimes and the Specter of a 35% Tax

Brazil’s solar energy sector is facing a critical moment that goes far beyond simple regulatory adjustments. The recent extinction of the ex-tarifário regime for solar inverters marks the end of an era of competitiveness and affordability, while rumors of a potential increase in the import tax on photovoltaic modules to as high as 35% loom like an acid cloud over the market’s future. The result? More than 115,000 jobs at risk and a slowdown that could prove irreversible for one of the country’s largest job-creating sectors.

The Sun Under Acid Clouds: The Collapse of Ex-Tariff Regimes and the Specter of a 35% Tax

The death of the ex-tariff regime for inverters was not an isolated event, but part of a deliberate strategy to close the incentive cycle that sustained the solar boom of recent years. Inverters—absolutely critical components in the solar value chain—are responsible for converting the direct current generated by panels into usable alternating current. Without them, there is no functional solar system. Until recently, these devices could be imported at reduced tariffs, given the lack of comparable large-scale domestic production. This flexibility allowed integrators, installers, and engineering firms to maintain competitive margins and offer affordable solutions to the market.

Now, with the end of the ex-tariff regime for inverters, the reality has changed. Import taxes on these components jumped to the 10.8%–12% range in 2024 and remain on an upward trajectory, with the threat of reaching 25% for imports exceeding established quotas. But there is more. While the government seeks to justify the measure as protection for domestic industry, increasingly concrete rumors point to a possible increase in the import tax on photovoltaic modules to 35% by July 2026, mirroring the tax policy applied to electric vehicles. If confirmed, it would be a devastating blow.

The prospect of a 35% tax is not mere speculation. Recent data show that the government has already implemented this rate for electric vehicles, following a schedule that began at 10% in 2024 and is set to reach 35% in July 2026. Applying the same logic to solar modules is a real and alarming possibility. This would mean that equipment costing R$100 when imported tax-free in 2022 could cost R$135 in 2026. For a sector operating on tight margins where equipment accounts for 60% to 70% of total investment—this difference is nothing short of lethal.

The combined impact is devastating. With the end of the ex-tariff regime for inverters already in effect and the looming threat of a 35% tax on modules, the economic viability of entire projects collapses. The Brazilian Solar Energy Association (Absolar) has warned of the potential cancellation of more than 25 GW in projects, representing R$97 billion in suspended investments. These figures are not abstract: they translate into mass layoffs among integrator companies, reduced working hours for installers, canceled hiring of engineers and designers, and the closure of small and medium-sized enterprises that form the backbone of the sector.

The employment chain affected is vast and deep. This is not just about technicians installing panels. The solar sector has generated more than 115,000 jobs, spread across manufacturers of mounting structures, cable and connector suppliers, logistics companies, project consultants, specialized electricians, system engineers, maintenance teams, and hundreds of other professions. Every percentage point increase in import taxes leads to a proportional reduction in demand—and, consequently, in the workforce required.

Legal and regulatory uncertainty further worsens the outlook. While the government fails to clearly define its tax policy for the sector, investors freeze decisions, banks hesitate to finance projects, and companies halt hiring. The National Electric Energy Agency (ANEEL) has yet to regulate how surplus energy injected into the grid will be remunerated after 2029, adding another layer of uncertainty. On top of that, the collection of 60% of the Fio B tariff starting in 2026 for new distributed generation systems further erodes investment attractiveness.

Brazil faces a clear choice: follow a protectionist path that sacrifices jobs and competitiveness, or find a balance that enables the development of domestic industry without destroying the dynamism of a sector that has become vital to the energy transition. The acid cloud of a potential 35% tax on modules, combined with the collapse of ex-tariff regimes for inverters, threatens to turn the solar sector from a growth engine into a story of decline.

The time to act is now. Without a change in tax and regulatory policy, Brazil will not only lose investment opportunities and jobs, but also its leadership in one of the most promising energy sources of the 21st century. The sun, which should illuminate the country’s energy future, risks being obscured by increasingly dark clouds.

Daniel Pansarela

Public Affairs and BD Director LatAm at Trina SolarChairman of the Fiscal Council at Absolar