The Brazilian renewable energy sector is grappling with a growing challenge: renewable generation curtailment. As the share of renewable sources in the Brazilian electricity grid increases, so too does the frequency and severity of these curtailments. Data from the National System Operator (ONS) reveals a stark trend: solar generation cuts in 2025 were proportionally higher than the same months in 2024. In August 2025, 20% of potential solar output was curtailed, a significant jump from 12% in August 2024. This trend is not isolated; from January to August 2025, an average of 13.7% of real-time availability was curtailed, compared with 9.7% from April to December 2024.
The financial implications are substantial. Rodrigo Sauaia, president of the Brazilian Photovoltaic Solar Energy Association (Absolar), estimates sector losses at BRL 1.7 billion ($315.4 million), yet ONS recognizes only BRL 1.1 billion. This discrepancy underscores a critical issue: the current methodology understates the true impact on generators. The sector faces reduced investment and difficulties obtaining financing for new centralized projects, according to Vinicius Nunes, lead analyst at BloombergNEF. Solar curtailment reached 14% in 2024 and 21% in the first half of 2025, a trend that, if unchecked, could exceed 30% by 2030.
Absolar is advocating for full compensation for curtailed generation, a call that resonates with financial institutions. Last week, the National Electricity Regulatory Agency (ANEEL) met with associations, banks, and government agencies to discuss Public Consultation 45/2019, which could establish a mechanism to share the effects of generation cuts. ANEEL’s commitment to developing short-term alternatives to reduce financial difficulties for sector participants is a step in the right direction, but it does not address the root causes of curtailment.
Operational limits, particularly the lack of transmission lines and grid robustness, account for roughly half of the problem. The National Council for Energy Policy has approved the use of synchronous compensators in substations to address frequency, voltage, and power quality issues. However, additional infrastructure investments are needed. Renata Carvalho, adviser to the Electric Energy Studies Directorate at the Energy Research Company (EPE), noted plans for 15,000 km of transmission lines and synchronous compensators, with investments of BRL 56 billion scheduled to come online between 2028 and 2030.
Demand-side solutions could also mitigate the problem. New pricing structures, combined with storage, could encourage consumers to shift demand. Industries could adjust processes, farmers could irrigate or refrigerate, and households could use or store energy during low-cost periods. Aggregating large loads could also reduce power curtailments. In the northeast alone, 18 green hydrogen projects could add 23 GW of capacity by 2030 and 44.3 GW by 2038. Data center projects could require 3 GW, competing with hydrogen-to-vehicle production for grid access.
The implications for markets are profound. The current trend of increasing curtailment could deter investment in new renewable projects, stifling growth in the sector. However, if addressed effectively, this challenge could spur innovation in storage, demand-side management, and grid infrastructure. The Brazilian renewable energy sector stands at a crossroads. The path forward will require a concerted effort from policymakers, financial institutions, and industry stakeholders to ensure that the country’s renewable energy potential is fully realized.