Curtailment, flexibility, and storage: Regulatory challenges of distributed generation in Brazil

The rapid growth of distributed photovoltaic generation in Brazil, fueled by the sharp decline in solar module costs and China's dominant production capacity, has marked a new phase in the country's electricity sector. While this expansion has democratized access to clean energy, it has also highlighted structural and regulatory challenges, particularly regarding the rise in curtailment, which refers to temporary reductions in generation due to grid limitations or oversupply. ANEEL's ruling, formalized through Official Letter No. 553/2025, authorizing distributors to interrupt energy injections from micro- and mini-generators under systemic risk conditions, has intensified discussions on legal certainty, regulatory authority, and alignment with Law No. 14,300/2022. In this context, energy storage has emerged as a key tool for enhancing system flexibility, minimizing losses, and integrating Distributed Generation in a safe and efficient manner. Internationally, FERC Orders No. 841 and 2222 in the United States, European flexibility markets, and recent Australian programs, demonstrate the economic and systemic benefits of energy storage solutions. This article provides an institutional analysis of the evolution of Brazilian regulations, explores potential mechanisms for remunerating flexibility, and examines pathways for incorporating storage into capacity markets and ancillary services. It concludes that energy storage is a foundational pillar for mitigating curtailment, strengthening energy security, and supporting the consolidation of Brazil's energy transition.