Key facts
- Atlas Renewable Energy has paused $1 billion in new investments in Brazil.
- The company cited periodic rejections of renewable power by the national grid operator.
- Curtailments for existing projects reached 15%-25% in the June quarter.
- Fitch Ratings assigned negative outlooks to 11 Brazilian renewable project finances.
- Market design changes are not expected before 2028.
Atlas Renewable Energy, a major clean power generator owned by BlackRock's Global Infrastructure Partners, has paused plans for $1 billion in new investments in Brazil. The company's CEO, Carlos Barrera, stated that the national grid operator has periodically rejected renewable power, leading to curtailments as high as 15%-25% for existing projects in the June quarter. This issue of renewable curtailment, where generated power is rejected due to grid limits, is a significant bottleneck for development not only in Brazil but also in countries like Australia, Japan, India, and Chile. The market design in Brazil exacerbates the problem, as renewable companies may have to buy replacement power at double the contracted sale price when curtailed. Fitch Ratings recently assigned negative outlooks to 11 Brazilian renewable project finances, forecasting continued curtailment impacts on cash flow and liquidity until 2030. Barrera does not anticipate significant changes to the current market design before 2028, but expects curtailments to gradually decrease as new solar capacity additions slow and demand grows. He noted that even with transmission improvements, overcapacity of solar power remains a fundamental issue leading to curtailment.