Brazil’s isolated power systems supply towns and communities that are not connected to the national grid. Almost all are located in the Amazon and run mostly on diesel. Much of this cost is spread across every electricity consumer in the country through the Fuel Consumption Account (CCC), a cross-subsidy that reached about R$12.5 billion (US$2.4 billion) in 2024.
Connecting Boa Vista in Roraima to the national grid in September 2025 cut isolated consumption roughly in half. What remains is the costliest part of the system, where each liter of diesel avoided saves the most. An auction held weeks later, for example, showed what better design can achieve there.
In the first isolated systems auction to price avoided emissions, a solar, battery and diesel hybrid in Jacareacanga, Pará, won at just over half of the price ceiling. The auction did not pay a premium for cleaner power. It bought cheaper power that happened to be cleaner.
RAP recommends five actions that can help Brazil’s energy ministry (MME), regulator (ANEEL) and planning agency (EPE) to modernize Brazil’s isolated power systems:
- Cut inefficient demand before contracting new generation, by making efficiency and loss reduction part of every plan.
- Adjust what auctions buy, with contract terms that match the life of clean assets. Consider procuring energy separately from capacity to ensure cheaper renewables can displace diesel.
- Pay local generation for the diesel it displaces. Decision-makers can achieve this through net billing priced at the full avoided cost and through time-of-use pilots.
- Ensure utilities weigh all resources in planning, from storage and microgrids to efficiency and loss reduction.
- Prioritize projects nationally by subsidy, including reduction, reliability, emissions and local development.
Isolated systems are bounded, observable, and expensive. These three features also make them good places to test tariff, metering and planning tools before a wider rollout. The lessons are relevant to diesel-dependent grids well beyond Brazil.
Featured image: Cácio Murilo de Vasconcelos
