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Brazil: 5 energy policy briefs

The energy policies moving Brazil’s power markets, one brief each: the problem, the mechanism, the market effect, who gains and who pays, where it stands on the path to binding law, and the official text.

Free-market opening · all Grupo A consumers since January 2024 and the low-voltage schedule in Lei 15.269/2025

Brazil · Ministério de Minas e Energia and Congresso Nacional (Portaria Normativa 50/GM/MME; MP 1.300/2025; Leis 15.235/2025 and 15.269/2025) · statute · 2025

Where it stands: MP 1.300/2025 converted into Lei 15.235/2025 (social tariff); the market opening enacted separately in Lei 15.269/2025 and now in ANEEL rulemaking

Portaria Normativa 50/GM/MME opened the Ambiente de Contratação Livre to every high-voltage (Grupo A) consumer from 1 January 2024, with loads below 500 kW represented by retail agents at the CCEE; MP 1.300/2025 tried to extend that to low-voltage consumers but its conversion law kept only the social-tariff measures, and the opening schedule was enacted instead in Lei 15.269/2025.

The problem

Brazil's wholesale market has been split since 2004 between a regulated environment where distributors buy through auctions for captive consumers and a free environment where large consumers contract bilaterally. The free-market threshold was set in Lei 9.074/1995 at 3,000 kW and lowered administratively over time, but small industrial and commercial consumers stayed captive and paid the cost of distributors' legacy contracts, while the migration of large loads left those distributors over-contracted. Opening the rest of the market required answering three questions the 2004 model never had to: who supplies a consumer whose retailer fails, how distribution tariffs are split between the two environments, and who absorbs the involuntary over-contracting the migration creates.

What it does

Portaria Normativa nº 50/GM/MME of 27 September 2022, published in the DOU on 28 September 2022 and in force from 1 November 2022, exercised the power in article 15, paragraph 3 of Lei 9.074/1995 to let every Grupo A consumer, regardless of load size, buy from any concessionaire, permit-holder or authorised agent of the Sistema Interligado Nacional from 1 January 2024, with consumers below 500 kW required to be represented before the CCEE by an agente varejista. Medida Provisória 1.300 of 21 May 2025 proposed the next step together with a rebuilt social tariff, but the conversion statute, Lei 15.235 of 8 October 2025, retained only the consumer measures: a 100 percent discount on the first 80 kWh a month for the low-income residential subclass and zero above it, exemption from CDE quotas up to 120 kWh for CadÚnico households between half and one minimum wage per capita from 1 January 2026, and the socialisation of Angra 1 and Angra 2 revenue across all SIN final consumers from the same date. The opening itself was enacted in Lei 15.269 of 24 November 2025, which inserts into Lei 9.074 a timetable for reducing the voltage and load limits to reach consumers supplied below 2.3 kV: 24 months from entry into force for industrial and commercial consumers and 36 months for everyone else, conditional on ANEEL first delivering a communication plan, separate tariffs for the two contracting environments, a supplier-of-last-resort regime (new article 15-C, licensed and supervised by ANEEL and paid through a specific ANEEL tariff), a standard product with a reference price for low-voltage offers, and the over-contracting charge of new article 15-D. Lei 15.269 also requires free consumers to contract their entire load, subject to penalty, and renames the CCEE the Câmara de Comercialização de Energia.

Market effect

The January 2024 step alone moved tens of thousands of Grupo A consumers into the free market and created a retail-agent industry: a consumer with a 300 kW load can now be aggregated into a varejista's portfolio and buy at a PLD-linked or fixed price instead of a regulated tariff, which typically saves 10 to 25 percent on the energy component depending on the hedge. The effect on distributors is the mirror image: their regulated purchase portfolios, contracted years ahead in A-5 and A-6 auctions, are now oversized, and article 15-D makes that involuntary exposure an explicit charge shared across both environments rather than a loss. The low-voltage timetable is the larger prize and the larger risk. It puts roughly 90 million consumer units in play from late 2027 for commercial and industrial customers and late 2028 for residential, but only if ANEEL delivers the five prerequisites, and the supplier-of-last-resort design decides whether retail competition is bankable: article 15-C paragraph 2 spreads the last-resort supplier's involuntary deficit across all free-market consumers, which prices in the failure risk of the weakest retailer. Traders and retailers are already building the low-voltage origination capability; distributors are lobbying on the tariff segregation that determines how much network cost follows the migrating customer.

Key numbers

Grupo A opening
1 January 2024, no load threshold; below 500 kW must be represented by a varejista
Low-voltage timetable
24 months for industrial and commercial, 36 months for other consumers, from entry into force of Lei 15.269 on 24 November 2025
Social tariff
100 percent discount up to 80 kWh a month; 0 percent above; CDE exemption to 120 kWh for CadÚnico households between 0.5 and 1 minimum wage per capita
Distributor unbundling deadline
Tariff and accounting or contractual separation of regulated retail from distribution by 1 July 2026

Who gains and who pays

  • Retail agents (varejistas) and energy traders (gains): A new customer class since 2024 and a low-voltage market from 2027-2028.
  • Grupo A commercial and industrial consumers (gains): Free choice of supplier since 1 January 2024 without a load threshold.
  • Distribution concessionaires (costs): Over-contracting from migration, now recovered through the article 15-D charge; must separate regulated retail from network by 2026.
  • Low-income residential consumers (gains): Lei 15.235/2025 gives a 100 percent discount on the first 80 kWh a month from 2026.
  • ANEEL (obligation): Must deliver the supplier-of-last-resort regime, tariff segregation, standard product and over-contracting rules before the low-voltage opening.

Implementation

The Grupo A opening is fully operational: the CCEE registers retail agents and their represented consumers and settles them in the short-term market. Lei 15.235/2025 took effect on publication except the revocation of article 11 of Lei 12.111/2009, which took effect on 1 January 2026, and ANEEL has been implementing the social tariff and the Angra cost allocation in the 2026 tariff resolutions. Lei 15.269/2025 is in force from 24 November 2025, with article 3-D of Lei 10.848 effective after 90 days and the storage tax benefit running from 1 January 2026 to 31 December 2030 within an annual cap of R$1 billion. ANEEL opened a consulta pública on the 2027 Regras de Comercialização on 1 September 2026, taking contributions to 2 October 2026, which is where the low-voltage product and last-resort rules are being drafted. The binding test is whether ANEEL certifies the five prerequisites before November 2027.

Concerns

  • Supplier-of-last-resort economics and the socialisation of retailer failure across free consumers
  • Tariff segregation between the regulated and free environments and stranded distribution cost
  • Consumer protection and mis-selling risk when 90 million low-voltage units become contestable
  • Over-contracting charges under article 15-D raising costs for those who do not migrate
  • Slippage of the 24 and 36-month deadlines if ANEEL's prerequisites are not ready

Dates to watch

  • 2 October 2026: Close of ANEEL's consulta pública on the 2027 Regras de Comercialização
  • 1 July 2026: Deadline for distributors to separate regulated retail from the distribution service
  • 2027-11: 24-month deadline for opening to industrial and commercial consumers below 2.3 kV
  • 2028-11: 36-month deadline for the remaining low-voltage consumers

Sources

Checked against sources on .

Low-carbon hydrogen framework · Lei 14.948/2024, Rehidro and R$18.3 billion of PHBC tax credits, now 2030-2034

Brazil · Congresso Nacional / Presidência da República (Lei nº 14.948/2024 and Lei nº 14.990/2024) · statute · 2024

Where it stands: Enacted and in force; ANP authorisation rules, Rehidro qualification and the PHBC competitive procedure still to be issued

Lei 14.948/2024 created Brazil's low-carbon hydrogen legal framework, made the ANP the authorising regulator and set up the Rehidro tax regime; the funding articles were vetoed and re-enacted in Lei 14.990/2024 as the PHBC, a competitive tax-credit programme capped at R$18.3 billion, whose window Lei 15.269/2025 pushed from 2028-2032 to 2030-2034.

The problem

Brazil has the cheapest firm renewable electricity in the Atlantic basin, deep-water export ports in the Northeast and a large existing ammonia and refining demand base, but no legal definition of low-carbon hydrogen, no designated regulator and no production incentive. Developers announced tens of gigawatts of electrolyser projects at Pecém, Suape and Açu that could not reach final investment decision because the offtake gap against European and Asian buyers was unbridgeable without a subsidy, and because it was unclear whether the ANP, ANEEL or the states authorised production. The European Union's own rules and the US 45V credit were setting the terms of trade while Brazil had none.

What it does

Lei 14.948 of 2 August 2024 institutes the legal framework and the Política Nacional do Hidrogênio de Baixa Emissão de Carbono, defines low-carbon and renewable hydrogen, and creates the Regime Especial de Incentivos para a Produção de Hidrogênio de Baixa Emissão de Carbono (Rehidro), whose tax incentives run for five years from grant to beneficiaries that qualify within five years and that must spend a regulated minimum share on research and development. It amends Lei 9.427/1996 so ANEEL contributes to the ANP's regulation of production authorisations, and amends Lei 9.478/1997 to give the ANP power to regulate and authorise production, loading, processing, import, export, storage, transport, distribution and sale of hydrogen, including hydrogen produced from electricity, and to declare public utility over land needed for hydrogen infrastructure; article 38 lets ANEEL declare public utility for restricted-interest transmission and distribution lines dedicated exclusively to hydrogen projects. Articles 32 to 35, which carried the money, were vetoed. Lei 14.990 of 27 September 2024 re-enacted them as the Programa de Desenvolvimento do Hidrogênio de Baixa Emissão de Carbono (PHBC): a tax credit awarded through a competitive procedure to producers or buyers of low-carbon hydrogen, with annual global caps originally of R$1.7 billion in 2028, R$2.9 billion in 2029, R$4.2 billion in 2030, R$4.5 billion in 2031 and R$5 billion in 2032, unused amounts carried forward, the annual figure set in the budget law and the beneficiaries published. Lei 15.269 of 24 November 2025 moved the same five-year schedule to 2030 through 2034.

Market effect

R$18.3 billion, about US$3.3 billion, is roughly a tenth of what the US 45V credit offers over a comparable period, so the PHBC is a project-selector rather than a market-maker: the competitive procedure will fund a handful of anchor plants at Pecém and Suape whose offtake is already half-committed, and their clearing bid will set the reference cost of Brazilian low-carbon hydrogen for the rest of the decade. Deferring the window by two years to 2030-2034 is materially negative for anyone who underwrote a 2028 start: it pushes first credit revenue past most current debt tenors and hands an advantage to projects that can wait or that monetise the European market directly. For the power sector the framework matters mostly through demand: a gigawatt-scale electrolyser in Ceará or Pernambuco is a controllable load in exactly the submarket where wind and solar are being curtailed, so hydrogen is one of the few credible sinks for the Northeast's surplus and a reason for developers to co-locate rather than compete for scarce transmission. The ANP's exclusive authorising role removes a real permitting ambiguity and shortens the path for projects that also need ANEEL self-production authorisations.

Key numbers

PHBC tax credit envelope
R$18.3 billion total: R$1.7bn, R$2.9bn, R$4.2bn, R$4.5bn and R$5.0bn across five years
PHBC window
Moved from 2028-2032 to 2030-2034 by Lei 15.269/2025
Rehidro
Tax incentives for five years from grant; qualification within five years of the regime
Conformity review of existing authorisations
180 days from publication of Lei 14.948 (2 August 2024)

Who gains and who pays

  • Electrolyser project sponsors in Ceará, Pernambuco and Rio de Janeiro (gains): Legal framework, Rehidro tax relief and competitive PHBC credits.
  • Northeastern wind and solar generators (gains): A controllable local load in the submarket where output is being curtailed.
  • National treasury and taxpayers (costs): Up to R$18.3 billion of foregone revenue across the five-year window.
  • ANP (obligation): Becomes the authorising and supervising regulator for hydrogen production and logistics.
  • Projects that assumed a 2028 credit start (costs): Lei 15.269/2025 moved the PHBC window to 2030-2034.

Implementation

Lei 14.948 entered into force on publication and its regulation is still being built: the ANP has to issue the authorisation rules for production and logistics, the Executive must regulate the Rehidro qualification requirements and the minimum research-and-development spend, and the PHBC competitive procedure has to be defined by decree before any credit can be awarded. Because Lei 15.269/2025 moved the first credit year to 2030, the budget appropriation that article 4 paragraph 3 requires will not appear in a lei orçamentária anual before the 2030 cycle, which gives the government several more years to design the auction and gives developers no bankable federal revenue until then. Watch the regulating decree for the PHBC competitive procedure, the ANP's authorisation resolutions and any further change to the credit schedule in an annual budget or medida provisória.

Concerns

  • The PHBC window deferred to 2030-2034, well beyond most projects' financing horizon
  • Credit size small relative to US and EU support, limiting how many projects clear
  • No regulating decree yet for the competitive award procedure
  • Grid and port infrastructure for gigawatt-scale electrolysis not yet contracted
  • Certification alignment with EU and Japanese import rules still unresolved

Dates to watch

  • 2027: Expected regulating decree and ANP authorisation rules
  • 2030: First year of PHBC tax credits under the revised schedule
  • 2034: Final year of the PHBC envelope

Sources

Checked against sources on .

Lei 14.300/2022 · distributed generation and the TUSD wire-fee phase-in, 15 percent in 2023 to full tariff in 2029

Brazil · Congresso Nacional / Presidência da República (Lei nº 14.300, de 6 de janeiro de 2022) · statute · 2022

Where it stands: In force since January 2022; the article 27 wire-charge ladder is at the 60 percent step and rises to 75 percent in 2027

Brazil's distributed-generation statute ended unlimited net metering: units that applied for grid access after 7 January 2023 pay a rising share of the distribution wire charge on compensated energy (15 percent in 2023, 30, 45, 60, 75, 90 percent, then the full ANEEL tariff rule from 2029), while everything connected or requested before that date keeps full netting until 31 December 2045.

The problem

Brazilian distributed solar grew from almost nothing in 2016 to tens of gigawatts under a 2012 ANEEL net-metering rule (Resolução Normativa 482/2012) that let a rooftop system offset consumption at the full retail tariff, wire charges and sector levies included. Because distribution tariffs recover network and policy costs per kilowatt-hour, every compensated unit shifted those costs onto consumers without generation, most of them low-income and captive. Distributors booked falling billed volumes between tariff reviews, the CDE and other levies lost base, and ANEEL's attempts to fix the rule by regulation were repeatedly blocked in Congress and the courts. A statute was the only way to settle the transition with enough legal certainty to keep the sector financeable.

What it does

Lei 14.300/2022, sanctioned on 6 January 2022, creates the Sistema de Compensação de Energia Elétrica (SCEE) in primary law and sets a long transition. Article 26 grandfathers every micro or mini generator existing at publication, or whose access request was filed with the distributor within twelve months of publication (that is, by 7 January 2023), until 31 December 2045: those units continue to pay tariff components only on the positive difference between consumption and injected energy plus accumulated credits. Article 27 puts everyone else on a ladder that applies a percentage of the distribution asset-remuneration, regulatory depreciation and O&M components (the Fio B part of the TUSD) to all compensated energy: 15 percent from 2023, 30 percent from 2024, 45 percent from 2025, 60 percent from 2026, 75 percent from 2027, 90 percent from 2028, and from 2029 the full tariff rule of article 17, under which units are billed all non-energy components net of the valued benefits distributed generation brings to the system. Remote self-consumption and shared generation above 500 kW on non-dispatchable sources pay 100 percent of those components plus 40 percent of transmission use and 100 percent of the P&D, energy-efficiency and TFSEE levies until 2028. Article 26 also fixes deadlines to start injecting after the parecer de acesso (120 days for micro, 12 months for solar mini, 30 months for other mini generation) and article 30 gave ANEEL and the distributors 180 days to conform their rules. Lei 15.269/2025 later amended articles 22 and 26 and revoked the sole paragraph of article 22, with effect from 1 January 2026.

Market effect

The ladder converts an uncapped retail-tariff subsidy into a scheduled and quantifiable one. At the 45 percent step in 2025 a São Paulo or Minas Gerais residential project loses roughly a tenth of the value of each compensated kilowatt-hour relative to full netting, and at 90 percent in 2028 close to a fifth, which lengthens payback from about four years toward six or seven at current equipment prices and pushes developers toward self-consumption sizing, storage and larger shared-generation portfolios rather than pure export. The twelve-month grandfathering window produced a queue rush in the second half of 2022, so a very large stock of capacity is locked into 2045 economics and will keep transferring cost to captive consumers for two more decades; that stock, not the ladder, is the reason distribution tariffs still carry a visible DG cross-subsidy line. For distributors, the law converts an open-ended revenue leak into a forecastable one they can defend in a revisão tarifária. For ANEEL and the CNPE the unfinished business is article 17: the methodology that values the locational, loss, transmission and distribution benefits of distributed generation, which decides what the post-2029 tariff actually looks like and is the single biggest open number for anyone underwriting a 2029-plus distributed asset.

Key numbers

TUSD wire-charge phase-in
15% (2023), 30% (2024), 45% (2025), 60% (2026), 75% (2027), 90% (2028), full article 17 rule from 2029
Grandfathering
Existing units and access requests filed by 7 January 2023 keep full netting to 31 December 2045
Large remote self-consumption threshold
Above 500 kW on non-dispatchable sources: 100% of distribution components plus 40% of transmission use until 2028
Injection deadlines after the parecer de acesso
120 days (micro), 12 months (solar mini), 30 months (other mini)

Who gains and who pays

  • Owners of pre-2023 distributed generation (gains): Full netting locked in to 31 December 2045 under article 26.
  • New distributed-generation developers and integrators (costs): Rising Fio B charge on compensated energy from 2023 and full tariff rules from 2029.
  • Distribution concessionaires (gains): Recover a growing share of network cost from compensating units; a quantifiable revenue path.
  • Consumers without distributed generation (costs): Continue to carry the grandfathered cross-subsidy through 2045.
  • ANEEL and the CNPE (obligation): Must set the valuation of distributed-generation benefits that governs the post-2029 tariff.

Implementation

ANEEL conformed its rules within the 180-day deadline of article 30 and now runs the SCEE through the distribution tariff resolutions, so each annual step appears in the Resoluções Homologatórias that reset each distributor's tariffs on its own anniversary date rather than on 1 January. The 60 percent step has applied through 2026 and the 75 percent step arrives in 2027. The article 17 valuation of distributed-generation benefits, which the law expected within eighteen months of publication, has still not produced a settled post-2029 tariff methodology, and ANEEL keeps the topic on its Regulatory Agenda, whose first revision for the 2026-2027 biennium was approved on 9 September 2026. Lei 15.269/2025 amended articles 22 and 26 with effect from 1 January 2026, and further congressional attempts to extend or soften the ladder recur each session.

Concerns

  • The size of the 2045 grandfathered stock and the cross-subsidy it keeps on captive consumers
  • No settled article 17 methodology for valuing distributed-generation benefits after 2029
  • Distribution networks in the Northeast and Southeast absorbing reverse flows without matching investment
  • Retroactive congressional changes to the ladder undermining project finance assumptions
  • Shared-generation structures used to arbitrage the 500 kW threshold

Dates to watch

  • 2027: Wire-charge ladder rises to 75 percent of the distribution components
  • 2028: Ladder reaches 90 percent, the last step before the full tariff rule
  • 2029: Article 17 tariff rule applies to all non-grandfathered units
  • 31 December 2045: Grandfathering under article 26 ends

Sources

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Eletrobras privatisation law 14.182/2021 · the 8 GW gas mandate and its 2025 replacement by small hydro and biomass

Brazil · Congresso Nacional / Presidência da República (Lei nº 14.182, de 12 de julho de 2021) · statute · 2021

Where it stands: Privatisation executed in 2022; the mandated contracting rewritten by Lei 15.269/2025 and now running through reserve-capacity auctions

The law that privatised Eletrobras by capital increase also ordered the state to contract 8,000 MW of inflexible gas-fired capacity in regions without gas pipelines through reserve-capacity auctions; Medida Provisória 1.304/2025, converted into Lei 15.269/2025, replaced that mandate with up to 4,900 MW of sub-50 MW hydro plus 3,000 MW of biomass, restructuring Brazil's most expensive legislated procurement.

The problem

Eletrobras held about 30 percent of Brazilian generation and 45 percent of transmission under cost-based concessions that capped its revenue and its ability to invest. Successive governments wanted to privatise it and to convert its hydro concessions to independent-producer regime, which required a law. Congress priced its consent in the currency it understood: mandated purchases. The result was a statute in which the privatisation itself is legally conditional on the state running procurement rounds that no planner had asked for, in regions chosen by geography rather than by system need, at a price ceiling indexed to a 2019 auction.

What it does

Lei 14.182/2021 authorised the destatização of Eletrobras through a public share subscription in which the Union waived its subscription right, diluting federal control, with a 10 percent cap on any single shareholder's voting power, and granted 30-year independent-production concessions for the converted plants. Article 1 conditioned all of that on: contracting 8,000 MW of gas-fired reserve capacity with at least 70 percent inflexibility and fifteen-year supply (1,000 MW in the Northeast, 2,500 MW in the North, 2,500 MW in the Centre-West and 2,000 MW in the Southeast, with delivery staged from 2026 to 2030) at a ceiling equal to the A-6 2019 gas price cap; extending Proinfa contracts by 20 years; and buying at least 50 percent of distributors' declared demand in the A-5 and A-6 auctions from hydro plants up to 50 MW. Lei 15.097/2025 added further carve-outs, including 250 MW of ethanol-derived hydrogen in the Northeast and 300 MW of southern wind. Medida Provisória 1.304 of 11 July 2025, converted into Lei 15.269 of 24 November 2025, rewrote article 1 paragraph 1: the gas mandate is gone and in its place the state must contract, through reserve-capacity auctions, up to 4,900 MW of hydro plants of 50 MW or less over 25 years at the A-6 2019 ceiling indexed by the INCC and then by the IPCA, split 3,000 MW by the first quarter of 2026 in 1,000 MW tranches starting supply in the second halves of 2032, 2033 and 2034, plus a potential further 1,900 MW, with regional quotas (1,837 MW Centre-West, 918 MW South and Southeast, 245 MW North and Northeast in the first tranche) and an additional 3,000 MW of biomass thermal capacity under new paragraph 15-A. Lei 15.269 also revoked articles 20 and 21 of Lei 14.182.

Market effect

The original mandate would have locked fifteen-year, 70-percent-inflexible gas contracts on top of a system that already has surplus energy and a growing midday solar glut, with the cost socialised across all final consumers through the reserve-capacity charge of article 3-A of Lei 10.848. Replacing 8,000 MW of gas with 4,900 MW of small hydro and 3,000 MW of biomass changes who wins: gas developers and LNG terminal sponsors in the North and Centre-West lose a legislated offtake, while PCH developers, equipment suppliers and sugar-and-ethanol mills with cogeneration gain a guaranteed 25-year contracted market at an indexed ceiling. It does not change the direction of the cost: consumers still pay, and the reserve-capacity charge is now the fastest-growing item in the regulated tariff. Lei 15.269 also widened who pays, extending the reserve-capacity charge to free consumers, self-producers on their grid-connected share, and, for battery storage procurement, to generators only. For traders the practical effect is that the reserve-capacity auction calendar, not the A-5/A-6 energy auctions, is now the main state-created demand signal in Brazil.

Key numbers

Original gas mandate
8,000 MW, minimum 70 percent inflexibility, 15-year supply, delivery 2026-2030
2025 replacement
Up to 4,900 MW of hydro of 50 MW or less over 25 years, plus 3,000 MW of biomass
First hydro tranche
3,000 MW contracted by Q1 2026 in 1,000 MW blocks starting supply in H2 2032, 2033 and 2034
Regional split of the 3,000 MW
1,837 MW Centre-West, 918 MW South and Southeast, 245 MW North and Northeast
Shareholder voting cap
10 percent of voting shares

Who gains and who pays

  • Eletrobras and its new shareholders (gains): Independent-production regime and 30-year concessions after the 2022 capital increase.
  • Small hydro (up to 50 MW) and biomass developers (gains): Up to 4,900 MW and 3,000 MW of legislated 25-year reserve-capacity contracting.
  • Gas-fired developers and LNG sponsors (costs): The 8,000 MW inflexible gas mandate was removed in 2025.
  • Final consumers, free consumers and self-producers (costs): Reserve-capacity costs are socialised through the article 3-A charge, now extended to the free market.
  • MME, ANEEL and CCEE (obligation): Must run the mandated auctions, publish the editais and settle the charge.

Implementation

The capital increase was executed in June 2022 and the new concession contracts signed, so the privatisation itself is complete and only the procurement obligations remain live. ANEEL and the CCEE run the reserve-capacity auctions (LRCAP) under the MME's editais: contracts from LRCAP nº 2/2026, the capacity-form auction, were signed at ANEEL on 10 September 2026 alongside the second stage of Transmission Auction nº 1/2026. ANEEL held an audiência pública on 1 September 2026 on the draft editais and contracts for the first large-scale battery reserve-capacity auctions, scheduled for December 2026, with contributions accepted to 14 September 2026. The indexation change from INCC to IPCA after the auction, and the price ceiling still anchored to the A-6 2019 result, are the parameters most likely to determine whether the mandated volumes actually clear.

Concerns

  • Legislated procurement volumes set by region and source rather than by system need
  • Reserve-capacity charge growth as the fastest-rising item in the regulated tariff
  • Price ceilings anchored to a 2019 auction that may not clear at today's costs
  • Environmental licensing risk concentrated in Centre-West small hydro
  • Repeated reopening of article 1 by medidas provisórias, which destabilises project pipelines

Dates to watch

  • 2026-12: First large-scale battery reserve-capacity auctions
  • 2032: Supply start of the first 1,000 MW small-hydro tranche
  • 2034: Supply start of the third 1,000 MW small-hydro tranche

Sources

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Hourly PLD and constrained-off curtailment · settlement from 1 January 2021 and compensation back to 1 September 2023

Brazil · Ministério de Minas e Energia and ANEEL (Portaria 301/2019; REN 910/2020; Lei 15.269/2025 art. 1º-B) · regulation · 2020

Where it stands: Hourly PLD operating in settlement since January 2021; statutory curtailment compensation in force since November 2025 and awaiting ONS and CCEE apportionment

Brazil replaced weekly load-block pricing with an hourly PLD computed by the DESSEM model from 1 January 2021, and after the 15 August 2023 national blackout the ONS began curtailing wind and solar in the Northeast for reliability; Lei 15.269/2025 finally created a compensation right for those cuts from 1 September 2023 in exchange for dropping the litigation.

The problem

Until 2021 the settlement price in Brazil's short-term market was a weekly figure per load block derived from medium-term hydrothermal models, which could not represent an intraday solar ramp, a thermal start or an evening peak. As wind and solar passed a fifth of the matrix the mismatch became a transfer: generators were settled against a price that did not reflect when they produced. The second problem arrived on 15 August 2023, when a disturbance in the Northeast cascaded into a national blackout. The ONS responded with far more conservative operating limits on inverter-based generation in the Northeast, and through 2024 and 2025 curtailed wind and solar output for both electrical-reliability and energy reasons, with no legal basis for compensating the electrical-reason cuts. Hundreds of generators sued and won injunctions, which fragmented settlement at the CCEE and left the sector unable to price curtailment risk.

What it does

Portaria MME nº 301 of 31 July 2019, published in an extra edition of the DOU on 1 August 2019, set the timetable for the DESSEM very-short-term hydrothermal dispatch model: shadow operation from 2019, use for operational programming by the ONS from 1 January 2020, a shadow hourly PLD published daily by the CCEE through 2020, and use of DESSEM for price formation, accounting and settlement from 1 January 2021. ANEEL Resolução Normativa nº 910 of 15 December 2020, effective 1 January 2021, amended REN 843/2019 so that the marginal operating cost is produced per half-hourly interval and per bus and the PLD is determined daily, per submarket, with hourly granularity between a floor and a cap. On curtailment, article 1º-B inserted into Lei 10.848/2004 by Lei 15.269 of 24 November 2025 gives the holder of any wind or solar photovoltaic authorisation connected to the SIN a right to compensation for external unavailability and for cuts made to meet electrical reliability requirements, covering the period from 1 September 2023 to the entry into force of the provision, conditional on signing a termo de compromisso with the granting authority that waives the underlying claim and withdraws any pending lawsuit, with no loser-pays fees. The ONS must measure the curtailed volumes and send them to the CCEE, which calculates the reimbursements updated by the IPCA from the date of each cut to payment; unliquidated amounts owed to wind and solar agents under reserve-energy contracts and availability-type CCEAR contracts are redirected to fund the compensation.

Market effect

Hourly pricing rebuilt the revenue stack. Solar now settles against the depressed midday price it helps create and against a much higher 18:00 to 21:00 price, which is the single most important reason batteries became bankable in Brazil and why Lei 15.269 added a storage framework and a R$1 billion-a-year tax benefit for storage investment from 2026 to 2030. Thermal plants with fast ramps capture evening scarcity they previously could not, and load with intraday flexibility gained a real arbitrage. The curtailment settlement is the other half of the picture. Northeastern wind and solar assets have been running well below their contracted physical guarantee, which broke debt-service coverage on project financings and stopped new merchant development in the region; converting the electrical-reason cuts into an IPCA-indexed receivable, and forcing the litigation to be dropped to collect it, restores a calculable cash flow and removes the injunction overhang from CCEE settlement, but it funds the compensation out of amounts otherwise owed to reserve-energy and availability contracts, so it is a reallocation within the renewable fleet rather than new money. The structural fix is wires: ANEEL put the April 2027 transmission auction, the first to contract batteries as a transmission resource, into public consultation on 8 September 2026 with an expected R$12.9 billion of investment, and the second stage of Transmission Auction nº 1/2026 awarded four lots in Mato Grosso, Mato Grosso do Sul and São Paulo worth about R$1.75 billion at an average discount of 53.20 percent.

Key numbers

Hourly PLD in settlement since
1 January 2021 (Portaria MME 301/2019; ANEEL REN 910/2020)
Curtailment compensation window
From 1 September 2023 to the entry into force of art. 1º-B of Lei 10.848, indexed by the IPCA
April 2027 transmission auction
About R$12.9 billion of expected investment; first auction to contract batteries in transmission
Transmission Auction 1/2026, second stage
Four lots in MT, MS and SP, about R$1.75 billion, average discount 53.20 percent

Who gains and who pays

  • Battery storage and flexible thermal operators (gains): Hourly prices create an intraday spread worth capturing; storage is now contracted in transmission auctions.
  • Northeastern wind and solar generators (mixed): Curtailed output since 2023, now compensated from 1 September 2023 if they drop their lawsuits.
  • Holders of reserve-energy and availability CCEAR contracts (costs): Unliquidated amounts are redirected to fund the curtailment compensation.
  • ONS and CCEE (obligation): Must measure curtailed volumes, compute IPCA-indexed reimbursements and settle them.
  • Transmission concessionaires (gains): An enlarged auction programme, including batteries as a transmission resource from April 2027.

Implementation

The DESSEM-based hourly PLD has run in settlement since January 2021 and its parameters, including the price floor and cap, are reset annually by ANEEL. The curtailment compensation now depends on secondary work: the ONS must apportion the cuts between electrical and energy reasons, the CCEE must compute the indexed amounts, and the granting authority must publish the termo de compromisso and the regulation redirecting reserve-energy and availability-contract balances. Generators have to choose between signing and waiving their claims or continuing in court with no statutory right for the electrical-reason cuts. On the network side ANEEL signed the second-stage contracts of Transmission Auction nº 1/2026 on 10 September 2026, opened the consultation for the April 2027 auction on 8 September 2026, and on 8 September 2026 also proposed new connection rules for solar, batteries and electric vehicles.

Concerns

  • Apportionment between electrical-reason and energy-reason curtailment, which decides who is paid
  • Funding the compensation out of amounts owed to other renewable contracts rather than new money
  • Continued curtailment in the Northeast until transmission reinforcements are energised
  • Hourly price volatility and the floor and cap parameters ANEEL resets each year
  • Whether generators who refuse the waiver are left without any remedy

Dates to watch

  • 2026-12: First large-scale battery reserve-capacity auctions
  • 2027-04: Transmission auction with battery contracting, about R$12.9 billion expected
  • 2027: Settlement of the accumulated curtailment compensation through the CCEE

Sources

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