Shell announces cessation of investment in renewable energy power plant projects in Brazil

At the end of March 2025, international energy giant Shell announced the termination of its investment in large-scale solar and onshore wind power plants in Brazil, citing the need to "adjust its investment portfolio" and retain its subsidiary Prime Energy's distributed photovoltaic business, further prompting new energy investment companies to think.

Behind this decision, on the one hand, is the complex changes in the investment environment of Brazil's renewable energy market in recent years - energy surplus, slowing demand, regulatory fluctuations, and grid bottlenecks intertwined, making the profit prospects of large-scale power plant projects vague; On the other hand, it is an important reflection of how renewable energy investment enterprises should examine their strategic layout and adjust their strategies in a timely manner.

For Chinese new energy companies going global, this change is both a warning and a window to explore new opportunities.

1、 Why did Shell stop investing?

The withdrawal of Shell's investment in centralized power plants this time is not a temporary intention, but the result of the dual effects of strategic contraction and market changes.

In terms of strategic adjustment: contraction+shift

As an energy giant, Shell's global strategy in the renewable energy sector is showing a shrinking trend, and its strategic style has shifted from being a "green pioneer" to a "pragmatic" approach

December 2024: Shell announced a reduction in new offshore wind power investments, stating that it will no longer lead the development of new projects and instead focus on high return areas such as oil and gas and biofuels.

In March 2025, the power sector Shell Energy will be split into two major segments: power generation (Shell Power) and power trading (Shell Energy), with the aim of streamlining operations and improving efficiency.

Capital allocation adjustment: Shell plans to reduce annual capital expenditures to 20-22 billion US dollars from 2025 to 2028, and allocate 40% -50% of its cash flow to shareholder dividends and stock repurchases.

Official statement: CEO Wael Sawan emphasized on Capital Markets Day 2025 that "the company needs to balance energy transition and shareholder returns, prioritizing the profitability of investment projects

In terms of market changes: structural contradictions+policy volatility risks

According to data from ABEE ó lica/ANEEL/IADB, the newly installed wind power capacity in Brazil in 2024 decreased by 31.25% year-on-year, with photovoltaic power rationing losses exceeding 15%. The National Power System (ONS) was forced to cut renewable energy transmission in the northeast by up to 30% due to grid bottlenecks.

2、 Why hasn't Shell completely stopped investing?

Despite the decreasing attractiveness of investment in centralized power plants, Brazil remains a potential market for renewable energy investment in South America, and the government is continuously attracting and retaining foreign investment through three major directions:

1. Distributed photovoltaic

Policy support: By 2025, new regulations will allow distributed power generation projects to be exempt from paying transmission and distribution electricity fees, with an expected installed capacity of over 40GW.

Advantages of Chinese enterprises: The component cost is the lowest in the world, and they can collaborate with local enterprises to develop rooftop photovoltaic and industrial and commercial projects.

Risk Warning: Policy fluctuations, local regulatory and compliance requirements, local corporate integrity.

2. Green hydrogen

Policy support: The National Hydrogen Energy Plan (PNH2) aims to become the world's most competitive hydrogen producing country by 2030, with a focus on developing wind power hydrogen production bases in the northeast.

Risk Warning: Policy Continuity, Impact of Cost Fluctuations, Approval Cycle.

3. Offshore wind power

Policy support: By 2025, legislation will be enacted to clarify the approval process for offshore wind power projects, with a planned installed capacity of over 700GW.

Risk Warning: High initial investment, strict environmental assessment, and uncertain investment returns.

3、 Four suggestions for Chinese enterprises

For Chinese renewable energy investors, Brazil has always been a flagship market that cannot be ignored in South America. However, most companies have insufficient understanding of the electricity market in South America and Brazil. Therefore, it is recommended that Chinese investors:

1. Avoid the Red Sea and focus on segmented tracks

Prioritize the layout of policy support areas such as distributed photovoltaics and hydrogen energy, and carefully evaluate large-scale wind/photovoltaic projects.

2. Localized cooperation to reduce systemic risks

Establish joint ventures with local Brazilian companies such as CPFL Energia and engineering giant Odebrecht to reduce policy and operational risks.

3. Technological adaptation, calculate investment details well

Seeking benefits from design and operation, optimizing the weather resistance of photovoltaic modules for Brazil's high temperature and humidity environment; Develop wind turbine models suitable for low wind speed areas

4. Policy prediction and preliminary analysis should not save costs

Closely monitor the trends of the 2026 Brazilian election and the market dynamics of renewable energy, and predict the continuity of energy policies; Pay attention to preferential policies and regulatory requirements for foreign investment; Conduct a feasibility study before project approval.

In summary, international energy giants have successively adjusted their strategies in Brazil, sounding the alarm for the development of Brazil's renewable energy market, but also providing opportunities for differentiated competition for Chinese enterprises. In the face of complex environments, "precise layout, local deep cultivation, technological adaptation, and policy analysis" will become the key to preventing and controlling systemic risks and market disruption. Whether Chinese enterprises can benefit from the energy transition in Latin America depends on their ability to face risks, assess risks, capture opportunities in risks, and build resilience in challenges.