Brazil considers changes to battery storage auction cost allocation

The Brazilian government is considering a proposal to change how costs from the country’s first battery energy storage auction could be allocated among electricity sector participants.

Introduced by federal deputy Arnaldo Jardim, PL 3.716/2026 would repeal a provision added under Law 15.269 that requires generators to exclusively cover costs associated with contracted battery energy storage capacity.

The proposal argues that battery storage should follow the same cost-sharing framework as other capacity solutions, whose costs are distributed among electricity sector participants. Industry associations including Abeeólica, Abiape, Absae, Absolar, and Apine support the change, saying the current rule creates uncertainty for the upcoming battery storage auction.

The associations said battery energy storage systems (BESS) provide flexibility and capacity services that benefit consumers, generators, transmission operators, distribution companies, and the wider electricity system. They argued that allocating costs only to generators could create economic distortions, reduce competition between technologies, and increase electricity costs as expenses are passed through the supply chain.

The proposed change would not remove the existing regulatory framework for capacity contracting, as Brazil’s electricity law already provides for cost allocation among end users and generators, according to the bill’s justification.

The discussion comes ahead of Brazil’s first capacity auction for battery storage systems, scheduled for December. ABSAE has also submitted recommendations to regulators, including clearer rules for standalone and co-located storage projects, local content requirements, and maintaining a 15-year contract period aligned with expected asset lifetimes.

Studies cited in the proposal estimate Brazil could deploy around 71.8 GWh of energy storage capacity between 2025 and 2034, requiring approximately BRL 77.2 billion ($14 billion) in investment. Around BRL 36 billion of that amount would be linked to capacity reserve projects integrated into Brazil’s national grid.

Industry groups said greater regulatory clarity and predictable auction rules will be critical to attracting investment and accelerating battery storage deployment in Brazil.

From pv magazine Brazil