Brazil’s federal government has issued rules to compensate wind and solar generators for past power-production cuts, but the renewable energy sector says the plan leaves out a central part of the problem. Based on single-source reporting from Folha de S.Paulo, nearly half of the curtailment events in the covered period will not qualify for reimbursement.
The measure applies to cuts imposed between September 1, 2023, and November 25, 2025. It covers only two categories: restrictions made for electrical reliability, when grid operators reduce output to protect the system, and external unavailability, such as failures in transmission lines.
What Is Excluded
The rules exclude what Brazil’s power sector calls the “energy reason”: cuts caused by excess supply. That exclusion was already part of a law signed last year by President Luiz Inácio Lula da Silva, of the Workers’ Party (PT), the center-left party he leads. Industry groups said they had tried to negotiate the terms with the Ministry of Mines and Energy.
According to Brazil’s National Electric System Operator (ONS), excess supply accounted for 46% of curtailment events during the reimbursement window. Electrical reliability represented 41%, and external unavailability accounted for 13%.
The issue has grown more important in 2026. Folha reports that cuts attributed to excess generation now represent 70% of curtailment in Brazil, as transmission capacity and electricity demand fail to keep pace with the expansion of renewable supply.
Industry Concerns
Sector associations argue that the classification system is not objective or auditable. Absolar, Brazil’s solar photovoltaic industry association, said the current model is a “black box” that keeps companies exposed to unpredictable losses.
Elbia Gannoum, president of Abeeólica, the Brazilian wind energy and new technologies association, told Folha that some cuts classified as excess supply are caused by other operational decisions. One example involves wind generation being reduced to offset the early activation of thermal power plants.
Thermal plants must sometimes start in the morning to be ready by 6 p.m., when they are needed to meet peak demand from homes and industry. That start-up ramp adds power to the system during the day and can contribute to renewable curtailment. Gannoum argues that such cases should be treated as system-security restrictions, which would make them eligible for compensation.
Financial Impact
The Ministry of Mines and Energy estimates total compensation at about R$3.49 billion, roughly USD 650 million at recent exchange rates. The ministry says the money will not come from public funds or from consumers’ electricity bills.
Instead, compensation will be handled through amounts owed by wind and solar generators under their contracts. Gannoum described the mechanism as a settlement of accounts. Folha reports that companies have an estimated R$6 billion liability with Brazil’s Electric Energy Trading Chamber (CCEE), from which the R$3.49 billion would be drawn.
The relief will not be immediate. Under the timetable set by the ordinance, the credit process could take about 300 days.
The voluntary nature of the deal adds another uncertainty. Industry associations say they cannot guarantee full participation because the rules do not cover all claims. Some companies may choose to continue lawsuits already under way rather than join the government’s settlement.
Folha said it contacted the Ministry of Mines and Energy by email on Thursday, July 23, asking whether it wanted to comment on the criticism. The ministry had not responded by the time Folha published its report.