Latin Analysis: How Brazil’s Northeast became the hub of its clean energy transition

Divulgação

Brazil is emerging as one of the world’s renewable powerhouses. The government of Luiz Inácio Lula da Silva has placed green energy at the heart of its industrial policy, seeking to leverage the country’s natural abundance of wind and sun to establish Brazil as a global climate leader. Nowhere is this shift more visible than in the Northeast, where the states of Rio Grande do Norte and Ceará are turning into hubs for wind, solar, and soon hydrogen.

Yet Brazil’s path to becoming a renewable superpower is not without obstacles. New laws and major foreign investments are fuelling optimism, but they coexist with regulatory delays, transmission bottlenecks, and uncertain market dynamics. The story of Brazil’s energy transition is therefore one of both ambition and constraint.

A new framework for offshore wind development

A key milestone in Brazil’s quest to expand renewables came in January 2025, when Lula signed into law a bill that permits the development of offshore wind farms. The law, drafted in 2021 and approved by the senate late last year, establishes a framework to identify and award offshore wind areas, and to regulate the development process.

The series of regulations under the new law include provisions to protect Brazil’s environment, tourist sector, and local economies. One example is the requirement for prior consultations with impacted communities ahead of any developments.

The law is largely seen as a bid to strengthen energy security and spark investment, realising the massive interest in building and operating offshore wind farms in Brazil. This interest comes from a range of major oil and gas companies that also develop offshore wind, including French energy company TotalEnergies, Norwegian oil giant Equinor, and Neoenergia, a subsidiary of the Spanish utility Iberdrola. By the end of last year, Brazil’s Institute for the Environment and Natural Resources (IBAMA) had commenced environmental licensing procedures for over a hundred offshore wind projects. This interest, coupled with the new legislation earlier this year, positioned Brazil as one of the world’s largest emerging offshore wind markets and on its way to becoming a dominant global player in renewables.

However, industry observers urge caution. The legislation does not compensate for a range of uncertainties and challenges facing the future of renewables in Brazil. Offshore wind remains a costly and complex venture, requiring significant investment in transmission infrastructure, port facilities, and supply chains. Brazil’s regulatory process, though more defined after the new law, still faces bottlenecks in environmental licensing and bureaucratic coordination across federal and state agencies.

China’s growing stake in Brazil’s green energy sector

Another major development occurred further back in 2024, when Chinese electricity company SPIC announced a $147 million investment in Brazil’s renewables sector. The investment went towards the construction of two wind farms in north eastern Brazil, as well as two large solar parks. The CEO of SPIC’s Brazilian unit, Adriana Waltrick, said at the time that the company hoped to become one of Brazil’s three largest energy generators. The wind farms, to be built in the state of Rio Grande do Norte, will have a combined installed capacity of 105.4 megawatts, and are expected to be operational by the end of 2026.

Again, the project demonstrates an appetite for Brazil’s renewable energy scene, this time specifically from China. For SPIC, Brazil is a priority market – this is a broader trend that can be seen since 2010, with the first major Chinese investments in Brazil’s energy sector. Since then, Chinese electric and energy companies have become the leading foreign players operating in the country. As of 2019, they represented meaningful proportions of Brazil’s electricity generation (10%), transmission (12%), and distribution (12%) segments.

Chinese investment in Brazilian renewables in particular, however, started with hydropower. The transition toward wind and solar marks a shift in both investment strategy and geopolitical interest. China’s state-owned firms are increasingly positioning themselves within Brazil’s green industrial drive, aligning with Lula’s ambition to make Brazil a manufacturing and export hub for clean energy components.

This partnership, while offering Brazil investment and technology, also raises questions about strategic dependency on Chinese financing and equipment at a time when the United States and Europe are also vying for influence in Latin America’s green transition. This partnership also does not come without its logistical uncertainties. Many of these investments are moving faster than the government’s ability to integrate new capacity into the national grid, and developers face logistical hurdles in transporting equipment across Brazil’s vast territory.

The Pecém project and the rise of green hydrogen

One of the most ambitious representations of the Northeast’s green potential is the hydrogen hub being built at the port of Pecém in Ceará. Backed by the World Bank, the federal and state governments, and foreign partners, the project aims to turn the Pecém Industrial and Port Complex (CIPP) into Brazil’s first large-scale center for green hydrogen production. It is designed to anchor a new hydrogen economy, generating clean hydrogen for export, attracting international investment, and creating regional value chains around low-carbon technologies.

In July 2025, the World Bank approved $134 million in funding for the initiative, with loans and grants to build critical infrastructure. This goes towards electricity cabling, gas and water pipelines, and an expanded export terminal capable of shipping large volumes of ammonia overseas. The support also includes technical assistance to establish market frameworks and environmental safeguards, drawing on lessons from similar World Bank-backed hydrogen programs in Chile and India.

The Pecém Complex, jointly managed by the state of Ceará and the Port of Rotterdam, has already signed nearly 40 memoranda of understanding with international developers to develop hydrogen and ammonia production facilities. The site’s proximity to Europe and integration with existing port and industrial infrastructure make it an ideal export hub, particularly for supplying Europe’s growing demand for clean ammonia.

The project aligns with President Lula’s vision of green reindustrialization: using renewables to spur jobs and industrial recovery in historically underdeveloped regions. When completed, the hub is expected to create around 1,500 construction jobs and 200 permanent positions, placing Ceará at the forefront of Brazil’s clean energy transition.

Still, the scale of the Pecém project highlights the same structural challenges facing Brazil’s wider green energy expansion. Turning such ambition into reality will require far more than international financing – it depends on stable regulation, long-term policy direction, and substantial investment in infrastructure. As with offshore wind, the gap between ambition and implementation remains wide, and questions persist over market viability, institutional capacity, and the pace at which Brazil can overcome its transmission and logistical bottlenecks.

Bottlenecks slowing green growth

While Brazil’s clean energy push has made impressive progress and a more diversified electricity mix, this rapid expansion has exposed the limits of its grid. The main issue is that the Northeast produces more wind and solar energy than it can distribute, leading to curtailment, where generated electricity goes unused because of transmission constraints. Crucially, this structural gap between production and delivery discourages investors and risks slowing the momentum of Brazil’s renewables pivot.

Government plans to expand the high voltage transmission network and modernize regional substations have seen slow progress. Licensing delays, complex environmental approvals, and limited coordination between federal and state agencies remain major obstacles. Analysts have also pointed out that most of the grid is still geared toward hydroelectric power, making integration of intermittent renewables technically challenging.

The problem is compounded by a series of financing and execution risks. Many transmission projects are awarded through auctions but face delays in land acquisition and construction. Private developers have also called for clearer cost sharing mechanisms and faster project approvals to ensure that new renewable capacity can actually reach consumers and industries.

Brazil’s ambition to become a global leader in renewables is clear, but its success depends on bridging this infrastructure gap. Without it, the country risks building an abundance of clean energy that cannot be efficiently delivered or exported. The Northeast’s rise as a green powerhouse will therefore hinge not only on new laws and foreign capital, but on the state’s ability to translate high potential and ambition into implementation.