Brazil Energy Grid Modernization

Brazil’s record renewable surge faces growing grid bottlenecks, creating new opportunities for U.S. firms in grid modernization and energy storage.

In August 2025, Brazil reached a historic milestone: solar and wind power together supplied over one-third (34%) of the nation’s electricity for the first time, generating a record 19 terawatt-hours (TWh) – enough to power approximately 119 million households. At the same time, hydroelectric power fell to its lowest level in four years at 48%, impacted by persistent droughts. Fossil fuel use remained relatively stable at 14%.

This marks a pivotal shift in Brazil’s energy landscape. The country is increasingly relying on solar and wind generation, supported by government incentives, subsidies, and favorable financing programs aimed at diversifying away from hydropower, which has become less reliable due to climate variability. Falling technology costs and improved grid integration have strengthened the economic case for renewables, making them an attractive investment opportunity and accelerating capacity growth.

However, Brazil’s rapid expansion of renewables has exposed significant infrastructure constraints. A surge in energy curtailment, where power cannot be delivered to the grid due to transmission bottlenecks, has delayed new projects and reduced the profitability of existing ones. Developers now face uncertainty around grid access, connection timelines, and curtailed output, dampening investor confidence.

The underlying challenge stems from outdated and insufficient transmission infrastructure, especially in the North and Northeast, where renewable resources are most concentrated. Grid congestion, coupled with the intermittency of solar and wind, has created system stability concerns. Regulatory delays and complex grid connection procedures further restrict the sector’s growth potential.

To address these issues, the Brazilian government introduced Provisional Measure 1304 (MP 1304) in 2025, establishing a compensation mechanism for curtailed generation and directing the National Electric System Operator (ONS) to implement clearer curtailment protocols. The measure also encourages investment in transmission expansion, energy storage, and system modernization, creating a timely opening for international collaboration.

For U.S. companies, this transition represents a strong opportunity to contribute proven expertise in grid modernization, smart grid systems, energy storage, demand response technologies, and power systems integration. These capabilities directly align with Brazil’s emerging needs and can help mitigate transmission challenges, enhance grid stability, and sustain the country’s renewable growth trajectory.

By partnering with Brazilian utilities, regulators, and private developers, U.S. firms can play a critical role in advancing infrastructure upgrades, improving energy reliability, and strengthening the resilience of Brazil’s power sector, all while expanding commercial ties in one of Latin America’s fastest-growing renewable markets.
 

For more information on opportunities for U.S. companies, please contact Igly Serafim Igly.serafim@trade.gov, Energy Commercial Specialist, U.S. Commercial Service, São Paulo.