Brazil's power sector is undergoing a paradigmatic redefinition. The energy transition, driven by decarbonization policies, has brought with it a growing technical and legal challenge: curtailment (or constrained-off), which consists of the reduction or interruption of energy generation ordered by the National System Operator (ONS) for operational reasons. The subject, which once lived in operating manuals, has moved to the center of the regulatory agenda, exposing fissures in the risk allocation of infrastructure projects.
The regulatory backdrop and the genesis of REN 1,030/2022
To understand the current state of the art, one must go back to Regulatory Impact Analysis Report 002/2022-SRG/ANEEL. That document was the technical instrument that underpinned the enactment of Normative Resolution (REN) No. 1,030/2022, whose aim was to standardize the treatment of operating restrictions for photovoltaic plants.
In the impact-analysis (AIR) diagnosis, the Agency acknowledged the "rapid growth of Variable Renewable Generation (VRG) sources" and conceded that the variability of these sources, combined with the structural limitations of the transmission grid, imposes new challenges on the system. However, in converting that diagnosis into a rule, ANEEL consolidated a restrictive view of compensation.
REN 1,030/2022 limited the generator's indemnification to very specific scenarios — essentially when the cut stems from reasons of local electrical reliability — leaving out cuts motivated by systemic reasons or by energy oversupply.
The compensation limbo: what is (not) indemnified
The discussion on compensation is the crux of the legal uncertainty. The current rule generally requires the developer to bear the risk of the cut. The recent Law 15,269/2025 sought to mitigate this scenario by providing for compensation in two specific cases. Nevertheless, the statute and the infra-legal regulation still fail by not addressing the loss arising from the "merit order" or from broad systemic restrictions.
In practice, if the cut occurs due to an immediate technical failure in the connection, there is a path to compensation. However, if the cut results from a structural inability of the system to carry the energy produced — that is, a long-term planning failure — the generator is left unprotected. This distinction creates a scenario in which the investor is punished precisely for the efficiency of its delivery, in a system that the State failed to expand at the same pace.
International best practice and efficiency in risk allocation
The current distribution of risk in Brazil collides with the best global infrastructure practices. As established in the PPP Reference Guide (World Bank), the golden rule provides that each risk should be assigned to the party best able to manage it at the lowest cost.
In the case of systemic curtailment, the generator holds "zero" management power. It does not design grid expansion or control centralized dispatch. As E.R. Yescombe (Public-Private Partnerships) notes, efficient allocation must consider who can bear the impact without compromising the project's bankability. When risk is allocated to someone with no control over the event — the private investor facing State planning — the inevitable result is a higher cost of capital and a loss of economic efficiency for the entire sector.
Physical predictability vs. legitimate expectation
From the standpoint of Economic Law, the physical predictability of the limits of electrical systems does not imply the automatic assumption of financial risk. If the public authorities, through the MME and the CNPE, send clear signals encouraging renewable sources, a legitimate expectation arises that the transmission infrastructure will be compatible.
By using the AIR to acknowledge the growth of these sources and, at the same time, enacting a REN that denies compensation for grid bottlenecks, the Agency ignores that the State is the party with the least information asymmetry. As the State is the planner, it is the primary allocator of the risk of structural insufficiency.
Conclusion: the challenge of alignment and legal certainty
Curtailment, when devoid of a clear and comprehensive compensation metric, transforms from a technical-operational tool into a structural regulatory risk factor. The sustainability of the expansion of our energy matrix requires that grid risk not be a "lottery" for the generator.
Sector planning must be aligned with regulation that not only recognizes the technical problem but also offers fair economic consideration. Without revising the compensation criteria of REN 1,030/2022 in light of Law 15,269/2025 and of the Pareto principles in risk allocation, we will continue to drive away the capital needed for the energy transition, in the name of a short-term economy that will cost dearly in terms of system reliability and the country's legal certainty.
References
ANEEL. Relatório de Análise de Impacto Regulatório nº 002/2022-SRG/ANEEL e Resolução Normativa nº 1.030/2022.
BRASIL. Lei nº 15.269/2025.
WORLD BANK. Public-Private Partnerships Reference Guide, Version 3.0. Washington, DC, 2017.
YESCOMBE, E. R. Public-Private Partnerships: Principles of Policy and Finance. Elsevier, 2007.
Informational content; this does not constitute legal advice.