Brazil to add 11.4 GW of solar in 2025 amid regulatory and financial constraints

Brazil’s solar photovoltaic (PV) market is projected to add approximately 11.4 GW of new capacity in 2025, continuing its role as the leading source of new power additions nationally despite notable challenges. This growth – slightly above 2024’s 10.6 GW additions reported by ABSolar – will bring Brazil’s cumulative installed solar capacity to around 64.7 GW by year-end, including 51.8 GW from distributed generation and 24.1 GW from large-scale plants connected to the National Interconnected System.

However, multiple regulatory and economic hurdles are limiting the sector’s expansion pace. ABSolar identifies increasing curtailment without compensation as a critical issue for utility-scale projects, which erodes project economics and dampens investor confidence. Small- and medium-scale distributed PV systems face grid access restrictions, often justified by concerns over grid stability and reverse power flows, which restricts self-generation and market participation for prosumers.

High capital costs exacerbate the slowdown, with interest rates nearing 15% annually and exchange rate volatility impacting financing. Elevated import tariffs on photovoltaic modules and equipment raise upfront costs further. These factors have led ABSolar to forecast a decline in annual solar investments from BRL 40 billion (~$7.8 billion) in 2024 to BRL 31.8 billion (~$6.2 billion) in 2025. Employment in the solar sector is projected to reduce from nearly 396,500 jobs in 2024 to fewer than 320,000 in 2025, accompanied by a revenue drop from over BRL 13 billion to approximately BRL 10.5 billion.

While the distributed generation segment, growing rapidly, now accounts for nearly 43% of Brazil’s total electricity capacity additions since 2018, the broader market faces uncertainty due to pending regulatory reforms. ABSolar is engaging with stakeholders and presidential candidates to advocate for curtailment compensation, streamlined grid connection processes, and clearer rules on energy storage integration aligned with Law No. 15,269/2025.

BloombergNEF’s projections confirm continued solar dominance in Brazil’s energy transition, estimating accumulated PV capacity could reach 200 GW by 2035 despite short-term deceleration. Expansion is expected to be driven heavily by the growing free energy market, where solar accounts for over 90% of planned capacity additions. However, delays in distributed generation licensing and challenges in grid infrastructure modernization remain significant constraints that the sector must address to sustain growth momentum beyond 2025.