Brazil is experiencing one of the most decisive moments in its energy history. With an electricity mix already largely renewable—about 88% of generation coming from clean sources, according to data from the Energy Research Company (EPE)—the country now faces a new challenge: financing the sustainable expansion of its infrastructure, diversifying its energy matrix, and ensuring energy security amid the global transition to a low-carbon economy.
According to the Brazil Transition Factbook 2025 by BloombergNEF, the country needs to invest more than USD 700 billion by 2050 to reach its carbon neutrality goals. In solar and wind energy alone, an estimated USD 15 billion per year will be required by the end of this decade. Despite the scale of this challenge, Brazil holds a unique advantage: it combines natural resources, regulatory maturity, and investor appetite to lead this transformation.
A growing but still concentrated market
The International Energy Agency (IEA) ranks Brazil among the top five countries that most expanded renewable generation capacity in 2024, driven by photovoltaic solar energy, which grew 34% last year. The country now totals more than 40 GW of installed solar capacity, according to ANEEL.
However, investment remains concentrated among large players, and the high cost of capital for small and medium projects continues to be an obstacle. A study published by the National Center for Biotechnology Information (NCBI) highlights that financial and bureaucratic barriers make it difficult for new investors to access the sector. The study notes that while large corporations obtain international green credit lines, small producers and cooperatives depend on public programs—often slow and with limited resources.
Regulatory frameworks and the role of public policy
Brazil’s legal framework has advanced, especially after the enactment of the Distributed Generation Legal Framework (Law 14.300/2022), which established clear rules for energy generation in homes, businesses, and industries. This move attracted new investors and provided greater predictability to the sector.
The Renewable Energy Laws and Regulations Brazil 2026, an international comparative guide to energy regulation, points out that Brazil has one of the most solid regulatory frameworks in Latin America but still lacks tax stability and legal certainty. Frequent changes to tax incentives and financing programs—such as Finame Energias Renováveis and BNDES Finem—can create uncertainty and deter foreign investors.
Furthermore, BloombergNEF’s report highlights the need to modernize the transmission sector, currently one of the main bottlenecks to expansion. In 2024, 17% of the energy generated in the Northeast could not reach the national grid due to insufficient transmission capacity. The solution involves new transmission lines and investments in energy storage—both capital-intensive areas that require adequate regulation.
Where the funds come from and who provides them
According to the Climate Policy Initiative (CPI), international clean energy financing flows to Brazil reached USD 1.5 billion per year between 2021 and 2023—an increase of 25% over the previous three-year period. Of this total, 61% came from commercial debt and 35% from equity, demonstrating strong private participation.
The main financiers are multilateral banks such as the IDB, the World Bank, and the IFC, in addition to climate funds and green bonds. In 2024, the National Bank for Economic and Social Development (BNDES) announced a BRL 20 billion green credit program for solar and wind generation projects, with a focus on small and medium-sized enterprises.
The green bond market is also growing rapidly. According to B3, the volume of sustainable bond issuances in Brazil exceeded BRL 60 billion in 2024, with the energy sector accounting for 47% of that total.
Storage and smart grids: the next step
The rapid growth of intermittent sources such as solar and wind requires storage and smart grid solutions to balance the system. A joint report by EPE and the World Economic Forum highlights that Brazil will need to triple its storage capacity by 2030 to ensure stability.
Moreover, the digitalization of the electric grid—with sensors, automation, and smart meters—can reduce technical losses and improve operational efficiency. This advancement could save up to BRL 10 billion annually by 2035, according to the study “Smart Grid Development in Emerging Economies” published by the IEA.
Opportunities and bottlenecks
The combination of abundant natural resources, technical expertise, and regulatory progress creates a promising scenario—but significant bottlenecks remain. Bureaucracy in environmental licensing and delays in grid connection approvals continue to hinder growth.
The Brazilian Photovoltaic Solar Energy Association (ABSOLAR) reports that more than 14 GW of projects are stalled awaiting authorization or connection. Another challenge is the cost of capital: Brazil’s real interest rates remain among the highest in the world, increasing the cost of long-term financing.
To mitigate these risks, experts advocate strengthening currency-hedging instruments and sovereign guarantees. The Renewable Energy Performance Platform (REPP) model, used in the United Kingdom and Africa, is cited as a reference for reducing the cost of risk capital in emerging markets.
Public–private partnerships and the role of states
States and municipalities are playing an increasing role in advancing clean energy. The city of Rio de Janeiro inaugurated on November 2 the *Solário Carioca* project—a 5 MW solar plant built on the former Santa Cruz landfill, structured as a PPP (administrative concession) by the Companhia Carioca de Parcerias e Investimentos (CCPar) with an estimated investment of around BRL 45 million. The project involved international cooperation from C40 Cities and the German agency GIZ through the Cities Finance Facility (CFF) program, supporting urban energy transition efforts.
In Fortaleza (Ceará), the city launched a PPP tender for solar energy installations in schools and daycare centers, with an estimated private investment of about BRL 52 million and projected savings of BRL 38.4 million over the contract period—covering 468 municipal education units.
These cases demonstrate how municipal PPPs can become key drivers in mobilizing private capital, repurposing degraded areas or underused infrastructure, and promoting governance, innovation, and clean energy at the local level.
Brazil in the global clean energy race
With COP30 approaching, Brazil is in the global spotlight. The International Renewable Energy Agency (IRENA) estimates that the country could become a net exporter of clean energy by 2035 if it accelerates investments in green hydrogen and biomethane.
The Brazil Transition Factbook reinforces this potential, noting that Brazil holds more than 80% of Latin America’s biomass capacity and could capture up to 3% of the global green hydrogen market. To achieve this, it will be essential to mobilize public and private resources and build international partnerships that ensure predictability and competitiveness.
Brazil’s energy transition financing is progressing but must still overcome structural challenges. The country has the assets, the expertise, and the political will—but depends on consolidating modern financial instruments, regulatory stability, and integration between the public and private sectors.
The path toward a low-carbon economy lies in governance, innovation, and patient capital. Brazil is well positioned to lead this journey, provided it transforms its potential into a long-term strategy that unites economic efficiency, social inclusion, and environmental sustainability.
