Curtailment and transparency: who deciphers the ONS's cuts?

The advance of renewable sources in Brazil has brought with it a phenomenon that, until recently, seemed marginal: curtailment — the reduction or limitation of generation ordered by the National Electric System Operator (ONS) for operational reasons. Once restricted to isolated situations, these cut orders have become routine in a system increasingly pressured by outflow bottlenecks, grid constraints and new dispatch dynamics. Alongside the expansion of wind and solar, a silent liability has taken shape: the revenue loss arising from the dispatch restrictions imposed on generation projects.

The debate over who bears this burden has been waged on the basis of ANEEL Normative Resolution (REN) 1,030/2022, which distinguishes cuts according to their cause. Less explored, however, is the informational dimension of the problem: the proper classification of the event — and, consequently, the very right to compensation — depends, above all, on the transparency with which the ONS sets out the technical reasons justifying each operational restriction.

The classification labyrinth

REN 1,030/2022 establishes a dichotomous regime. On one side, cuts for "electrical reliability" or "energy reasons," attributed to system operation and absorbed by the generator as its own risk. On the other, "external unavailability," a scenario in which failures unrelated to the project — typically limitations of the basic transmission grid — trigger the right to financial compensation under the regulation.

The criterion seems simple on paper, but it conceals a porous boundary. Restrictions nominally classified as "reliability" may, upon examination of their material cause, prove to stem from structural outflow bottlenecks — situations that would properly characterize external unavailability. It is in this gray zone that the project's economic and financial balance is defined — and, by extension, the bankability of a growing number of constrained-off projects.

The operator's duty to inform

Against this backdrop, Article 15, §10, of REN 1,030/2022 imposes a clear obligation on the ONS: to make available, on a publicly accessible platform, all information used in calculating the generation shortfall. This is not merely a matter of publishing aggregate figures or statistical methodologies, but of setting out, in a verifiable manner, the technical rationale underlying each operational restriction.

This reading flows from the very purpose of the rule. If the classification of the event determines whether compensation exists, restricting disclosure to the results of the calculation amounts to turning the process into a black box. Transparency here is not procedural ornament: it is a precondition for external scrutiny by agents, by the regulator and, where appropriate, by the Judiciary. The duty to give reasons therefore reaches not only the data, but the very causal chain invoked to justify the cut — regardless of the classification assigned to the event.

The expansion brought by REN 1,109/2024

This informational duty was recently reinforced. REN 1,109/2024 amended Article 16, §3, of REN 1,030/2022 to require the ONS to actively disclose the regulatory unavailability limit. Two points deserve emphasis.

The first is semantic: the verb "to disclose," now express in the text, replaces the passive logic of mere availability and reinforces the duty of active disclosure of the parameters adopted. The second is substantive: the change signals that fixed temporal criteria cannot prevail over the concrete causal analysis of the restriction event. In other words, form yields to substance, and the technical rationale returns to the center of the classification regime.

From transparency to legal certainty

The disclosure of the grounds for a cut is no regulatory filigree. It is part of the risk-allocation architecture of the power sector. Without knowing the material cause invoked by the ONS, the generator is unable to verify whether the classification assigned actually corresponds to operational reality — and, where warranted, to challenge it in the administrative and judicial spheres.

Information asymmetry contaminates the entire chain. Investors and lenders price unpredictability as a risk premium, pushing up the cost of capital in renewable projects. Operating agents, in turn, are subject to classifications whose criteria are not fully intelligible to them. The result is a regulatory environment with fissures that undermine predictability and, ultimately, the very economic rationality of centralized dispatch.

Good governance of curtailment is not limited to designing compensation formulas. It runs, first, through the quality of the information made available by the system operator. Ensuring that each cut is accompanied by a public, auditable technical rationale is a condition for the dichotomy between "electrical reliability" and "external unavailability" to operate according to material criteria, and not merely nominal ones. Only then can the risk allocation prescribed by REN 1,030/2022 — as refined by REN 1,109/2024 — fulfill its promise of predictability and legal certainty for sector agents.