Brazil now has 4.6 million consumers who are also micro or mini power generators, about 5% of all consumers, and the spread of this "rooftop energy" is starting to strain the national grid. On Sunday (23), the National Electric System Operator (ONS), the body that coordinates power generation and transmission across the country, ordered distribution companies to cut about 1 gigawatt (GW) of generation between 11 a.m. and 1:30 p.m. to keep excess supply from overloading the National Interconnected System (SIN). It was the second time this year the emergency plan was triggered, according to G1 and Agência Brasil.
The first activation came on June 7, during the Corpus Christi holiday weekend, when the operator asked for 1,000 megawatts to be managed between 10 a.m. and 2 p.m. Solar and wind are intermittent sources: they depend on natural conditions that do not always match consumption. On weekends, when commercial and industrial activity drops, panel output can exceed demand. Because electricity cannot be stored at scale, the ONS must balance supply and consumption at every moment.
The risk has already materialized once. On Father's Day in 2025, distributed generation reached 37.6% of national demand and the surplus nearly overloaded the system. To prevent a blackout that could have hit several states, the ONS cut hydroelectric and thermoelectric plants to a minimum and slashed 98.5% of centralized wind and solar generation, according to Agência Brasil. Even with those steps, power is left over at certain hours, and the cuts have become routine. The targets are Type 3 plants, which the operator does not dispatch directly, such as small hydro plants, biomass units and smaller wind and solar farms, switched off through the distribution companies.
"The ONS tends to reduce hydro generation to a minimum, thermal to a minimum, but even then there is more generation than consumption and it keeps cutting. It cuts wind, it cuts solar, centralized", Roberto Brandão, technical and scientific director of the Electric Sector Study Group (Gesel) at the Federal University of Rio de Janeiro (UFRJ), told G1.
Subsidies weigh on power bills
Behind the boom is the sector's incentive structure. The Distributed Generation Legal Framework, signed in 2022, guaranteed until 2045 the benefit of not paying in full for use of the distribution network for those who requested a connection by January 2023. Later adopters entered transition rules, with gradual charges for grid use. According to Clauber Leite, director of Sustainable Energy and Bioeconomy at the E+ Energy Transition Institute, the subsidies made the transformation of Brazil's energy matrix viable, but they have become a burden on tariffs: regulator Aneel estimated the Energy Development Account (CDE), a fund that finances public energy policies, at R$ 52.7 billion for 2026, with about R$ 47.8 billion paid directly by consumers through their power bills. "The part linked to the expansion of distributed generation and other subsidies is the most sensitive point of the debate, because it transfers costs to consumers who often cannot afford to install panels", he told G1.
Losses and the operator's response
The cuts carry a cost for investors. Consultancy Volt Robotics estimated that losses from solar and wind curtailment totaled R$ 6.5 billion in 2025. For Joisa Dutra of the Center for Regulation and Infrastructure Studies (Cebi) at Fundação Getúlio Vargas, the energy surplus undermines investment returns and, in some cases, can make it harder for investors to meet their obligations.
Faced with this scenario, the ONS announced on August 20 that it is preparing the Regional Generation Relief Scheme, a system to automatically switch off part of distributed generation in critical situations, with cutting capacity of up to 3 GW split into three stages, activated only after all other control options are exhausted. A pilot project is due to be tested by the end of 2026 at one distributor and, if it works, implementation moves forward in 2027. Distributed generation now totals about 50 GW of installed capacity in Brazil. Abradee, the association of power distributors, said its members will follow ONS guidance, but asked for clearer criteria for the cuts to give generators operational and legal security.