Brazil’s battery capacity auction risks being delayed until 2027

Establishing and adhering to a definitive schedule for the Capacity Reserve Auction (LRCAP) for battery energy storage systems (BESS) is fundamental to ensuring Brazil does not miss the global window of opportunity in the battery supply chain.

The realization of the auction depends on the Ministry of Mines and Energy (MME) publishing the guidelines ordinance, which has not yet happened. The Brazilian Association of Energy Storage Solutions (Absae) warns that the minimum timeframe for conducting the auction is five to six months following the publication of the ordinance.

Ensuring that the competition occurs this year is crucial to guarantee the start of operations for these systems by 2028, a year for which several periods of power deficits are forecast. This risk is expected to intensify in the coming years. Projections from the Energy Research Office (EPE) indicate a risk of a power deficit of up to 55 GW in Brazil by 2034, driven by rising demand, a higher share of intermittent sources — such as solar and wind — and hydrological limitations.

Beyond the technical demand for power, the insertion of batteries is seen as a solution to advance the Brazilian energy transition, allowing for a reduction in the activation of fossil fuel thermal plants and a better utilization of wind and solar generation. According to data from Absae, battery storage is approximately 46% cheaper than new gas plants and represents a potential saving of R$ 3 billion per year in charges on consumer electricity bills for every 2 GW of storage added.

“The realization of the auction, which is on the agenda of the Power Sector Monitoring Committee (CMSE) for June, is expected for the second half of the year. The fact is that the minimum period for its implementation is five to six months after the ordinance. If it is not published in May, its realization is practically impossible during this administration, notwithstanding the minister’s various trips to Asia to attract investors who believed in his call five times,” warned the executive director of Absae, Fábio Lima.

An auction awaited since 2024

Dialogue regarding the integration of batteries into the National Interconnected System (SIN) has advanced significantly since July 2024, when the MME began preparations for the auction. However, the productive sector has dealt with successive schedule reprogrammings.

In April 2025, the official expectation was that the ordinance with the guidelines would be published by the end of May that year. Subsequently, the horizon was shifted to the end of 2025 and, more recently, in March 2026, there was a new indication that the definitions would occur in April, with the auction scheduled for the second half of the year. However, this deadline was not met, and the new promise is that the document will be published this month, maintaining the necessary time for the bidding process to be held still in 2026.

The 2026 LRCAP could unlock approximately R$ 10 billion in investments in this first round. Over a ten-year horizon, Absae estimates that the storage market as a whole has the potential to move up to R$ 77 billion by 2034.

“Storage has a strategic role for the security and efficiency of the Brazilian electrical system, and the country needs to create the conditions for this potential to turn into reality. However, for it to be viable this year, the Ministry of Mines and Energy ordinance must be issued this month. Beyond that, it is not credible,” states Fábio Lima, spokesperson for Absae.