Brazil’s distributed solar sector, long celebrated as one of the fastest-growing renewable segments in Latin America, is experiencing its first year of slowdown in more than a decade. According to pv magazine Brazil, annual new capacity for 2025 is projected to reach 8.5 GW—down from 9.8 GW in 2024—marking a pivotal moment in the country’s energy transition trajectory.
From explosive growth to measured expansion
Since 2018, Brazil’s distributed generation capacity has surged from under 1 GW to nearly 40 GW by mid-2025, driven by residential rooftops, commercial buildings, and rural installations. Distributed solar has consistently accounted for over 40% of new electricity capacity nationwide, supported by favorable net metering policies and state-level incentives in regions such as São Paulo, Minas Gerais, and Paraná.
This year, however, the pace has shifted. Between January and September 2025, only 6.4 GW was added, compared with 7.3 GW during the same period in 2024. Industry analysts point to a combination of policy uncertainty, market liberalization, and changing consumer economics as contributing factors.
Segment-by-segment performance
Residential installations remain the backbone of Brazil’s distributed solar market, accounting for 3.5 GW of new capacity in the first three quarters of 2025. Yet, this represents a 10% decline from the same period last year. The downturn was sharper in the commercial sector, which dropped 21%, while industrial systems fell by 19%. Rural installations saw a relatively modest 6% decline.
- Residential: 3.5 GW (down from 3.9 GW in 2024)
- Commercial: 1.5 GW (down from 1.9 GW)
- Rural: 734 MW (down from 788 MW)
- Industrial: 497 MW (down from 615 MW)
Analysts note that 2025 offered a significant opportunity for high-voltage consumers—such as small businesses and industrial facilities—to migrate to Brazil’s free electricity market. While this change potentially lowers power costs, it can delay or redirect investment into distributed generation assets.
Regional shifts in solar leadership
The regional dynamics of Brazil’s solar market are evolving. The Southeast remains the leader in new installations, adding 2 GW between January and September 2025. São Paulo continues to dominate with 830 MW, but Minas Gerais has regained momentum at 687 MW, followed closely by Paraná with 600 MW.
One notable milestone: the Northeast region has overtaken the South in total distributed solar capacity, reaching 9.2 GW compared with the South’s 8.9 GW. This reflects both favorable solar resources in the Northeast and proactive state-level support for renewable projects.
Policy headwinds and market uncertainty
Brazil’s National Electric Energy Agency (Aneel) is reviewing its compensation model for distributed generation, with possible changes that could reduce the financial benefits of rooftop systems. Legislative proposals such as PL 624 and PL 671 aim to boost competition and innovation but may also introduce short-term uncertainty.
The liberalization of the electricity market, while a long-term driver of efficiency, is creating transitional challenges for solar developers and investors. As more consumers gain access to competitive electricity rates, the economic case for installing distributed solar may shift, particularly for commercial and industrial buyers.
Battery storage: the emerging differentiator
While installation rates may slow, technological innovation is reshaping Brazil’s distributed generation landscape. Hybrid systems that pair solar PV with battery storage are gaining traction, offering improved energy autonomy and resilience against grid fluctuations. Falling costs in both panels and lithium iron phosphate (LiFePO4) battery systems—such as the new 2 kWh expandable units announced by Oscal—are making these solutions more accessible to residential and small business owners.
For battery enthusiasts, this shift represents a major opportunity: integrated storage solutions not only enhance self-consumption but also position distributed solar as a tool for peak shaving, backup power, and participation in emerging energy markets.
Long-term outlook remains bright
Despite 2025’s slowdown, forecasts remain optimistic. Brazil’s distributed solar capacity is expected to climb to 76 GW by 2028, supported by continued cost declines, improved storage technologies, and expanding access to the free energy market for low-voltage consumers. In combination with utility-scale projects—particularly in the sun-rich Northeast—the country’s photovoltaic capacity could surpass 100 GW before the end of the decade.
For stakeholders in the solar and battery sectors, the message is clear: the current dip in annual additions is a pause, not a reversal. The next phase of Brazil’s distributed generation growth will be defined not just by how much capacity is added, but by how intelligently it is integrated with storage, demand management, and grid modernization.
Key takeaways for investors and installers
- Expect near-term moderation in installation volumes due to policy shifts and market liberalization.
- Focus on hybrid PV-plus-storage solutions to maintain competitive advantage.
- Watch for regional growth opportunities, particularly in the Northeast and Central-West.
- Prepare for evolving customer economics as electricity market reforms expand to low-voltage consumers.
In short: while 2025 marks a cooling-off period for Brazil’s distributed solar, the sector’s fundamentals—abundant solar resources, technological progress, and growing consumer demand for energy independence—remain strong. For battery innovators and solar installers alike, the coming years will be about smarter integration and strategic positioning.
