How Brazil's northeast became an energy powerhouse

Historically one of Brazil's poorest regions, the northeast of the country is being transformed into a major energy powerhouse.

According to data from watchdog Aneel analyzed by BNamericas, the northeast has overtaken the southeast – where the most industrialized states are located – in installed capacity for centralized generation (CG), and is expected to widen the gap in the coming years.

The reason for this is the concentration of non-conventional renewable projects in the northeast, where wind and solar radiation levels are the highest in the country.

Currently, the northeast has total installed capacity of approximately 63.8GW, including 31.4GW of wind and 9.2GW of solar (in terms of CG).

The southeast, in turn, has 63.7GW, of which around 30GW is hydroelectric and 23GW thermoelectric.

Source: BNamericas with Aneel data

When distributed generation (DG) is included, the southeast, with 13.6GW, still has more installed capacity than the northeast (8.9GW).

However, considering the total of CG and DG, the northeast is expected to surpass the southeast as it has more than 90GW of CG scheduled to come online by 2032, compared to around 35GW in the southeast. These figures refer to authorized projects, meaning those already granted permits for construction and operation.

Given this scenario, the Brazilian government has promoted large-scale transmission auctions to enable the flow of more energy from the northeast to other regions of the country.

Despite the northeast's rise as an energy powerhouse, the country's backup capacity function is still mainly performed by the south-central region, particularly the southeast, where most of the hydroelectric reservoirs and thermoelectric plants are located.

Challenges

Expansion in the northeast will continue to be based on wind and solar sources, with projections of an additional 18.5GW and 78GW, respectively.

"Even with a scenario of reduced investment, we estimate that between 1.5GW and 2GW of wind power will be installed annually in the northeast over the coming years," wind power association Abeeólica told BNamericas via its press office.

According to the association, progress will depend mainly on the availability of transmission infrastructure, economic conditions and the regulatory environment – including the treatment of curtailments, market liberalization and environmental licensing.

Talita Porto, technical and regulatory director at solar power association Absolar, said that, apart from the region's natural conditions favorable to solar generation, the northeast has a vast coastline with port and industrial complexes that could attract green hydrogen plants.

In addition, there are regional development incentives via Sudene (superintendence for the development of the northeast) and favorable environmental licensing, as well as financing lines from the Banco do Nordeste development bank that encourage solar power investments.

However, curtailments are a challenge to the continued expansion of solar in the region, which depends on the transmission grid to export its energy surplus.

"Specifically for photovoltaic solar power, from April 2024 to July 2025, generation cuts caused 1.4bn reais [US$250mn] in financial losses in previously contracted agreements," Porto told BNamericas.

She warned that the curtailment situation has frozen current and future investments and is driving away new investors and developers from Brazil.

"Aneel points out that there are more than 90GW in projects that could come online, but without proper planning to integrate these plants into the system, without transmission lines to carry the energy, and without solutions for generation curtailments, they are unlikely to be implemented," Porto said.

In addition to expanding and modernizing the transmission grid and regulating energy storage, the Absolar director recommends the country implement a smart power rate model that encourages more intense consumption in the morning, something that could help prevent many of the generation cuts.