Brazilian grid limits threaten renewables investment

Brazil’s network operator is capped the amount of wind and solar electricity they can supply to the national grid, seriously threatening future renewable energy investment in the country. Industry executives and representatives have lamented that investment in renewable energy is less viable under the current National Electricity System Operator (ONS) “curtailment” policy, which temporarily limits the amount of power the operator accepts from wind and solar plants . The problem was most acute in northeastern Brazil, one of Brazil’s biggest producers of renewable energy.

“Renewable energy for the country will be wasted“, Eduardo Sattamini, the executive director of Engie Brasil Energia, told Reuters.

The ONS has been using renewable energy cuts since August 2023, when a blackout in the North East spread across most of the country. The operator claims that the reductions are not excessive and only 3% of the electricity produced was lost due to the reductions in July. However, figures published by wind and solar power producers suggest the ONS may be greatly underestimating the losses incurred by these companies when generated power is rejected.

“This is not an environment for making decisions about new projectsEquatorial Energia’s renewable energy unit, Echoenergia, said in a statement. Equatorial is among the worst-hit wind companies, with 58% of power generated between January and early August rejected by the grid.

Chinese generator SPIC’s Banabuiu complex lost 50% of the electricity it produced between January and early August. Voltalia, a major renewable energy producer with nearly two-thirds of its capacity in Brazil, expects the cuts to shave 40 million euros ($44.48 million) off its EBITDA earnings, while CPFL Energia, a of power controlled by China’s state-owned grid, is expected to post losses of 21 million reais in the second quarter.

According to Brazil’s Wind Energy Association, last year the sector lost 700 million reais ($128 million) in rejected energy due to the cuts, while Brazil’s Solar Association, Absolar, estimates the solar sector lost 50 million reais in the four months through July.

Help may be on the way, however, with Christiano Vieira, chief operating officer at ONS, saying a new transmission line will start operating in September and could help ease the cuts.

By Alex Kimani for Oilprice.com

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