Brazil has introduced a compensation framework for wind and solar generators affected by curtailment, covering eligible grid-related and reliability-driven cuts from 2023 to 2025. The rules aim to reduce legal uncertainty, while excluding energy oversupply-related curtailment and highlighting the need for long-term grid expansion and storage solutions.
Brazil’s Ministry of Mines and Energy (MME) has published Portaria Normativa No. 140 in the Official Gazette (DOU), establishing a financial compensation mechanism for wind and solar generators affected by curtailment events.
The regulation defines the conditions for recovering revenue losses caused by two types of curtailment events that occurred between Sept. 1, 2023, and Nov. 25, 2025. It also sets the eligibility criteria for generators seeking compensation.
The regulation confirms that only curtailment events classified as external unavailability – such as delays or limitations affecting transmission infrastructure – and those caused by electrical reliability requirements determined by Brazil’s National System Operator (ONS) will qualify for compensation.
Curtailment caused by energy oversupply remains excluded. These events occur when electricity generation exceeds system demand and are considered by the government to be a market risk assumed by generators.
To receive compensation, project owners must sign a commitment agreement. In doing so, they must waive claims related to existing legal proceedings concerning the curtailment events covered by the regulation and withdraw ongoing lawsuits related to the same period.
According to the MME, the measure aims to increase legal certainty and reduce litigation surrounding curtailment, which has become a growing concern as renewable energy penetration has increased and operational restrictions have affected wind and solar generators since 2023.
The ministry also said the mechanism will help preserve the financing capacity of future renewable energy projects, as some plants have experienced unexpected revenue reductions due to grid constraints.
How will compensation be calculated?
Portaria No. 140 establishes that compensation will be calculated according to the electricity market arrangement of each project.
For energy contracted under Brazil’s Regulated Contracting Environment (ACR), compensation will be based on the contract price when a specific provision exists. For uncontracted energy, calculations will use the Settlement Price of Differences (PLD) applicable to the respective electricity submarket.
The regulation assigns the ONS responsibility for classifying curtailment events. The operator will apply more detailed criteria to determine the main cause of each reduction in generation.
When multiple causes occur simultaneously and their individual impacts cannot be separated, the event will be classified as external unavailability, in accordance with the commitment agreement.
The regulation also states that energy generation lost due to compensated curtailment events will be considered effective generation when reviewing the physical guarantee of projects. This aims to prevent additional impacts on future plant revenues.
Curtailment remains a structural challenge
Although the new regulation addresses part of the accumulated financial impact from curtailment, it does not change the treatment of cuts caused by energy oversupply, which remain outside the compensation framework.
The government considers these events part of electricity market dynamics and an inherent risk for generators.
The rapid expansion of renewable energy capacity, combined with delays in transmission infrastructure development and operational constraints in Brazil’s National Interconnected System (SIN), has increased pressure on wind and solar projects in recent years.
Industry stakeholders expect compensation measures to be accompanied by structural solutions to reduce the need for curtailment, including transmission expansion, greater system flexibility, and increased deployment of energy storage technologies.
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