Brazil built one of the most promising solar markets in Latin America, and then watched investors walk away from it. The new curtailment rules finally answer some long-standing questions about who bears the cost of forced generation cuts. They do not answer the question developers care about most: how much power will actually be switched off in the years ahead? That gap explains why industry voices expect new curtailment rules to bring stability rather than a sudden return of utility-scale solar investment.
Why Developers Were Walking Away
The scale of the retreat is hard to ignore. According to a study by the Brazilian Solar Photovoltaic Energy Association (ABsolar), developers surrendered authorizations for 923 solar projects in 2026 alone. Together they represented more than 40.6 GW of capacity and roughly BRL 134 billion (about $26.3 billion) in investment that will not be built.
Brazil’s regulator, Aneel, tells a similar story. In January 2026, 2,492 power plants with a combined potential of 110 GW held authorizations. That pipeline has since shrunk to around 60 GW. Meanwhile, solar curtailment averaged 1.4 GW in 2026, about 25.3% of total solar generation, and the volume is already close to the full-year 2025 total. When roughly a quarter of what a plant produces can be cut with unclear compensation, lenders and equity partners stop signing off on new builds.
What the New Curtailment Rules Actually Change
Two developments arrived close together. The first is Ordinance 140, issued in July by the Ministry of Mines and Energy. It sets compensation rules for curtailment that occurred between 1 September 2023 and 25 November 2025. About 682 solar plants, representing roughly 25.5 GW, are eligible. Developers who accept the agreement would drop related legal actions, whatever the classification of the cuts.
The second is Normative Resolution 1,170, published by Aneel on 6 October after Public Consultation 45. It sets out how future energy-related curtailment will be shared among generation technologies. It introduces a priority order that includes run-of-river hydropower and favors higher-cost sources, which should reduce the share of cuts falling on wind and solar plants.
| Measure | What it covers | Why it matters | What it leaves open |
|---|---|---|---|
| Ordinance 140 (July) | Compensation for past curtailment, Sept 2023 to Nov 2025 | Gives developers a basis for financial planning and debt talks with banks | Excludes curtailment caused by oversupply, which is most events |
| Normative Resolution 1,170 (6 Oct) | Allocation of future energy-related curtailment across technologies | Replaces ambiguity with a clear priority order | Does not forecast how large total curtailment will be |
| Planned distributed generation controls | Possible dispatch controls for small-scale solar | Could ease system stress as rooftop solar grows | Rules and incentives still being designed |
Why Clarity Alone Won’t Restart Investment
Eduardo Tobias, founding partner at Watt Capital, put the problem in a simple image. The rules now explain how the pie will be sliced, but nobody can say how big the pie will be. The size of future curtailment depends on several moving parts at once:
- growth in electricity supply against demand
- how quickly energy storage is deployed
- demand-response programs
- GDP growth and the pace of electrification
Developers also face price risk. The Settlement Price for Differences (PLD) determines how curtailment hits revenue, yet it is not set through bidding and its calculation rules change often. Combine uncertain volumes with an unpredictable price, and a long-term financial model becomes very hard to defend. Tobias therefore expects new greenfield wind and solar projects to stay the exception for an extended period.
ABsolar adds a further caveat on the compensation side. The key question is whether payments will be large enough for companies to resume investing, meet financing obligations and repair their balance sheets. Because oversupply cuts are excluded, the relief may feel partial to many owners.
Where Opportunity May Still Exist
The outlook is not entirely bleak. Tobias sees room for solar projects located close to electricity demand, with or without batteries. Proximity helps because consumers avoid curtailment, transmission system usage charges (TUST), losses up to the system’s reference point, and capacity reserve charges (ERCAP).
Curtailment is also likely to reach further. Brazil’s grid operator, ONS, is preparing controls for distributed generation, and industry groups want incentives to make some small systems dispatchable. One idea is to encourage consumers to add batteries that absorb surplus output. ABsolar is preparing a study on distribution system operators (DSOs) covering technical requirements, governance and transparency, and it argues that independent entities, not only distribution utilities, should help manage distributed generation.
Brazil’s new curtailment rules are a real step forward. They give developers something concrete to take to their banks and remove a layer of regulatory guesswork. But a market that lost tens of gigawatts of planned capacity in a single year will not recover on rulemaking alone. Storage, demand growth, price stability and clearer volume forecasts will decide whether large solar plants get built again. For now, expect cautious, demand-adjacent projects rather than a rush of new utility-scale announcements.
Frequently Asked Questions
What are Brazil’s new curtailment rules?
They are two measures: Ordinance 140, which sets compensation for past curtailment between September 2023 and November 2025, and Normative Resolution 1,170, which defines how future energy-related curtailment is allocated across technologies.
Will the new curtailment rules bring solar investment back?
Probably not quickly. Industry experts say the rules reduce regulatory uncertainty, but investors still cannot forecast future curtailment volumes or price exposure, so new large greenfield projects are expected to remain limited.
Which solar plants qualify for compensation?
Around 682 solar plants, with roughly 25.5 GW of installed capacity, are eligible under Ordinance 140. The compensation excludes curtailment caused by electricity oversupply.
Where could new solar projects still make sense in Brazil?
Projects located close to electricity demand, with or without battery storage, look most promising, because they avoid curtailment, certain transmission charges and system losses.
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