A critical moment for Brazilian energy storage

The Brazilian energy storage market is at a crucial point.

The cancellation of a planned grid-capacity reserve auction (LRCAP) for hydroelectric, thermal, gas, and biofuel generation capacity has cast into doubt plans for a procurement round for battery energy storage systems (BESS) in the second half of the year.

To make matters worse, publication of the regulations relating to BESS may take longer than initially thought.

The Brazilian Electricity Regulatory Agency (Aneel) did not include the results of a consultation exercise about BESS regulation on the agenda for its meeting today and the term of office of Ricardo Tili, the director responsible for reporting the regulation, ends on Saturday. If his term expires without the issue being resolved, the workload will be taken on by the remaining Aneel directors.

Energy storage companies and trade bodies have called for the BESS-dedicated LRCAP to go ahead as planned.

“Since the government canceled the first [LRCAP], this may also postpone the second one,” said Canadian Solar ​​General Manager in Brazil, Samir Moura, in April. “And postponing it is very bad for Brazil in general. It is not bad for Canadian, which sells [energy] storage. We have a big problem at the moment, which is curtailment [of excess clean energy], for which the government has not provided a solution, and the battery is a solution. But no one is going to install the battery without having regulations on how they can use it. If I can use it, in addition, in [grid-strengthening] ancillary services, without knowing what the [electricity] discharge [into the grid] rule is, what rate will I receive?”

Canadian Solar is one of the PV module manufacturers that has started offering BESS in response to a growing need for grid flexibility in several countries, driven by the rise of intermittently generating renewable energy sources. In the first quarter of this year, Canadian’s energy storage unit, e-Storage, contracted 91 GWh of sales with an estimated order value of $3.2 billion. The company believes investors in Brazil are waiting for obstacles to be resolved before focusing on developing projects with batteries.

Cristiano Piroli, Canadian Solar’s sales director, told pv magazine electricity generators are “one step behind.” He said, “They want to solve the curtailment problem and then think about [energy] storage. One issue is linked to the other. In 2024 alone, we had 400,000 hours in which the ONS [National Electric System Operator] suspended the generation of 445 photovoltaic projects. And there is no regulation for these people today. The money is going into the ground and is not being remunerated. This represents around 14.6 TWh of energy that was wasted or, in value, ​​BRL1.6 billion [$283 million] that we threw into the ground in 2024.”

Brazilian solar association Absolar says generators receive compensation for only a small proportion of the clean electricity which is curtailed.

Executives argue batteries could reduce curtailment and improve clean energy use while strengthening the grid by providing ancillary services called for by the ONS.

“The public consultation [into BESS auction regulation] has already ended, they have to publish it,” said Piroli. “Before, we were afraid that there would be too much contracting in the thermoelectric LRCAP and there would be little demand left for batteries. But now we are afraid that they will not maintain the battery [exercise]. As they are going to push [back] this thermoelectric LRCAP, they are pushing the [energy] storage one even further. Then we will get … more than a year [delay].”

The decision to suspend the ordinance that established the guidelines for the first, thermoelectric LRCAP of 2025, which led to cancellation of the auction, determined the Ministry of Mines and Energy (MME) should hold a new public consultation on a new auction system, including a method for calculating bid prices. The MME opened a consultation proposing changes to ordinance No. 88/2024/GM/MME, of Oct. 31, 2024, which defined the rules for operation of thermoelectric plants under different conditions, to meet power requirements. That proposed ordinance does not mention an LRCAP auction, however.

From pv magazine Brasil.