The limitations of the transmission infrastructure and the increase in mandatory cuts in renewable generation are beginning to have a more concrete effect on investments in the Brazilian electricity sector.
A Atlas Renewable Energy The company decided to suspend projects totaling approximately US$1 billion in the country, in light of the increasing curtailment of what is known as curtailment – a situation in which energy produced by solar and wind power plants is not utilized due to operational restrictions in the grid.
According to the Reuters AgencyThe company, one of the largest clean energy generators in South America and controlled by the asset manager BlackRock, had planned to implement the projects throughout 2025 and 2026, but decided to halt the investments after increased restrictions imposed by the Brazilian electrical system.
According to statements by Atlas CEO Carlos Barrera, approximately 1,5 GW of new projects that were already scheduled to begin construction have been put on hold.
Lack of economic viability
Barrera told Reuters that the cuts recorded in Atlas's currently operating assets have recently ranged between 15% and 25%, a percentage considered sufficient to alter the economic attractiveness of new investments.
In addition to the direct reduction in production, the structure of the Brazilian market, according to the executive, amplifies the financial impacts for entrepreneurs.
Generators that stop producing due to operator decisions end up being forced to buy energy on the market to fulfill previously signed contracts, often paying higher prices than originally negotiated.
According to Barrera, this combination of physical network limitations and contractual obligations ends up significantly increasing project costs.
Brazil is not an isolated case.
Reuters highlights that the problem is not limited to the Brazilian market. Countries such as Australia, Japan, India, and Chile also face similar challenges, as the expansion of renewable energy generation is occurring at a faster pace than the growth of transmission infrastructure.
In the Brazilian case, however, the combination of strong growth in solar power generation and limitations in energy distribution has been attracting the attention of investors and financial institutions.
Last month, the Fitch Ratings agency assigned a negative outlook to the financing of 11 renewable energy projects in the country. According to Fitch, curtailment is expected to continue affecting the cash flow, liquidity, and debt repayment capacity of these projects until at least 2030.
The data cited in the report show that average losses associated with the phenomenon increased from a range between 6% and 12% in 2024 to levels between 7% and 25% in 2025.
Improvement is gradual.
Despite the decision to freeze new investments, the Atlas executive believes the scenario is likely to gradually improve over the next few years.
Barrera believes that the slowdown in the expansion of solar capacity, combined with the natural growth in energy demand, could reduce some of the constraints currently observed in the Brazilian electrical system.
Nevertheless, the executive believes that structural changes to the market model are unlikely to occur before 2028, considering the country's political and regulatory calendar.
In his assessment, the main challenge stems from the mismatch between the rapid expansion of renewable energy sources and the pace of development of transmission networks.
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