Renewable energy generators in Brazil claim losses due to operating restrictions

Restrictions imposed by Brazil’s grid operator ONS are causing losses for wind and solar energy generators, local associations claim. 

Technically called curtailment, the cuts consist of limiting all or part of a plant's electricity production potential in order to maintain the stability of the transmission network.

These actions became more frequent after a blackout left six northeastern states without electricity in August 2023. 

According to Abeeólica and Absolar, which represent wind and solar generation companies respectively, record cuts were registered in June, when the production of more than 1,050MWa of energy from wind farms and more than 370MWm of energy from solar photovoltaic plants was prevented.  

The losses estimated by Abeeólica for wind power generators could exceed 700 million reais (US$128mn) between August 2023 – when the situation was aggravated by the blackout – and the end of 2024.

In the case of solar, the economic losses in 2023 amounted to 178mn reais and in 2024 (between April and July) reached another 50mn reais, according to Absolar.

On Tuesday, Voltalia reported that if the generation restrictions imposed by the ONS continue and if the company is not financially compensated, its 2024 Ebitda will suffer a heavy impact. 

“Voltalia's curtailment volume in the northeast of the grid may be expanded for a period that could last several months, especially due to the delay in the construction of new transmission lines to strengthen the grid in the northeast of the country,” the company said in a release. 

Earlier this month, Abeeólica and Absolar filed a lawsuit seeking financial compensation for generation cuts imposed by the ONS. 

“We’re seeking a right established in law, which is crystal clear, and which determines that any outage that is not caused by the generator deserves compensation from the system,” Carlos Dornellas, Absolar's technical-regulatory director, told BNamericas.

“What happens in practice is that an Aneel resolution has limited this reimbursement to a specific cause that rarely occurs.” 

According to the associations, the regulatory agency has restricted the compensation provided for by law only to cuts classified as “external reasons for unavailability,” leaving out “reasons for meeting electricity reliability requirements” and “energy reasons.” 

“We’ve seen outages of up to 80% a day. This has consequences for ratings, credits and financing for the companies, which could go bankrupt if this situation continues,” said Dornellas. 

Through its press office, Aneel told BNamericas that it is not appropriate for consumers to pay a charge to generators when, due to engineering limitations or systemic security, it is not possible to physically transmit the energy, nor should consumers pay for energy they do not need. 

The agency said that including the financial compensation amounts in the sectoral charges would force industrial, commercial and residential consumers to bear this additional cost in their electricity bills.

According to Dornellas, the companies are negotiating with Aneel and the ONS so that the cuts are less intense and the operation is “less conservative and more consistent” with the reality of the system's capacity available to users. 

“But negotiations are moving very slowly in the face of the investors' need to have their compensation guaranteed in accordance with the law,” Dornellas said.  

The ONS had not replied to a request for comment from BNamericas as of press time.