Early Years

The power industry in Brazil started at the turn of the 20th century with small, local private investments serving specific companies or municipal lighting. Canadian Light and the American & Foreign Power Company (Amforp) later entered the market by acquiring these assets and developing new ones. The industry was therefore originally developed and owned by private companies. 

A major change occurred around 1930, during President Getúlio Vargas’s government. The Great Depression reduced international investment and rising nationalism led the federal government to pass new laws increasing oversight and tariff regulation, which reduced returns. Public companies such as Chesf, Cemig, CEEE and Eletrobras were created to compensate for the lack of private investment, marking a new phase of direct government intervention.

This phase of public investment began to reverse with the transition from military dictatorship to a liberal democracy. The 1988 Federal Constitution allowed power services to be performed directly by the federal government or indirectly through concessions, permissions or authorisations.

The Development of a Market-Driven Industry in the 1990s

In the 1990s, as part of a broader privatisation programme, the government took steps to increase private investment in the power sector and privatise three federal and 20 state-owned power generation and distribution companies.

In 1995, Law No 8,987 (the “Concessions Law”) set general rules for concessions and permissions for public services, and Law No 9,074 introduced independent power producers and free customers with open access to all distribution and transmission facilities.

In 1996, Law No 9,427 created the National Electricity Regulatory Agency (Agência Nacional de Energia Elétrica or ANEEL), an independent federal agency regulating and supervising the power industry in accordance with the Ministry of Mines and Energy (Ministério de Minas e Energia or MME) policies. 

In 1998, Law No 9,648 completed the legal framework for a market-driven industry, establishing free power contracting between concessions, permissions and authorisation holders, and initial rules for unbundling power companies into generation, transmission, distribution and trading entities. This law also created the Power Wholesale Market (Mercado Atacadista de Energia Elétrica or MAE), later replaced by the CCEE, as defined below, and the National Electric System Operator (Operador Nacional do Sistema Elétrico or ONS), a non-profit private entity that co-ordinates and regulates power generation and transmission in the National Interconnected System (Sistema Interligado Nacional or SIN) under ANEEL’s supervision.

Power Shortage and Reforms After 2001

After a serious power shortage in 2001, the federal government reformed the power industry to attract more private investment in power generation, transmission and distribution, aiming to provide a stable power supply at reasonable prices. Law No 10,848/2004 created: 

• the free and regulated power contracting markets and the Electricity Trading Chamber (Câmara de Comercialização de Energia Elétrica or CCEE), a non-profit private entity responsible for registering, accounting for and clearing all energy transactions in both markets; 
• the Energy Research Company (Empresa de Pesquisa Energética or EPE), a federal public company conducting strategic studies and research in the energy sector; and 
• the Power Sector Monitoring Committee (Comitê de Monitoramento do Setor Elétrico or CMSE), an executive branch committee monitoring power service conditions and recommending measures to ensure power supply safety. 

The law also expanded the National Energy Policy Council (Conselho Nacional de Política Energética or CNPE) role in advising the president on national energy policy. 

Law No 10,848/2004 further unbundled the industry by prohibiting power distribution concessionaires from engaging in generation and transmission, selling to free-market customers, holding equity in other companies, or performing activities unrelated to distribution.

In 2012, the government enacted: 

• Provisional Measure No 577, later converted into Law No 12,767/2012; and 
• Provisional Measure No 579, later converted into Law No 12,783/2013 (the “Concession Renewal Law”). 

Law No 12,767/2012 required the granting authority to provide power services if a concession ended and to set new rules for intervention to ensure adequate utility service.

The Concession Renewal Law changed the rules for renewing concession agreements. Generation and distribution concessionaires could renew agreements that had been effective since 1995, and transmission concessionaires could renew agreements effective from before and after 1995 for another 30 years, provided they accepted a new tariff regime set by ANEEL.

Re-Allocation of Hydrological Risks

In 2015, Provisional Measure No 688/2015, later converted into Law No 13,203/2015, revised how hydrological risks are allocated among hydroelectric power plants under the Energy Reallocation Mechanism (Mecanismo de Realocação de Energia or MRE). In 2014 and 2015, poor hydrological conditions caused MRE participants to generate less power than their assured energy (garantia física), decreasing their Generating Scaling Factor (GSF), a measurement of the proportion of power generated by MRE participants against their respective assured energy. These generation deficits resulted in losses for MRE participants, given their exposure to hydrological risks.

Law No 13,203/2015 introduced an optional mechanism allowing each plant to transfer these risks to final customers by paying a risk premium to the government, along with temporary extensions of generation concessions and authorisations to offset losses. However, this option mainly benefited generators in the regulated market, leaving those selling in the free market largely unassisted.

New Re-Allocation of Hydrological Risks

The Brazilian government launched a new framework with Law No 14,052/2020, and ANEEL Normative Resolution No 895/2020, to address additional structural issues in the MRE, this time specific to the free market. In exchange for withdrawing certain lawsuits regarding the GSF, the hydropower generators who chose to adhere to this new framework received an extension of their generation concessions and authorisations.

Impact of COVID-19

In 2020, the COVID-19 pandemic utilities’ finances decreased due to reduced energy consumption and increased payment defaults. As a result, Decree No 10,350/2020, regulated by ANEEL Normative Resolution No 885/2020, created the “COVID Account”, a centralised credit line to support the liquidity of power distribution concessionaires, with costs passed on through tariffs.

At the turn of 2021, Provisional Measure No 998, converted into Law No 14,120/2021, implemented measures to reduce tariff impacts from the pandemic and the privatisation of power utilities in the north and north-east regions. It also ended discounts on power transmission and distribution tariffs for renewable energy projects for which authorisation was requested after March 2022.

Privatisation of Eletrobras

Provisional Measure No 1,031/2021, converted into Law 14,182/2021, determined the privatisation of Eletrobras, Latin America’s largest power company, created in 1954 in the phase of strong public investment. The transaction was structured and implemented by the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social or BNDES) and concluded in June 2022, with a market capitalisation of BRL29.3 billion to BRL33.7 billion. This was the first privatisation in Brazil implemented through a public offering, and the largest by value. 

The developments from the enactment of the 1988 Constitution to the privatisation of Eletrobras have enabled the relevant increase in private investment in the electricity sector in Brazil, which represents the vast majority of the power generation, distribution and transmission assets, and few companies involved in power production remain state-owned today.

Inclusion of Battery Energy Storage Systems in the Regulatory Framework

The current Brazilian power regulatory framework does not regulate the implementation and operation of battery energy storage systems, nor pumped-storage hydroelectric power plants. ANEEL has started proceedings to fill this gap and promote the necessary regulatory improvements by launching Public Consultation No 039/2023 to collect contributions on the possible impacts of such new regulation, which was concluded in early 2025. 

ANEEL intends to establish a procedure for obtaining authorisation for battery energy storage projects and pumped-storage hydroelectric power plants; to enable its connection to the national electricity grid; and to define the proper payment mechanism for such projects. ANEEL expects to publish such new regulations later in 2025.

New Reform of Brazil’s Power Sector – Focus on Market Opening

The intention of Provisional Measure No 1,300 published on 21 May 2025 (“MP 1,300”) is to promote reform of the Brazilian energy sector based on three pillars, as designated by the government:

• tariff justice;
• freedom for the consumer; and
• balance for the sector.

In summary, the first pillar refers to the expansion of certain electricity tariff exemptions for low-income customers.

The second pillar introduces a gradual expansion of the free market by establishing that: (i) after 1 August 2026, all industrial and commercial customers served at low voltage will be able to migrate to the free market; and (ii) after 1 December 2027, this right will be extended to all customers, including residential ones.

To support the full opening of the power market, the MP 1,300 also introduces the supplier of last resort (Supridor de Última Instância or SUI), a new agent responsible for supplying electricity to customers who lose their contracted supplier, and new tariff modalities to better reflect market dynamics and customer profiles, including the full segregation of energy costs and transmission and distribution services in the tariffs for all customers. The SUI and the new tariffs must be regulated in 2026 according to the MP 1,300.

The third pillar addresses several measures to rebalance the burden of the sectoral charges between the free and captive markets, reallocating certain charges to the free customers.

The MP 1,300 also imposes restrictions to self-production structures, specifically for the self-production by equivalence structure, aiming to reduce the self-production incentive of exemption from sectoral charges.

Another relevant change is the extinction of the discounts applied to transmission and distribution tariffs (TUSD/TUST) for certain renewable energy customers, provided that such discounts will be maintained for customers with power purchase agreements (PPAs) for contracted amounts and supply periods duly registered with CCEE by the end of 2025.

The MP 1,300 also changes the name of the CCEE to the “Chamber of Energy Commercialisation” (excluding the reference to “Electric”) to allow the CCEE to act in other energy markets, including gas, biofuel and hydrogen markets. The MP 1,300 also authorises the CCEE to contract companies and natural persons to monitor market agents and operations and it provides that such companies and persons, as well as the managers of the market agents are directly liable, civilly and administratively, for damages resulting from wilful misconduct or gross negligence, as well as violations of laws and regulations.

Finally, the MP 1,300 also provides for a mechanism for the settlement of the remaining amounts under dispute regarding hydrological risks.

Most provisions of the MP 1,300 come into force immediately and remain in force for 60 days, which may be extended once for an additional 60-day term. The MP 1,300 may be amended by the Brazilian Congress and it must be voted on, approved by the Brazilian Congress and by the president prior to 1 October 2025, in order to become law. Otherwise, the MP 1,300 will become ineffective.

On 11 July 2025, Provisional Measure No 1,304 (“MP 1,304”) was published, establishing a cap for the Energy Development Account (Conta de Desenvolvimento Energético or CDE) equivalent to the CDE’s 2026 budget. The CDE is a sectoral charge that supports several energy policies, including the electricity tariff exemptions for low-income customers. If there is a shortfall in the CDE’s budget due to the cap, a new charge called the “Resource Complement Charge” will be created and paid by the CDE beneficiaries (except for certain beneficiaries, including low-income customers). This new charge will be phased in, with 50% due in 2027 and 100% from 2028 onwards.

MP 1,304 also changes Law 14,182/2021 to cancel the regional power auctions to contract gas-fired thermo power plants and to establish a new schedule of auctions for contracting Small Hydropower Plants (Pequenas Centrais Hidrelétricas or PCHs). It also provides that the CNPE will be responsible for determining the need to contract new energy arising from hydrogen-from-ethanol in the northeast as well as from wind farms in the south.

Federal/State-Owned Entities

A few companies are still under the control of federal states, as follows:

• Companhia Energética de Minas Gerais – CEMIG, controlled by the state of Minas Gerais;
• Centrais Elétricas de Santa Catarina SA – CELESC, controlled by the state of Santa Catarina;
• Petróleo Brasileiro SA – Petrobras, the federal state-owned oil and gas company in Brazil, which also owns certain thermal power generation assets; and
• Empresa Brasileira de Participações em Energia Nuclear e Binacional SA – ENBPar is a federal state-owned company that was incorporated in the context of Eletrobras’s privatisation to ensure that the federal government would maintain its control of Eletronuclear SA (which owns Angra 1, 2 and 3 nuclear power plants) and Itaipu Binacional (which holds a 50% stake in Itaipu hydropower plant).

Investor-Owned Entities

Generation

Some of the main investor-owned companies in the generation segment are: 

• Centrais Elétricas Brasileiras SA – Eletrobras;
• Norte Energia SA; 
• China Three Gorges Brasil Energia Ltda; 
• Jirau Energia SA;
• Engie Brasil Energia SA; 
• Santo Antonio Energia SA; 
• Energia Sustentável do Brasil SA; 
• SPIC Brasil; 
• Companhia Paranaense de Energia – COPEL;
• Empresa Metropolitana de Águas e Energia SA – EMAE;
• Energias do Brasil SA – EDP Brasil; 
• Neoenergia SA; 
• CPFL Energia SA e CPFL Energias Renováveis SA; 
• Enel Brasil SA; 
• Eneva SA; 
• Companhia Estadual de Geração de Energia Elétrica – CEEE-G;
• Novta Energia Renovável; 
• Centrais Elétricas de Sergipe SA – Celse; 
• Gás Natural Açu – GNA; 
• New Fortress Energy; 
• EDF; 
• Casa dos Ventos Energias Renováveis SA; 
• PEC Energia;
• Atlas Renewable Energy; 
• Auren Energia; 
• Alupar Investimentos SA; 
• Companhia Energética de São Paulo – CESP; 
• Light SA; 
• Cubico SA; 
• Trinity Energias Renováveis;
• CGN Brasil; 
• Essentia Energia;
• Arke Energia;
• Ambar Energia;
• Karpowership;
• Comerc Energia;
• Órigo Energia;
• Pontal Energy;
• IVI Energia;
• GreenYellow;
• Brennand Energia; 
• Rio Energy; 
• Canadian Solar; 
• Serena Energia SA; 
• Aliança Energia; 
• Voltalia SA; 
• Statkraft Energias Renováveis SA; 
• CER Energia; 
• Atlantic Energias Renováveis; 
• Echoenergia Participações SA; 
• Acciona Energía;
• Enerfin do Brasil;
• Tradener;
• Total Eren; and
• Diamante Energia.

Transmission

Some of the principal investor-owned companies in the transmission segment are: 

• Centrais Elétricas Brasileiras SA – Eletrobras;
• Companhia de Transmissão de Energia Elétrica Paulista – Isa CTEEP; 
• Transmissora Aliança de Energia Elétrica SA – TAESA; 
• State Grid Brazil Holding SA; 
• Alupar Investimentos SA; 
• Engie Brasil Energia SA; 
• Companhia Paranaense de Energia – COPEL;
• Equatorial Energia SA; 
• Energias do Brasil SA – EDP Brasil; 
• Grupo Energisa SA; 
• CPFL Energia SA; 
• Neoenergia SA; 
• Argo Transmissão de Energia SA; 
• Celeo Redes;
• Evoltz;
• Verene; and
• Quantum Participações.

Distribution

The principal investor-owned companies in the distribution segment are: 

• Equatorial Energia SA; 
• Grupo Energisa SA; 
• Enel Brasil SA; 
• CPFL Energia SA; 
• Companhia Paranaense de Energia – COPEL; 
• Neoenergia SA; 
• Energias do Brasil SA – EDP Brasil; and 
• Light SA.

Federal Control of Nuclear Power

The only restriction to private investment in the power industry – whether foreign or domestic – is in nuclear power generation, as the Brazilian Federal Constitution provides for the federal government’s monopoly over this and does not provide for delegation of such activity through the granting of concessions, permissions or authorisations.

Treatment of Foreign Companies

Basic equality

The Sixth Constitutional Amendment of 1995 revoked Article 171 of the Brazilian Federal Constitution, which provided for preferential treatment for companies controlled by Brazilians over companies directly or indirectly controlled by foreigners. Since then, equal and non-discriminatory treatment of companies, whether controlled by Brazilians or foreigners, has been a constitutional principle. 

Restrictions

There are certain restrictions to the acquisition or lease of rural lands by foreign companies or Brazilian companies directly or indirectly controlled by foreign companies, which commonly impact power generation, transmission and distribution projects, but there are alternative legal structures for foreign investors, which have been accepted by lenders and stakeholders in the development of power projects in Brazil. There are also restrictions on the acquisition of land within the country’s border areas, but this restriction is not usually relevant in the development of power projects in Brazil.

Finally, concessions, permissions and authorisations related to power activities must be granted to companies incorporated pursuant to Brazilian laws. 

The Concessions Law provides that the transfer of the concession or the control of the concessionaire is subject to prior approval of the competent authority, and the interested party must meet the requirements of technical and financial capacity, as well as legal and tax compliance, and must commit to comply with all the terms and conditions of the concession agreement. This provision in the Concessions Law was confirmed after passing judicial scrutiny by the Federal Supreme Court.

ANEEL is the entity in charge of approving the transfer of concessions, permissions or authorisations, or the change of control of companies that hold concessions, permissions or authorisations related to power activities. 

As a general rule, the transfer of concessions, permissions or authorisations (asset deal) is subject to ANEEL’s prior approval, while the change of control of companies (equity deal) in the power industry may or may not be subject to ANEEL’s prior approval. 

ANEEL Normative Resolution No 948/2021 (Module III) provides the rules applicable to change of control of companies in the power industry and, in summary, requires the prior approval of ANEEL for the following companies: 

• power generation, transmission and distribution companies that hold concessions and permissions; and 
• hydro and nuclear power generation companies, whether holders of concessions or authorisations. 

In accordance with the guidelines of the Concessions Law, ANEEL Normative Resolution No 948/2021 (Module III) establishes that the potential purchaser must submit evidence to ANEEL with respect to its financial and technical capacity; legal, tax and regulatory compliance; and commitment to comply with the terms and conditions of the concession, permission or authorisation. 

The change of control of oil, coal, gas, biogas, biomass, wind and solar power generation companies is usually not subject to prior approval by ANEEL. Nevertheless, the purchaser has an obligation to inform ANEEL about the change of control within 30 days after implementation of the transaction, upon the competent corporate registration.

The central authority that oversees and administers the technical aspects of the electricity supply and the development of transmission facilities to ensure the reliability of the electricity system and the adequacy of supply to satisfy the demand is the ONS, which is a non-profit private entity comprised of generation, transmission, distribution, importation and exportation companies and free customers. 

The primary role of the ONS is to co-ordinate and regulate the generation and transmission operations in the SIN, subject to ANEEL’s regulation and supervision. 

The main responsibilities of the ONS include, among others: 

• operational planning for the generation industry; 
• organising the use of the SIN and international interconnections; 
• ensuring that industry participants have access to the transmission network in a non-discriminatory manner; 
• proposing plans to the MME for extensions of the SIN; and 
• formulating regulations regarding the operation of the transmission system, subject to ANEEL’s approval. 

The MME is responsible for planning the expansion of the electricity system, with the support of the EPE and ONS, and it determines directives by which ANEEL conducts generation and transmission auctions.

The market operator that oversees and manages the electricity trade is the CCEE, which is also a non-profit private organisation comprised of generators, distributors, traders and consumers. 

The CCEE is responsible for comparing the actual measurements of electrical energy consumption and generation with the agent’s respective agreements for the purchase and sale of energy, and for calculating the settlement price difference (Preço de Liquidação de Diferenças or PLD).

Other of the CCEE’s main responsibilities include:

• collecting measurement data for generation and consumption;
• registering PPAs;
• conducting regulated auctions for the supply of power distributors or for back-up reasons; 
• conducting competitive procedures for the sale of energy surplus by power distributors; and
• managing sectoral funds.

There have been several material changes in the laws and regulations of the power industry over the past few years.

Foreign Exchange Law

The Foreign Exchange Law (Law No 14,286/2021, which came into effect on 30 December 2022) revoked Decree-Law No 857/1969 and expressly authorised the contractual parties to stipulate the foreign currency indexation in agreements (eg, PPAs) entered into between exporters and holders of concessions, permissions, authorisations or lessees in infrastructure sectors (eg, power companies).

Distributed Generation Law

The Distributed Generation Law (Law No 14,300/2022) established the new distributed generation legal framework and redefined the corresponding net metering rules. It also provided the transition process from the prior distributed generation regime set by ANEEL Normative Resolution No 482/2012 (recently revoked by ANEEL Normative Resolution No 1,059/2023).

New Distributed Generation Regulation

The New Distributed Generation Regulation (ANEEL Normative Resolution No 1,059/2023) regulates the new rules established by the Distributed Generation Law. It revoked ANEEL Normative Resolution No 482/2012 (prior distributed generation regulation) and amended ANEEL Normative Resolution No 1,000/2021 (which establishes general conditions for power supply to consumers by utilities).

Legal Framework for Offshore Power Generation

The Legal Framework for Offshore Power Generation (Decree No 10,946/2022) established the first framework for offshore power generation. In January 2025, Law No 15,097 was published, establishing a legal framework for offshore power generation, providing two regimes through which the areas will be assigned: (i) the permanent offer proceeding, which is initiated upon the request of the interested parties and granted by means of authorisation; and (ii) the planned offer proceeding, in which the federal government assigns offshore areas on which the interested parties can bid, granted by means of concession. In any case, the authorisation or concession for use of the offshore area will be followed by ANEEL’s authorisation to implement the power generation project.

Bidding and Term Extension of Existing Power Transmission Concessions

Bidding and Term Extension of Existing Power Transmission Concessions (Decree No 11,314/2022) establishes a new bidding process as a general rule for expiring transmission concessions agreements. The extension of a transmission concession’s term may occur exceptionally and at the sole discretion of the MME when the bidding process is deemed (i) unfeasible; or (ii) detrimental to the public interest. From 2025 and, more intensely, between 2030 and 2042, 170 transmission concessions will reach their respective contractual terms, according to data made available by the MME.

IPP Authorisation Issuance Procedures for Power Plants

IPP Authorisation Issuance Procedures for Power Plants (ANEEL Normative Resolution No 1,071/2023) establishes a different mechanism for obtaining Independent Power Producer (IPP) Authorisation for wind, solar, thermal, hybrid and other alternative source power plants. The main innovations are: (i) that it is no longer necessary to provide a performance bond in order to obtain IPP Authorisation for wind power plants (as required under the previous regulation); and (ii) the execution of grid connection agreements has become a requirement for obtaining IPP Authorisation.

IPP Authorisation Issuance Procedures for Hydropower Plants up to 50 MW

IPP Authorisation Issuance Procedures for Hydropower Plants up to 50 MW (ANEEL Normative Resolution No 1,070/2023) modifies ANEEL Normative Resolution No 875/2020 to establish that the criterion for classification as a PCH is exclusively having an installed capacity greater than 5 MW but less than or equal to 30 MW (under the previous regulation, a maximum reservoir area of 13 km² was also required, but this is no longer applicable).

Grid Connection Procedures

Grid Connection Procedures (ANEEL Normative Resolution No 1,069/2023) modifies the rules for access to the transmission grid to require developers to provide a financial guarantee equal to three months of connection fees when requesting an access opinion from the ONS. Once the access opinion has been issued, the developer may either request that the guarantee be returned (and the access opinion annulled) or maintain it until execution of the connection agreements in order to be granted access to the grid.

CCEE Governance Modifications

CCEE Governance Modifications (Decree No 11,835/2023) establishes the new governance structure of the CCEE by modifying the composition of the board of directors and the board of officers. The CCEE board of directors is now composed of eight members, four of whom are appointed by the MME, including the chairman of the board. The other four are appointed by representatives of the production, distribution, commercialisation, and consumption sectors, with one member per sector. Additionally, the administration of the CCEE will now also be carried out by a board of officers composed of up to six officers, with the MME also appointing the chairman of the board. The CCEE Trade Convention was further amended by ANEEL Normative Resolution No 1,087/2024 to incorporate the changes made by the decree.

Law No 14,120/2021

Extension of the deadline for the implementation of projects affected by Law No 14,120/2021 (Provisional Measure No 1,212/2024) establishes that certain renewable energy projects that are subject to discounts on connection fees and that were subject to a 48-month deadline for commercial operation may request a 36-month extension (totalling an 84-month deadline), provided that such request complies with the requirements of Provisional Measure No 1,212/2024, including the submission of a performance bond. Provisional Measure No 1,212/2024 also provided for the anticipation of debts from the privatisation of Eletrobras in order to reduce the energy bills of final customers. Although Provisional Measure No 1,212/2024 expired on 7 August 2024, ANEEL still granted a 36-month extension to 601 projects that satisfied the legal requirements in time.

Conditions for the Extension of Certain Power Distribution Concessions

Decree No 12,068/2024 regulated the distribution concession renewal for concessions granted based on Law No 9,074/1995, which were not subject to prior renewal.

Eligible concessions may be renewed once for up to 30 years, subject to the granting authority’s discretion and the concessionaire’s acceptance of revised contractual conditions. Renewal depends on the concessionaire’s performance during the preceding five years – it must have complied with continuity-of-supply standards (measured by the frequency and duration of outages) for at least three consecutive years and must not have breached its economic-financial sustainability obligations for more than two consecutive years (the latter will be assessed only from 2021 onward). If either requirement is not met, the concession may still be renewed provided the concessionaire injects the capital specified in the amendment within 90 days of execution. The amendment will be null in case of default.

The concessionaire must file its renewal request and supporting documentation with ANEEL at least 36 months before the concession expires. ANEEL must forward its recommendation to the MME no later than 21 months before expiration, and the MME must publish its decision at least 18 months before that date. If renewal is approved, the amendment must be signed within 90 days.

The decree also allows a concessionaire to request that renewal effects be anticipated, provided the request was filed within 30 days after ANEEL released the draft amendment in February 2025. To date, ANEEL has recommended the renewal of five distribution concessions, and the MME will issue the final decisions.

If renewal is denied, the concession will be offered in a new bidding process.

Low-Carbon Hydrogen Legal Framework

The Low-Carbon Hydrogen Legal Framework (Law No 14,948/2024) establishes mechanisms for the insertion of hydrogen into the national energy sector and parameters to encourage its use. It provides the definition of renewable and low-carbon hydrogen. It amends the Petroleum Law (Law No 9,478/1997) to provide that the National Agency for Petroleum, Natural Gas and Biofuels (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis or ANP) is competent to regulate, authorise and supervise all activities in the hydrogen chain.

The Legal Framework also sets a new Special Regime of Incentives for the Production of Low-Carbon Hydrogen (“Rehidro”) for the low-carbon hydrogen chain and renewable power, biogas and biomethane projects destined to produce low-carbon hydrogen.

Following in the footsteps of Law No 14,948/2024, Law No 14,990/2024 established the Low-Carbon Hydrogen Development Programme (Programa de Desenvolvimento de Hidrogênio de Baixo Carbono Brasil or PHBC), which aims to provide financial subsidies through the concession of tax credits to low-carbon hydrogen projects qualified in the programme.

Energy Sector Reform

As further detailed in 1.1 Law Governing the Structure and Ownership of the Power Industry, Provisional Measure No 1,300/2025 was recently published to reform the power industry model towards free-market expansion, changes on tariff structures, and rebalance of sectoral charges among customers, among other relevant changes.

Access of Customers to the Transmission Grid

Resolution No 1,122/2025 revised regulatory aspects related to access to the transmission grid by final customers. In summary, the requirements for access of customers have become similar to those applicable to power plants and, accordingly, customers are also required to provide a financial guarantee equivalent to three months of connection fees upon request of the access opinion to the ONS. Once the access opinion is issued by the ONS, attesting to the feasibility of the connection, the customer has to replace the financial guarantee for another one in the amount equivalent to 36 months of connection fees until execution of the connection agreements. If the access opinion attests that the connection is not feasible, the customer has the option to either have its financial guarantee returned or to maintain it in place in anticipation of future capacity in the grid.

Some recent bills of law may materially affect the power industry.

Modernisation of the Power Industry Model

Through Modernisation of the Power Industry Model (Bills of Law No 1,917/2015 and No 414/2021) several improvements have been made to the power industry model as per discussions in MME Public Consultations No 32 and 33/2017. They provide for free market expansion, unbundling of the contracting of capacity and power, and a self-production regime, among other things. As further detailed in 1.1 Law Governing the Structure and Ownership of the Power Industry, Provisional Measure No 1,300/2025 anticipated some changes included in those bills of law. However, further reforms are still expected.

Brazil has one of the cleanest electric matrices in the world, as 85.06% of its power generation capacity comes from renewable sources. This share is led by hydroelectric plants (52.35%), followed by wind (15.89%), biomass (8.41%) and solar photovoltaic power plants (8.41%). Brazilian energy is clean and meets international commitments for the environment, such as those signed by Brazil at COP 21 in Paris (Brazil’s first round of commitments). 

Highlights include wind power, which has grown rapidly (especially in Brazil’s north-east region), sugar cane biomass thermal power generation and, more recently, both centralised and distributed solar power generation. 

Investments in renewable energy will continue to flow in parallel with investments in gas-fuelled thermal power plants, which increase the stability and safety of the power supply. 

Brazil is a continental country that has been making continuous investments in energy transmission and distribution facilities, despite the continuous increase of distributed generation resources. 

With an increasing energy consumption of 70 GW average (reference year: 2024), Brazil is among the top ten countries in the world in terms of electricity demand, and only about 40% of such demand is contracted in the free market, with 60% of the demand still supplied by power distribution companies in the regulated market.

The structure of the electricity market in Brazil is divided between the regulated market (Ambiente de Contratação Regulada or ACR) and the free market (Ambiente de Contratação Livre or ACL).

The Regulated Market

It can be said that the regulated market aims ultimately at serving the retail electricity market, considering that all power distribution utilities mandatorily purchase 100% of the demand of their consumers’ market (“captive customers”) through public auctions defined by the MME and carried out by ANEEL and the CCEE. In these public reverse auctions, power generation companies compete to be awarded long-term power purchase agreements at the lowest electricity prices. This results in regulated prices for consumers. Around 60% of the total energy demand in Brazil is supplied through the regulated market.

The Free Market

On the other hand, the free market covers power sale and purchase transactions freely negotiated among generation companies, trading companies, export and import companies, and free consumers. Due to requirements for entering the free market, it can be said that this currently serves the wholesale electricity market.

Since January 2024, all consumers connected to the grid with a voltage level equal to or higher than 2.3 kV are allowed to freely negotiate in the free market, regardless of their consumption level. Customers with total demand below 500 kW must, however, be represented by a retail trading company (comercializadora varejista) in order to participate in the free market.

High-load consumers – such as industrial facilities and data centres – frequently opt to operate within the free market, given the potential for cost savings, contractual flexibility, and the ability to procure energy exclusively from renewable sources.

As further detailed in 1.1 Law Governing the Structure and Ownership of the Power Industry, Provisional Measure No 1,300/2025 recently introduced a gradual expansion of the free market. From 1 December 2027, all consumers, including residential users, will be able to freely choose their electricity supplier.

Distinctions Between the Two

This distinction between the regulated market and the free market was created in 2004 by Law No 10,848/2004. The regulated market has been primarily responsible for the development of greenfield power generation projects, but recently the free market has been gaining relevance, as: 

• the free market offers lower energy prices;
• requirements for migrating to the free market are being reduced; and
• the BNDES and other lenders have been financing projects in the free market.

Power generation companies have been building mixed portfolios of PPAs to develop greenfield power generation projects, both in the regulated and free markets. With the ongoing expansion of the free market in the past years, power generation companies have been increasingly relying on the free market, specifically through self-production structures and corporate PPAs, to develop greenfield projects.

The importation or exportation of electricity is an activity subject to authorisation by the MME pursuant to MME Ordinance No 596/2011. Pursuant to Decree No 5,668/2006 and ANEEL Normative Resolution No 1,009/2022, electricity import and export transactions are subject to ANEEL’s approval through an importation licence or the exportation registry with the Foreign Trade Integrated System (Registro de Exportação no Sistema Integrado do Comércio Exterior or SISCOMEX). 

MME Normative Ordinance No 60/2022 and MME Ordinance No 418/2019 regulate specific importation and exportation transactions to and from Argentina and Uruguay.

According to information available on ANEEL’s website (reference date: May, 2025), the supply mix of electricity in Brazil comes from the following principal sources, with corresponding rounded percentages based on installed capacity: 

• hydro – 52.35%; 
• wind – 15.89%; 
• biomass – 8.41%; 
• natural gas – 8.42%; 
• solar – 8.41%;
• oil – 3.93%; 
• coal – 1.65%; and
• nuclear – 0.95%.

Law No 12,529/2011, also known as the “Competition Law”, provided for an institutional reorganisation of the Brazilian System for the Defence of Competition. Under this law, the Administrative Council for Economic Defence (Conselho Administrativo de Defesa Econômica or CADE), an independent agency reporting to the Ministry of Justice, is the authority with jurisdiction over the national territory responsible for investigating and ultimately deciding on competition issues. 

Pursuant to the Competition Law, concentration acts (amalgamations, mergers, share or asset acquisitions, associations, consortiums, or joint ventures) must be submitted for CADE’s prior approval if one of the groups involved in the transaction has an annual gross revenue equal to or greater than BRL750 million and the other group involved in the transaction has an annual gross revenue equal to or greater than BRL75 million. 

The electricity market is divided, according to the case law of CADE, into four distinct relevant markets: 

• generation; 
• transmission; 
• distribution; and 
• trading. 

There are no concentration limits regarding percentage of market share in these segments of the power industry. In general terms, CADE understands that there is “competition by the market” in the power transmission and distribution segments, where concessions are granted after a public bidding procedure with the participation of Brazilian and foreign bidders.

As mentioned in 2.4 Market Concentration Limits, CADE is the authority with jurisdiction over national territory responsible for investigating and ultimately deciding on competition issues. ANEEL supports CADE’s activities by analysing concentration acts and behaviours violating competition laws by power companies, pursuant to ANEEL’s Normative Resolution No 948/2021. 

In the event of violation of competition laws, CADE may impose fines for an amount equivalent to 0.1% to 20% of the company’s or group’s gross revenues, as well as other penalties, such as: 

• prohibition from entering into contracts with official financial institutions and participating in public tenders for a five-year period; 
• denial of payment by instalment of federal taxes and cancellation of tax incentives or public subsidies; and 
• the transfer of corporate control, sale of assets or partial suspension of activities. 

Furthermore, companies may be subject to prosecution in the civil sphere and individuals in the criminal sphere.

Pursuant to Law No 9,074/1995 and the Concession Renewal Law, the construction and operation rights of power generation facilities may be granted through concessions or authorisations by the MME or ANEEL, depending on the source and size of the power plant. Both concessions and authorisations grant the concessionaire or authorised agent a 35-year term in which to act as an independent power producer or self-producer. 

The construction and operation of large hydropower plants (equal to or greater than 50 MW of installed capacity) is subject to a concession, which is granted after a public bidding process. The construction and operation of small hydro, wind, solar, biomass and fossil fuel thermal power plants is subject to authorisation by the MME or ANEEL. Power generation projects with installed capacity equal to or lower than 5 MW simply need to register with ANEEL after construction. 

Environmental licences at federal or state level are also required for the construction and operation of power generation facilities, as well as certain construction and operation permits at local level. Depending on the project’s characteristics, other permits may also be required, such as a water-usage permit. 

Access to the electricity grid is also a critical part of the process, and is subject to specific regulations, such as ONS’s Grid Procedures, ANEEL’s Transmission Rules and ANEEL’s Distribution Procedures.

Hydropower generation concessions are usually granted after a public auction, in which the winning bid criterion is the lowest power price, considering the payment of a fee for the use of a public good (Uso do Bem Público or UBP). 

Authorisations for power generation facilities are granted by ANEEL upon fulfilment of certain legal, technical and financial requirements pursuant to ANEEL Normative Resolutions No 875/2020 (small and medium-sized hydropower plants) and No 1,071/2023 (thermal, wind and solar power plants). 

Authorisations are also automatically granted, by the MME or ANEEL, to the winners of the new energy auctions. To participate in these auctions, the projects need to be technically qualified by the EPE upon evidence of certain technical, environmental, real estate, grid connection and fuel supply (if applicable) conditions that confirm the project’s feasibility.

Obligations

Permission to build large hydropower plants may be granted by means of public service concessions or concessions for the use of the public good, since all hydro-resources in Brazil are considered public. Concession agreements for power generation place several obligations on concessionaires regarding the regularity, continuity, safety, efficiency and quality of public services, as well as payment of the UBP, if applicable. 

Authorisation acts make reference to the obligation of authorised agents to comply with ANEEL Normative Resolution No 921/2021, which sets forth the rights and obligations of independent power producers and self-producers under authorisation.

Construction Schedule

Both the concession agreements and authorisation acts of greenfield projects establish a construction schedule with the dates for achieving intermediary milestones and the dates for commencing the commissioning and commercial operation of the power plant; and, specifically for solar, wind and thermal power plants, authorisation acts indicate a 54-month term for commencing their commercial operation. Projects that sell energy in the regulated market, by contrast, usually have the commercial operation date required to meet the supply term for the specific auction in which they negotiated power, unless the entrepreneur requests a shorter term (eg, in order to sell power in the free market by an earlier date).

Performance Bond

In relation to greenfield power generation projects that have sold energy in the regulated market, a performance bond must be submitted by the concessionaire or authorised agent to ANEEL, usually for an amount equivalent to 5% of the project’s capital expenditure (CAPEX) – as indicated by bidders in energy auctions in the regulated market – to guarantee the timely implementation of the project pursuant to its approved construction schedule.

Assured Energy

Concession agreements and authorisation acts may also indicate the officially approved power output of the project, the so-called assured energy (garantia física), which is the maximum amount of power that the concessionaire or authorised agent is entitled to sell to the market. The project’s assured energy can be revised in cases specified in the regulations.

Penalties

Non-compliance with the terms and conditions of concession agreements and authorisation acts is subject to penalties imposed by ANEEL after an administrative proceeding, based on ANEEL Normative Resolution No 846/2019. Depending on the seriousness of the violation, ANEEL may impose penalties of a warning; fine; suspension of works or activities; specific performance; temporary prohibition from participating in public auctions for new concessions, permissions, or authorisations and entering into contracts with ANEEL; revocation of authorisation; intervention and forfeiture of the concession or permission.

If the proponent fails to reach an amicable agreement with landowners over compensation for the construction and operation of power generation facilities on their land, the proponent may request the issuance of a Declaration of Public Utility (Declaração de Utilidade Pública or DUP) by ANEEL, pursuant to ANEEL Normative Resolution No 919/2021, which entitles the proponent to easement or expropriation rights over these lands. Based on the DUP, the proponent may judicially obtain injunctions against landowners to access their land, and the court will define the fair compensation due to landowners, usually based on market value.

However, according to ANEEL’s precedents, the DUP only covers lands required for construction of hydropower plants or high-voltage transmission lines and substations necessary to connect power plants of any source to the electricity grid.

Apart from certain environmental obligations applicable to decommissioning of nuclear power plants, there are no specific requirements for decommissioning of generation facilities in Brazil. 

Power generation facilities under the concession regime will revert to the federal government, upon compensation if the investment by the concessionaire has not been fully amortised. Power generation facilities under the authorisation regime, except hydropower facilities, may be freely disposed of by the authorised agent.

Pursuant to Law No 9,074/1995 and the Concession Renewal Law, the construction and operation rights of power transmission facilities may be granted through concessions following public auctions. The MME defines the transmission facilities to be auctioned, the cap for the annual revenue of each concession (Receita Annual Permitida or RAP) and the deadline for commencement of the commercial operation of such facilities. ANEEL then promotes the reverse auction, where the winning bid criterion is the lowest RAP. The concessions have a 30-year term. 

Environmental licences at federal or state level are also required for the construction and operation of power transmission facilities, as well as certain construction and operation permits at local level. 

Power transmission facilities are composed of transmission lines, substations, and other equipment with voltages equal to or higher than 230 kV. There are over 200 power transmission concessionaires, operating approximately 200,000 km of transmission lines in Brazil, and around 40% of these facilities are operated by Eletrobras.

The winning bidders must submit evidence of their legal, technical, economic-financial and tax qualification after the auction session. The winning bidders are also required to replace their bid bonds with performance bonds, for an amount equivalent to at least 5% of the project’s CAPEX, to guarantee the timely implementation of the project in accordance with the construction schedule set forth in their concession agreements. 

The process from the publication of the auction documents up to the signing of the concession contract usually takes four months.

Concession agreements provide for several obligations on the part of concessionaires regarding the regularity, continuity, safety, efficiency and quality of public services provided, and they establish a construction schedule with dates for achieving intermediary milestones, and dates for commencing the commissioning and commercial operation of power transmission facilities. 

Power transmission concessionaires are subject to regulations established by ANEEL and the ONS’s grid procedures, as well as conditions defined in the concession contract and in the transmission service agreement (Contrato de Prestação de Serviços de Transmissão or CPST), entered into by and between the concessionaire and the ONS, which provides for the payment of the RAP based on the availability of the power transmission facilities.

Similarly, in relation to power generation facilities, if the proponent fails to reach an amicable agreement with landowners over compensation for the construction and operation of power transmission facilities on their land, the proponent may request the issuance of a DUP by ANEEL, in accordance with ANEEL Normative Resolution No 919/2021, which entitles the proponent to easement or expropriation rights over the land. Based on the DUP, the proponent may judicially obtain injunctions against landowners to access the land, and the court will define the fair compensation due to landowners, usually based on market value.

Power transmission concessionaires have an exclusive right to construct and operate the transmission facilities under the scope of their concession agreements. The construction of new facilities or the expansion of the capacity of existing facilities may be required by the ONS and authorised by ANEEL, subject to an additional parcel of the RAP. 

A concessionaire has no exclusive right within a specified geographical territory, but there is no competition among concessionaires, as the RAP is not based on the amount of power transmitted by the concessionaires’ transmission facilities, but on the availability of such facilities.

The principal laws governing the provision of transmission services, as well as transmission charges and terms of service, are:

• the Concessions Law; 
• Law No 9,074/1995; 
• Law No 9,427/1996; 
• Law No 9,648/1998; 
• Law No 10,848/2004; 
• Law No 14,120/2021; and 
• the Concession Renewal Law. 

All of these have been previously discussed throughout this guide.

As mentioned in 5.1 Constructing and Operating Electricity Distribution Facilities, power transmission concessions are under a revenue cap regulation. These concessions may be divided into three categories, as follows:

• concessions granted prior to 1998 – their RAP is adjusted annually based on the IPCA index (the inflation index observed by the Central Bank of Brazil), they were renewed for an additional 30 years in 2013 and they have a tariff review every five years; 
• concessions granted from 1999 to November 2006 – their RAP is adjusted annually based on the IPCA index or IGP-M index (the general market price index) and is reduced by 50% in the 16th year of their commercial operation, they have a 30-year term and no tariff review; and 
• concessions granted after November 2006 – their RAP is adjusted annually based on the IPCA index, they have a 30-year term and three limited tariff reviews within five, ten and 15 years of the granting of the concessions, which only takes into account changes in the cost of capital. 

ANEEL adopts the weighted average cost of capital (WACC) methodology to review the transmission tariffs. In 2025, the WACC of transmission companies is 7.89% (after taxes), as defined by ANEEL. 

The RAP is adjusted annually and revised periodically, as applicable, according to the concession agreement.

In general terms, in the periodic tariff review, ANEEL covers the recalculation of the cost of capital, efficiency gains in the operation and maintenance of the facilities, and the partial or total deduction of revenues arising from other activities (so-called “other revenues”). The tariff review process follows a procedure of public hearing, where the company, consumers and any other party may submit contributions to ANEEL prior to definition of the new tariffs. 

The RAP is supported by revenues arising from payments of the transmission tariff (“TUST”) by users of the transmission grid in accordance with Transmission System Use Agreements (Contratos de Uso do Sistema de Transmissão or CUST) entered into by and between the ONS and such users. Concessionaires collect their allowed share of the TUST from each user of the national transmission grid, despite the location of their assets. The TUST is calculated on a monthly basis by the ONS according to a nodal methodology and applicable regulations that differentiate consumers from generators, and also observing the rights of certain generators that participated in auctions with stabilised TUSTs.

Law No 9,074/1995, Decree No 2,655/1998 and ANEEL Resolution No 281/1999, as amended, provide open-access rights to all power transmission facilities on a non-discriminatory basis for any power generator, distributor, or consumer, subject to payment of the applicable transmission charges. Nonetheless, access can be subject to technical restrictions and to the performance of studies and works by the accessing party, as determined by the ONS in each case.

The transmission charges are divided into: 

• connection charges that cover the costs incurred by the local transmission concessionaire in the construction and operation of the connection point of the user; and 
• usage charges to be paid to all transmission concessionaires and the ONS (TUST) according to the capacity contracted by the user. 

The ONS is responsible for the procedure of access to transmission facilities and it issues the access opinion required for the execution of the Transmission Usage and Connection Agreements (CUST and Contrato de Conexão ao Sistema de Transmissão or CCT).

Pursuant to Law No 9,074/1995 and the Concession Renewal Law, the construction and operation rights of power distribution facilities may be granted through concessions or permissions. The concessions and permissions have a 30-year term. 

Environmental licences at state level are also required for the construction and operation of power distribution facilities, as well as certain construction and operation permits at local level. 

Power distribution facilities are composed of distribution lines, substations, and other equipment with voltages lower than 230 kV. Certain equipment over 230 kV is maintained by power distribution companies and called “Other Transmission Facilities” (Demais Instalações de Transmissão or DITs). There are 105 distribution companies in Brazil, composed of 53 concessionaires and 52 permissionaires. 

The permissionaires are mainly power distribution co-operatives in rural areas. Of the concessionaires, 48 out of 53 are controlled by private capital and the remaining five are controlled by states and municipalities. In 2016, CELG D was privatised and sold to Enel, and in 2018, Eletrobras’s six distribution concessionaires in the north and north-east regions were also privatised and sold to Energisa, Equatorial, Oliveira Energia and Atem. In 2020, CEB and CEEE-D were privatised and sold to Neoenergia and Equatorial, respectively. In 2021, CEA and CELG D (currently EDP Goiás) were privatised and sold to Equatorial and EDP, respectively. In 2023, COPEL was privatised by public offer of its shares.

The existing concessionaires and permissionaires have monopoly rights over the totality of the geographical territory of Brazil, and they have the right and the obligation to construct and operate distribution facilities within their concession or permission areas.

Concession and permission agreements provide several obligations for concessionaires and permissionaires regarding the regularity, continuity, safety, efficiency and quality of the public services provided, as well as the universalisation or accessibility rights of consumers, and the affordability of tariffs. 

Power distribution concessionaires and permissionaires are subject to regulations established by ANEEL. The quality and continuity of the services are regulated by the Procedures for Distribution of Electricity in the National Electrical System (Procedimentos de Distribuição de Energia Elétrica no Sistema Elétrico Nacional or “PRODIST”) approved by ANEEL Normative Resolution No 956/2021. Interruptions in the power supply are assessed by two indicators called the “DEC” (Duração Equivalente de Interrupção por Unidade Consumidora) and “FEC” (Frequência Equivalente de Interrupção por Unidade Consumidora), which measure the duration and frequency of the interruptions, respectively.

ANEEL Normative Resolution No 1,000/2021 establishes the directives related to the general conditions of the supply of power to consumers by distribution companies.

Similarly, in relation to power generation and transmission facilities, if the proponent fails to reach an amicable agreement with landowners over compensation for the construction and operation of power distribution facilities on their land, the proponent may request the issue of a DUP by ANEEL, in accordance with ANEEL Normative Resolution No 919/2021, which entitles the proponent to easement or expropriation rights over the land. Based on the DUP, the proponent may judicially obtain injunctions against landowners to access the land, and the court will define the fair compensation due to landowners, usually based on market value.

The power distribution concessionaires and permissionaires have the exclusive right to construct and operate distribution facilities within a specified geographical territory. The concession or permission agreement indicates the areas subject to the concessionaire’s or permissionaire’s monopoly rights.

The principal laws governing the provision of distribution services, as well as distribution charges and terms of service, are the same as those governing transmission services. See 4.6 Transmission Charges and Terms of Service.

Distribution Tariffs

ANEEL adopts the WACC methodology to review the distribution tariffs. The definition of remuneration base considers only the value of the assets which are effectively rendering services to the customers, compared to the referential models established by ANEEL, specific to each company, which reflect the economic and geographic conditions of their respective concession or permission areas and the efficiency levels in services. In 2025, the current WACC of distribution companies is 8.03% (after taxes), as defined by ANEEL. 

Power distribution tariffs are subject to adjustments and reviews as provided in the concession or permission agreements.

Annual adjustment

In the annual tariff adjustments, non-manageable costs are fully passed on to the consumers and manageable costs are adjusted in line with inflation, based on the IGP-M or IPCA index, reduced by a factor – the so-called “X Factor” – determined by ANEEL so that distribution companies can share the gains of productivity with their consumers.

Periodic tariff review

Every four or five years, there is a periodic tariff review to ensure the necessary revenues to cover efficient operational costs and adequate compensation of investment. There is also an extraordinary tariff review, on a case-by-case basis, to compensate for unpredicted costs, including taxes and charges which significantly change the cost structure of the distribution company. 

In the process of review of the tariffs, ANEEL takes into account the costs and the company’s markets, comparing them and other similar companies abroad; the company’s efficiency; and the need for fairer tariffs and appropriate returns to shareholders. The tariff review process follows a procedure of public hearing, where the company, consumers and any other party may submit contributions to ANEEL prior to definition of the new tariffs.