The economic viability of new large-scale projects has deteriorated as curtailment volumes reached 1.4 GW-average in 2026, approaching the full-year total recorded in 2025. Regulatory uncertainty surrounding compensation for past curtailment events between September 2023 and November 2025 further pressured investment decisions. The Ministry of Mines and Energy established compensation rules in Ordinance 140, covering 682 photovoltaic plants totaling 25.5 GW, though the framework excludes curtailment caused by energy oversupply.
Developer response has been decisive. During 2026, project sponsors returned authorizations for 923 solar projects representing 40.6 GW of capacity and 134 billion reais in planned investment, according to Absolar. The authorized project pipeline contracted from 110 GW in January 2026 to approximately 60 GW by October, removing a substantial volume of future capacity from the expansion queue.
Distributed solar generation on rooftops demonstrates greater resilience, as these systems avoid transmission-level curtailment affecting utility-scale projects. BloombergNEF still forecasts slower installation growth due to rising grid-use charges under transition rules established by Law 14,300/2022, which gradually reduce economic incentives for self-generation.
Battery storage emerges as the sector’s primary growth vector. Annual installations of only 90 MW in 2025 are projected to surpass 1 GW by 2028, driven initially by behind-the-meter commercial, industrial and residential applications. Utility-scale battery deployment is expected to accelerate following Brazil’s first dedicated storage auction scheduled for December 2026. The shift reflects a strategic pivot toward system flexibility and demand management as intermittent renewable penetration strains grid operations.
BloombergNEF projects Latin American combined wind, solar and battery additions will reach 29 GW in 2026, with Mexico and Chile compensating for Brazilian weakness. Wind installations across the region are forecast to remain subdued through 2027, with gradual recovery anticipated only toward decade-end.
This article was curated and published as part of our South American energy market coverage.
