Reducing battery storage taxes key to managing Brazil’s electricity price hikes

Following a sharp rise in Brazilian electricity bills in September 2024, industry body the Associação Brasileira de Energia Solar Fotovoltaica (Absolar) said reducing the tax burden on battery energy storage systems, which currently exceeds 80%, could mitigate the price volatility.

Regulator the Agência Nacional de Energia Elétrica (Aneel) activated its “red flag level 2” in September, the highest level of electricity price rise available to it, because drought conditions affected hydroelectric generation and more costly fossil fuel power plants had to pick up the slack.

Absolar says recurrent curtailment of excess power generated by renewable energy sites has hamstrung the ability of solar to contribute and said wider energy storage deployment – incentivized by a tax reduction – could prevent such clean power wastage.

The recent bill rises emphasize the need to intensify planning and investment in Brazil’s electricity infrastructure, according to Absolar, especially in the form of electricity transmission lines and new forms of energy storage for the nation’s abundant clean energy.

“To achieve this, it is essential to apply the same tax treatment to electricity storage technologies as to renewable [energy] sources, since the tax burden on batteries currently exceeds 80%,” said Absolar CEO Rodrigo Sauaia. “Brazil is 10 years behind the world in the use of batteries and this jeopardizes the country’s leading role in the race towards the energy transition and the consolidation of an increasingly robust, competitive, and sustainable economy.

“As for renewable-generation discharges (constrained-off, or curtailment), they are determined directly by the National Electric System Operator … In other words, businessmen have no control or responsibility over these decisions, which already represent an accumulated waste of clean energy of nearly BRL 1 billion over the last two years [since 2022]. This is a huge contradiction since the country operates more expensive and polluting plants and, at the same time, restricts solar and wind generation.”

Absolar chairman Ronaldo Koloszuk said, “In this scenario, solar self-generation is one of the best solutions to protect against electricity price hikes and thus alleviate the burden on Brazilians in the face of increasingly frequent water shortages. The solar [energy] source is strategic for the diversification of the electricity matrix and the economic and sustainable growth of the country. In addition to preserving water resources, solar energy is a leader in the generation of green and quality jobs.”

From pv magazine Brasil.