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According to an estimate by the Brazilian Photovoltaic Solar Energy Association (Absolar), the country is expected to add 11.8 GW of solar energy this year. At an event held by the association in São Paulo, demand creation and connection restrictions were presented as the main challenges for future expansion of this source. Sectors such as data centers and green hydrogen could bring new demands in terms of GW, and trends such as electrification and the opening of the free market also motivate new business. Brazil is expected to add 11.8 GW of solar generating capacity in 2025, reaching 64.7 GW by the end of the year, according to projections from the Brazilian Photovoltaic Solar Energy Association (Absolar). The sector is coming off another record of consecutive annual additions, having connected 14.9 GW of capacity in 2024. With 55 GW currently operational, solar has already attracted 250 billion reais (US$43.6 billion) in investment and represents 22% of the countrys installed generating capacity, but faces challenges to growth, such as the creation of new demand and grid restrictions. The scenario was presented during the Absolar Free Market event, held last Thursday (October 4) in São Paulo. In the coming years, the expansion of solar energy will be heavily supported by the Free Market, which already accounts for more than 43% of the energy consumed in the country, while the captive market, served by energy distributors, represents 57%. “Its a matter of time before the free market becomes the dominant force, and eventually this division will no longer exist; a merger of these two environments will occur,” says Absolar CEO Rodrigo Sauaia. “The growth of the ACL (Portuguese for Free Contracting Environment) is not a threat to solar energy, but rather represents a transformation of the business and the way the sector seeks new customers,” he adds. The opportunities in the free market are diverse and affect large energy consumers, but also smaller ones, which have been allowed to migrate since 2024, those connected to high voltage, and often retailers. For distributed generation companies operating with mini-generation and larger plants, between 1 MW and 3 MW, and targeting these consumers, offering migration to the free market or systems in the self-production model can be a way to adapt the business. Sauaia emphasized that the free market has different representations in Brazilian states. While in São Paulo, for example, more than 60% of consumers are still in the captive market, meaning they have more room to migrate, in Minas Gerais and Pará, the free markets share of consumer services already exceeds 50%. “Starting in 2029, all planned expansion of [centralized] generation capacity in Brazil is destined for the open market,” Sauaia emphasized. Solar energy is leading this open market expansion, accounting for more than 90% of the new capacity added to serve this environment for most of the next few years. Despite growth prospects, supported by contracts signed in recent years, new investments in the open market are threatened by cuts in centralized generation. According to Márcio Trannin, Vice President of Absolars Board of Directors, investors in centralized solar energy have already lost approximately R$ 2 billion due to the restrictions. We are beginning to see a scenario of investment retraction due to uncertainty about the treatment of the cuts, the executive stated. He emphasized that Absolar has been seeking short- and long-term solutions to ensure compensation for losses and reduce cuts in the future. The executive manager of the National System Operator, Arthur da Silva Santa Rosa, highlighted the duck curve effect of solar generation, which is highly concentrated during the afternoon and has led the ONS to implement cuts in centralized generation and also to require capacity reserve auctions (LRCAP) to ensure demand can be met. Since a large portion of the installed solar capacity is in distributed generation, the ONS has been studying the role of distribution system operators (DSOs), which could be the energy distributors themselves, depending on a new Aneel regulation, to have greater control over these systems. We need this contact with the ONS because it will determine the future of generation expansion in Brazil, Trannin said. But we need to look beyond this issue to ensure the sustainability of the sector. We need to explore how to stimulate new demand and generate storage. We need to create the conditions for these new sectors to reach Brazil, he commented. Forecast demand for data centers and green hydrogen Two segments that have been closely watched by the solar sector in search of new renewable energy sales opportunities are green hydrogen production and data centers. The consulting firm Clean Energy Latin America (CELA) mapped 109 green hydrogen initiatives in Brazil, distributed across 16 states. Of these, 55 initiatives revealed planned investments, totaling 441 billion euros. And 34 revealed estimated electrolyzer capacity, totaling 89 GW of expected renewable energy demand. Around 80% of the mapped initiatives are in the memorandum of understanding phase. Globally, only 11% of potential initiatives have reached the Final Investment Decision (FID) stage, and the expectation is that the same will be true in Brazil. In the data center segment, the consulting firm identified an average of 777 MW of data centers in operation, an average of 472 MW under construction, and an average of 468 MW planned. Four data centers stand out in the cities of Fortaleza, Rio de Janeiro, São Paulo, and Porto Alegre. In addition to these large consumers, the progressive opening of the free market is also generating new business opportunities in this contracting environment. “Today, virtually all renewable energy contracts in the free market are based on the self-production model (30 out of a total of 31). The greater number of contracts and the lower volume of contracted energy reflect the opening of the free market to smaller consumers,” said Camila Ramos, founder and partner of CELA. “This is a new consumer profile, which often doesnt have a specific area to contract energy,” the executive comments. This requires companies to be prepared to approach and sell to new potential customers. Furthermore, the decarbonization and electrification trends of industries already operating on the open market are trends that can contribute to increasing energy demand in the segment. |
