Brazil: Solar Panels: Just Energy Transition and Forecast for the Coming Years

The Message from the Ballot Boxes

The October elections have defined the environment in which consumers, businesses, and rural producers will decide whether to generate their own energy through 2030. President Lula was re-elected with 51.79% of valid votes, approximately 64.3 million, marking the first second-round reversal in the history of the Republic. In Bahia, Governor Jerônimo Rodrigues won in the first round with 55.80%, and the state sent Rui Costa and Jaques Wagner to the Senate.

However, Congress will be different. The Liberal Party (PL) will have the largest delegation in the Chamber of Deputies, with 121 members, compared to 70 for the Workers' Party (PT) (88 with the PT-PCdoB-PV federation), and also the largest delegation in the Senate. We will therefore have continuity in the Executive branch and a more fragmented Legislature, where the center decides.

For distributed generation (DG), the reading is objective: government policies are likely to continue, but any change in law—subsidies, taxes, market opening—will be negotiated vote by vote. The good news is that generating one's own energy is not a left-wing or right-wing flag. It is an issue for consumers, merchants, and the agricultural sector, and it should be treated as such by the new delegations.

Microgeneration: Yes, there is growth, but at a higher cost and with rules to monitor

Our projection indicates a continued, albeit more moderate, growth in microgeneration through 2030. According to the State Secretariat for Economic Development (SDE), Bahia had over 312,000 generating units and 2.80 GW of distributed power capacity across 417 municipalities as of June, following a growth of approximately 23% in 2025. Nationwide, the National Electric Energy Agency (ANEEL) recorded 4.6 million microplants in August, serving approximately 18.4 million Brazilians and supporting more than 50,000 entrepreneurs. Rising electricity bills will continue to make the investment attractive.

However, the entry cost has increased due to government decisions. Gecex Resolution No. 666/2024 raised the import tax on modules from 9.6% to 25%, and Resolutions 682/2024 and 782/2025 revoked the tariff exemptions for modules and inverters. The quota with the reduced tax rate is now restricted to plants exceeding 5 MW: small-scale generators must pay the full tax rate. In January 2026, Gecex further approved raising the tax rate on capital goods to 20%, which affects batteries. We support the domestic industry, but it should be protected through credit and scale, not through taxes on consumers, while local production fails to meet demand.

On legal certainty, Law 14.300/2022 remains the anchor: those who began generating before the law took effect retain their rules until 2045, and the gradual payment of the Fio B (B Wire) reaches 75% for systems already installed and new ones in 2027. The power sector reform (Law 15.269/2025) opens the free market to low voltage and redefines charges, and its regulation will be contested in the new Congress. Our message to investors is clear: acquired rights are not negotiable.

In credit, the FNE Sol from the Banco do Nordeste continues to be the main line for households, companies, and rural producers. We expect the fourth term to bring more volume, interest rates compatible with the low risk of the asset, and domestic content rules that do not hinder financing—a point already criticized by industry associations in January. The BNDES can expand this scope without fiscal cost, as we show below.

Storage: the next frontier, and Bahia is on the map

Battery storage will be the major innovation of the four-year period. Normative Ordinance MME No. 136/2026 scheduled the first two Capacity Reserve Auctions (LRCAP) exclusively for batteries for December 2 and 4: one with a domestic content requirement and another open to all. The contracts will have a 15-year term, with delivery starting in 2028. The EPE registered 6,091 projects, totaling 296.8 GW, 71% of which are in the Northeast.

Bahia is already reaping industrial benefits. The Chinese company Windey laid the cornerstone in Camaçari for a BESS systems factory with an investment of 100 million reais and an annual capacity of 1.5 GWh, with operations expected to begin in 2027. Law 15.269/2025 also placed storage under Aneel’s regulation, including in distributed generation projects.

The challenge now is to bring storage to small consumers. On October 26, the Free Solar Movement Coalition (MSL), which brings together 25 state associations, including ABS, submitted a proposal to Vice President Geraldo Alckmin for micro distributed storage: batteries in homes, businesses, and rural properties. The proposal consists of three components, and none of them requires new legislation:

1. Aneel’s rule first. The bank does not finance what is not defined. Law 15,269/2025 has already granted Aneel the authority; what is missing is the resolution that specifies what is eligible, the limits per consumer unit, and how the equipment will be compensated or remunerated.

2. BNDES credit without fiscal cost. Once the rule is in place, the bank can open its own credit line through Finem, the Climate Fund, and energy efficiency lines, in a reimbursable operation and without Treasury guarantee. The energy efficiency and R&D calls provided for in Law 14,300/2022 form the initial portfolio of projects.

3. Interministerial Ordinance MME/MF/MDIC. This is the piece that ties together the regulation, credit, and industry: MME prioritizes the issue on Aneel’s agenda, the Ministry of Finance defines the credit guidelines, and MDIC oversees the supply chain for batteries, inverters, and meters, including the import tax in Gecex.

Combined with a battery LRCAP with a periodic calendar, this agenda would provide the factories arriving in Bahia with demand from both sides: from large power plants and from the roof of each consumer.

Electricity bills and the power grid: pressure ahead

Bahia residents should prepare for continued pressure on electricity rates in 2027. In April, the National Electric Energy Agency (Aneel) approved an average rate adjustment of 5.85% for Neoenergia Coelba, which serves 6.92 million units: a 10.21% increase for high-voltage consumers, impacting industry and large commercial establishments, and a 4.19% increase for low-voltage consumers. Without the resource prepayment applied by the agency, the index would have been 12.43%. In other words, part of the cost was deferred, not eliminated.

Surcharges continue to rise. On October 27, Aneel approved a budget of 52.66 billion reais for the Energy Development Account (CDE) for 2026. For 2027, the agency’s proposal forecasts a 7.3% increase in the unit cost of the CDE in the North and Northeast regions, with a preliminary impact of 0.77% on residential rates in those regions, while the South, Southeast, and Central-West regions would see a reduction. The revenue of transmission companies increased by 9.4% in the 2026/2027 cycle, reaching 54.95 billion reais.

This expansion funds new transmission infrastructure, which Bahia needs to evacuate the renewable energy it produces. Transmission Auction No. 4/2026, scheduled for October 30, plans for R$ 8.9 billion across seven states, including R$ 493.1 million in Lot 1 in Bahia and R$ 317 million in Lot 2, spanning Bahia and Goiás. The same urgency is lacking in distribution: low-voltage networks must be prepared to accommodate consumer-generated power, without the connection refusals due to capacity shortages that our members report in inland areas.

A just transition starts on the roof of the smallholder

The world views Brazil and President Lula as leaders of the climate agenda, a role reinforced by COP30 in Belém. This leadership will only be coherent if the energy transition reaches small consumers, small business owners, and small rural producers, and not just large power plants, auctions, and massive investments in the green fuel sector.

In Bahia, this has a specific address. The universalization of the electrical grid is still incomplete: the Ministry of Mines and Energy contracted 29,562 new connections in the state, with R$ 933.7 million, under the exceptional targets of the Luz para Todos program. For remote communities, solar systems with batteries arrive faster and at a lower cost than utility poles. The same applies to solar energy in the Minha Casa, Minha Vida program and for families registered in CadÚnico, who could find in self-generation a permanent relief, rather than a subsidy renewed every year.

The federal government and the Bahia state government, both re-elected and aligned, have the conditions to make this a state policy. To the new Congress, we ask and will work to ensure that distributed generation is treated for what it is: employment, income, increased competitiveness, and savings on the bills of those who produce.

ABS’s commitment, as the representative of distributed generation companies, is to ensure the right of every individual to generate their own energy and to preserve a sector that currently employs more than 25,000 people in Bahia. The sector has strength and extensive reach, being present in nearly all Brazilian municipalities. We will be at the table, with data and proposals, in every decision made over the next four years. And if necessary, we will be mobilized and active in our state, working side by side with society, the business sector, and the state and national legislatures. Rooftop solar panels must be at the center of Brazil’s energy debate.

Marcos Rêgo is the President of ABS – Associação Baiana de Energia Solar (abahiasolar.org.br), a businessman, speaker, and activist in favor of a Just Energy Transition and the fight against climate change, as well as a national leader in Brazil’s solar energy sector.

Sources

• Import duties and non-tariff measures: Gecex 666/2024, Gecex 682/2024, Gecex 782/2025, quota for power plants above 5 MW, batteries at 20%