Generation distributed (GD), primarily rooftop solar installations, remains resilient despite high interest rates, grid connection barriers, and regulatory bottlenecks. The Associação Brasileira de Energia Solar Fotovoltaica (Absolar) estimates distributed generation will add 6.5 GW in 2026, reaching a cumulative installed power of 50 GW. However, overall solar market additions are forecasted to decline by 7% compared to 2025, due to curtailments that reduce revenue for large generators and network limitations impacting distributed projects. Investment in solar is projected to contract from approximately R$40 billion in 2025 to R$31.8 billion in 2026. Employment generation in the sector is also expected to decrease, alongside a decline in fiscal contributions.
Regulatory challenges, particularly curtailment compensation and grid infrastructure, remain central concerns. The implementation of Law 15.269/2025, which mandates financial compensation for generation cuts, is pending, prolonging investor uncertainty. Strategic initiatives like the first battery storage auction and a historic transmission auction scheduled for 2026 aim to enhance grid flexibility and reduce constraints, potentially supporting future solar integration.
Geographically, the Ceará state’s solar projects, such as the 600 MW Complexo Fotovoltaico Lins, exemplify continued investment in utility-scale solar. Market participants anticipate a shift toward more selective, technically and financially mature projects this year due to increased risks and external factors including the electoral calendar and global economic volatility. The distributed generation market is expected to consolidate around more efficient business models and enhanced consumer communication.
Overall, the Brazilian solar market is poised for important structural adjustments in 2026, balancing short-term headwinds with foundational regulatory and infrastructural developments that could accelerate growth beginning in 2027.
This article was curated and published as part of our South American energy market coverage.
