Brazilian federal court ruling has suspended the environmental license of Solatio’s 3 gigawatt H2V Piauí project in Parnaíba, citing the absence of authorized water use and the risk of overloading the regional power grid.
The decision, issued by the Federal Court of the 1st Region, ordered the immediate halt of all activities and has triggered a reassessment of the project’s scope, including potential downsizing or conversion into a data center complex.
The scale of the halted project places it among the most ambitious green hydrogen developments announced in Latin America. Solatio’s plan combined 3 gigawatts of electrolysis capacity with a dedicated 9 gigawatt solar generation complex, targeting initial operations in 2029 and gradual expansion through 2031. At full buildout, the first phase alone was expected to produce around 400 kilotons per year of green hydrogen and up to 2.2 million tons of green ammonia, with exports largely oriented toward European off takers.
Such volumes, however, also translate into substantial infrastructure stress. Electrolysis at the proposed scale would require continuous access to large quantities of water and electricity, neither of which is trivial in the Parnaíba region. The court’s ruling highlights that water use permits had not been fully authorized, a critical gap given the sensitivity of water allocation in northeastern Brazil, where drought risk and competing industrial and municipal demand already shape licensing decisions.
Grid capacity emerged as a second decisive factor. A 3 gigawatt electrolyzer project paired with intermittent solar generation would impose significant demands on transmission infrastructure, both for power intake and system balancing. Brazilian grid operators have repeatedly warned that large industrial loads, particularly those clustered in regions without prior heavy demand, must be synchronized with transmission expansion plans. In this case, the court determined that proceeding without addressing the risk of overloading the regional grid was incompatible with licensing requirements.
The suspension also underscores a recurring tension in green hydrogen project development globally. Announcements frequently emphasize electrolyzer capacity and export volumes, while permitting processes focus on local constraints such as water rights, grid stability, and cumulative environmental impacts. In Brazil, where environmental licensing is decentralized and subject to judicial review, these mismatches can translate into abrupt project stoppages rather than incremental delays.
Solatio’s consideration of converting the site into a data center complex reflects how developers are reassessing asset optionality under tightening regulatory scrutiny. Data centers, while still energy intensive, typically require less water than large scale electrolysis and can be phased more flexibly in line with grid reinforcement. The shift also mirrors broader market signals, as hyperscale digital infrastructure continues to attract capital with clearer near term revenue visibility than export oriented hydrogen projects dependent on future offtake agreements and cross border certification frameworks.
For Brazil’s green hydrogen ambitions, the ruling does not negate the country’s structural advantages, including abundant renewable resources and proximity to Atlantic export routes. It does, however, illustrate that moving from concept to construction at the multi gigawatt level will require far tighter integration between project design, water management authorities, and transmission planning. Without that alignment, even projects positioned as flagship export hubs risk becoming stranded at the licensing stage.
