Renewable energy producers downsize operations in Brazil due to operational restrictions

SAO PAULO, March 31 (Reuters) - Brazil's renewable energy sector is facing severe headwinds, with major power generators scaling back operations and cutting jobs due to generation restrictions that the national grid operator imposed on wind and solar plants in 2023, companies told Reuters. Atlas Renewable Energy, owned by Global Infrastructure Partners (GIP) under BlackRock (BLK.N), opens new tab, Newave Energia, co-owned by Gerdau (GGBR4.SA), opens new tab, and French company Voltalia (VLTSA.PA), opens new tab, are among the firms adjusting operations to ensure financial sustainability. None disclosed the exact number of layoffs but confirmed changes aimed at adapting to the challenging market environment. The crisis marks a critical moment for Brazil's wind and solar sectors, which ⁠have become significant pillars of the country's electricity matrix. Renewable energy has helped the country consume more clean energy and shield itself from supply disruptions when the availability of fossil fuels used in power generation is affected by external shocks, such as the war in Iran. After a power outage in 2023, the National Electric System Operator (ONS) started restricting output from solar and wind power plants more severely during periods when the grid either does not require their electricity or lacks sufficient transmission capacity to accommodate it. Because battery storage has not been regulated for integration with power plants, these restrictions have led to significant financial losses, with some plants forced to halt generation altogether. Atlas Renewable Energy reported revenue losses of ⁠roughly 25% at some facilities. "You prepare to deliver a volume of energy, build your business around it, and then it becomes unattainable," said the company's vice president, Manoel Andrade. This month, Voltalia announced that it plans to reduce its workforce by nearly 10% globally, including in Brazil, as part of a broader transformation. The company told Reuters that fresh investments in Brazil hinge ⁠on regulatory stability and long-term returns. Newave Energia, which recently inaugurated a solar project in Goias, emphasized the need for efficiency and resource optimization given the volatile environment. The broader sector outlook remains bleak, with companies like Acciona exiting Brazilian renewables in 2024 and ⁠manufacturers such as GE shutting down operations. With close to 3 GW in solar projects, Atlas and other firms, including France's Engie, have paused new investments. Companies say the main problem is the lack of clarity over potential ⁠compensation. Congress passed a law last year ordering the reimbursement of part of the outstanding losses, but only retroactively. The law still needs to be regulated. Government efforts to address the challenges, including transmission upgrades and potential battery storage auctions, remain in early stages. Reporting by Leticia Fucuchima, editing by Manuela Andreoni and David Gregorio Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Energy * Grid & Infrastructure * Climate Change Leticia Fucuchima Thomson Reuters Covers energy-related topics with a focus on the electric power sector. Based in Sao Paulo, Brazil. Previously reported on aviation, transportation, and sanitation for leading Brazilian news outlets. Contact: leticia.augusto@thomsonreuters.com