Renewable power curtailment will grow up to 300% in Brazil by 2035, says Wood Mackenzie

Brazil's power sector is poised to add 76 gigawatts (GW) of new solar and onshore wind capacity through 2035, driven primarily by projects seeking to capitalize on transmission and distribution tariff discounts, as well as distributed solar installations projected to grow at a 5.5% compound annual growth rate (CAGR), according to Wood Mackenzie's latest analysis.

Despite this substantial expansion pipeline, renewable energy growth has decelerated significantly compared to recent years, according to Wood Mackenzie's latest Brazil Long-term Power Market Outlook.

The slowdown stems from multiple market challenges, including current oversupply conditions, rising curtailment rates, increased photovoltaic module tariffs, new grid usage charges that erode investment returns, and operational complications with distribution companies.

“Given the extended window for tariff subsidies, renewable generators are postponing business strategies until regulatory uncertainties are resolved and prices improve,” said Marina Azevedo, senior power analyst for Wood Mackenzie.

Renewables curtailment levels in Brazil’s National Integrated System (SIN)

Wood Mackenzie's report reveals that renewable energy curtailments in the national interconnected system will average 8% over the next decade, with the Northeast submarket facing particularly severe impacts at 11%, compared to just 2% in the Southeast/Centre-West region. 

“Brazil's infrastructure development cannot keep pace with the surge in energy oversupply expected this decade, particularly during peak solar generation hours between 8 am and 5 pm,” said Azevedo. “Even with 11 GW of new transmission capacity planned by 2029—including the new Silvania-Graça Aranha bipolar line—curtailment rates will continue climbing exponentially.”

Battery Storage Emerges as Critical Solution

Only the deployment of battery storage systems, coupled with transmission expansion from the 2030s onward, will stem further curtailment growth, the report notes. Beginning in 2032, expanded battery supply, combined with technological advances enabling longer storage duration, will be crucial for stabilising curtailment levels.

"Transmission capacity additions alone will not solve the curtailment scaling problem," said Fernando Dorand, power analyst at Wood Mackenzie. "Demand response measures and batteries will help absorb the energy oversupply from the Northeast. Batteries will enable generators to convert that wasted energy into power arbitrage opportunities and reverse the profit losses they face."

However, regulatory support is still needed. High capital costs mean this technology still requires regulatory incentives, such as the planned storage-focused auction. Any postponement of this auction threatens battery deployment forecasts and would further escalate curtailment risks.