Brazil’s electricity sector is undergoing a pivotal transformation driven by rapid growth in distributed energy resources (DERs), climate commitments and evolving consumer demands. The anticipated expiration of 20 distribution concession contracts between 2025 and 2031 presents a strategic opportunity to advance regulatory agendas and modernize grid infrastructure and operational frameworks. In this context, Brazil may consider reforming the traditional framework of distribution utilities in favour of a more dynamic distribution system operator model. Distribution system operators (DSOs) could facilitate harnessing the substantial untapped resources available at the distribution level, including managing bidirectional power flows, integrating distributed energy resources, and enhancing grid resilience. This shift has the potential to enhance the overall efficiency and effectiveness of the energy distribution system and could be the key to balancing Brazil’s decarbonization goals with rising energy demands. 

Brazil’s transition requires a phased approach combining immediate actions with systemic reforms. In Transitioning to Distribution System Operators in Brazil the Regulatory Assistance Project makes a series of recommendations for a phased transition between 2025 and 2030 and beyond. Implementing these recommendations must be discussed among Brazilian stakeholders in a phased approach that ensures progressive adaptation and identifies the best priorities according to the context of the different utilities and systems: Successful implementation of this transformation could position Brazil to lead the reform of the electricity distribution sector in Latin America.