Renewable generation curtailment is perhaps the biggest challenge the Brazilian renewable energy sector has ever faced, according to Rodrigo Sauaia, president of the Brazilian Photovoltaic Solar Energy Association (Absolar). While widely recognized, the problem is worsening as the share of renewable sources in the Brazilian electricity grid grows.

Figures from the National System Operator (ONS) show solar generation cuts in 2025 were proportionally higher than the same months in 2024. In August, 20% of potential solar output was curtailed, compared with 12% in August 2024.

ONS records include cuts due to external unavailability, reliability compliance, energy constraints, and access restrictions. 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.

Despite rising curtailment, ONS statistics may understate the impact on generators, said Sauaia.

Financial impact

“Of the total BRL 1.7 billion ($315.4 million) in sector losses, ONS recognizes only BRL 1.1 billion. Almost half the impacts go invisible,” Sauaia told pv magazine Brasil at Intersolar 2025.

ONS methodology ignores periods without solar radiation or wind data and counts outages in half-hour blocks even if caused by multiple factors.

“The sector faces reduced investment and difficulties obtaining financing for new centralized projects,” said Vinicius Nunes, lead analyst at BloombergNEF.

Solar curtailment reached 14% in 2024 and 21% in the first half of 2025.

“These cuts must be factored into new projects,” said Nunes. “They may exceed 30% by 2030. This does not prevent new projects but requires expanded financing.”

Absolar is calling for full compensation for curtailed generation. Last week, the National Electricity Regulatory Agency (ANEEL) met with associations, banks – including BNDES, BNB, Bradesco, Itaú, Santander, BTG – and government agencies to discuss Public Consultation 45/2019, which could establish a mechanism to share the effects of generation cuts.

ANEEL said it would “develop short-term alternatives to reduce financial difficulties for sector participants, a concern for financial institutions.” The issue affects both corporate balance sheets and investment decisions.

Operational limits

Compensation would address the financial impact but not the operational causes of curtailment.

“About 25% to 30% of outages result from a lack of transmission lines, and another 25% stems from grid robustness. Infrastructure still accounts for roughly half the problem,” said Sauaia.

The National Council for Energy Policy has approved the use of synchronous compensators in substations to address frequency, voltage, and power quality issues. 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.

“Margins in the Northeast are zero, access requests are frequently denied, and curtailments are rising,” Carvalho said at Intersolar Congress. Studies are underway to expand transmission capacity and revise guidelines following the November 2023 blackouts.

Demand-side solutions

Generation mismatches with consumption are increasing outages. New pricing structures, combined with storage, could mitigate the problem.

“We need clearer price signals. Cheaper daytime energy and adequate infrastructure would 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,” Sauaia said.

Aggregating large loads could also reduce power curtailments, Carvalho added. 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.

Other solutions include market mechanisms such as negative pricing and curtailment auctions, greater flexibility in hydro dispatch, increased storage for solar and distributed generation, and vehicle-to-grid (V2G) systems with electric cars acting as batteries, said Volt Robotics CEO Donato Filho.