By Leticia Fucuchima
SAO PAULO (Reuters) – Brazilian wind and solar power producers have said they will reconsider future investments there after the national grid operator repeatedly limited the amount of energy they supplied last year, cutting into their profits.
Brazil has made great strides in encouraging companies to invest in wind, solar and other renewable energy sources, offering generous financing and subsidies. But the electricity they generate puts a strain on the grid.
More than a dozen executives and industry representatives said investing in renewable energy would be less profitable under the National Electric System Operator’s (ONS) current “retreat” policy, which temporarily caps the amount of electricity ONS purchases from wind and solar power stations.
The pressure is greatest in northeastern Brazil, a hotbed for renewable energy investment, where there are bottlenecks in transmission lines that carry electricity to Sao Paulo, Rio de Janeiro and other parts of the more populous southeastern region.
Since August 2023, when a blackout in the north-east spread across most of the country, ONS has managed the network more carefully, meaning more cuts when generation exceeds consumption or there is a lack of transmission capacity.
ONS said the cuts were not excessive and were necessary for safety reasons. The operator said its data showed that only 3% of electricity generated was lost to cuts last month. Volt Robotics, an energy sector consultancy, analyzed the ONS figures.
Brazilian wind energy association ABEEolica estimated that the sector lost about 700 million reais ($128 million) last year. Brazilian solar association Absolar estimated the loss in the four months to July at 50 million reais.
“The country’s renewable energy is being wasted,” said Eduardo Sattamini, CEO of the company concerned, Engie Brasil Energia.
The Serra do Mel II B complex in the northeastern state of Rio Grande do Norte, owned by Equatorial Energia, was the most affected among the wind turbines, they found, with 58 percent of the electricity generated rejected by the grid between January and early August.
Echoenergia, Equatorial’s renewable energy subsidiary, said in a statement that the cuts had affected its operations and led to higher risk prices for investors, which could lead to a decline in new investment.
“This is not an environment for decisions about new projects,” the company said.
According to Volt Robotics, the worst affected solar generator was the Banabuiu complex of the Chinese generator SPIC in the coastal state of Ceará. Between January and the beginning of August, 50 percent of the electricity generated was lost.
Adriana Waltrick, managing director of SPIC Brasil, said it was crucial to solve the grid problems that “could increase future energy costs and affect the competitiveness of the renewable energy sector in Brazil.”
Losses can increase because producers often have to buy electricity at market prices in order to comply with their contracts with suppliers and consumers.
Voltalia, a renewable energy producer that has nearly two-thirds of its capacity in Brazil, expects the cuts to reduce its earnings before interest, taxes, depreciation and amortization by about 40 million euros ($44.48 million) this year.
CPFL Energia, an energy company controlled by Chinese utility State Grid, also highlighted the problem in its second-quarter results, reporting losses of R$21 million.
Some companies have taken legal action to seek compensation for losses caused by the ONS failure. These legal battles could last for years.
To provide some relief, the federal government has held auctions for the construction of transmission lines by private companies, but many of these projects will take years to complete.
ONS operations manager Christiano Vieira said more power from the north-east would flow into the national grid from September when a new transmission line came online, which could help reduce power curtailments.
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(Reporting by Leticia Fucuchima; Writing by Stefanie Eschenbacher; Editing by Brad Haynes and David Gregorio)
