Brazil opens consultation on first standalone BESS auction rules

Brazil’s electricity regulator, Aneel, has opened a public consultation on draft tender documents for the country’s first reserve capacity auctions dedicated exclusively to battery energy storage systems (BESS). Stakeholders can submit comments between July 30 and Sept. 14, while an in-person public hearing is scheduled for Sept. 1 in Brasília.

The consultation covers Auction No. 05/2026 (National Storage) and Auction No. 06/2026 (Storage), scheduled for Dec. 2 and Dec. 4, respectively. Both auctions will award 15-year capacity contracts, with supply beginning on Aug. 1, 2028.

Only standalone energy storage systems, with no association to generation assets, will be eligible to participate. Projects must have a minimum capacity of 30 MW, a round-trip efficiency of at least 85%, grid-forming capability, and use only new battery cells and inverters.

After the consultation closes, Aneel is expected to finalize the auction documents in time for the December tenders, marking Brazil’s first large-scale procurement of battery storage systems in the regulated electricity market.

Cost allocation

One of the main issues under consultation is the cost allocation model established under Law No. 10,848/2004, as amended by Law No. 15,269/2025. Unlike previous reserve capacity auctions, the cost of procuring battery storage systems would be borne exclusively by electricity generators, which would sign Capacity Reserve Power Use Contracts (COPCAP) with Brazil’s power market operator, the Electric Energy Commercialization Chamber (CCEE).

Industry representatives questioned which generators should be included in the cost-sharing base. Marcello Cabral, director of new business at Abeeólica, said uncertainty remains over whether existing projects would be required to contribute, noting that Law No. 9,074/1995 provides specific treatment for new grid entrants and that legal opinions suggest projects with grid access applications filed before the legislative changes may be protected. He argued that if only new projects pay while all meet the flexibility requirements under the law, there may be too small a funding base to support the storage contracts.

Aneel General Counsel Eduardo Ramalho said, in a preliminary opinion, that the law broadly refers to electricity generators, leaving the regulator to define the allocation methodology. He warned that an excessively narrow funding base could undermine the economic viability of the auctions.

Participants also raised the possibility of exempting generators that already provide system flexibility, such as reservoir hydropower plants and certain thermal power stations. However, Aneel’s board said any exemptions should be addressed through a separate regulatory process rather than in the auction rules.

Industry representatives also suggested the tender documents should simply reference the legislation, leaving detailed cost-allocation rules to future regulation.

“We are not advocating any regulatory shortcut. Aneel should apply the current legislation, but the auction process should not pre-empt exemptions or establish cost-allocation criteria without the appropriate regulatory process. The auction can move forward while the cost-allocation framework is developed, as happened with the first reserve capacity auction in 2021,” said Fabio Monteiro Lima, executive director of the Brazilian Battery Storage Association (ABSAE).

Financial guarantees

The draft rules also set out financial guarantee requirements. Aneel’s technical staff proposed a bid bond of BRL 100,000 per MW and a performance guarantee of BRL 1 million per MW, based on a reference investment cost of BRL 10 million per MW.

However, reporting director Gentil Nogueira de Sá Junior proposed consulting on an alternative based on the Energy Research Office’s (EPE) maximum investment estimate in its 2030 energy plan of BRL 9.8 million per MW. Under that proposal, the guarantees would be reduced to BRL 98,000 per MW and BRL 980,000 per MW, respectively.

According to his report, the proposal aims to align the financial requirements with EPE’s planning assumptions while preserving competition in the auctions.

The draft documents also introduce new governance and qualification requirements. These include prohibiting consortium bids from companies under the same corporate control and requiring disclosure of investors holding 5% or more of investment funds participating in the tenders.

During project qualification, Aneel proposes waiving the requirement to submit a preliminary environmental license. Instead, developers would need to demonstrate they have obtained an installation license once 60% of the period between contract signing and the start of supply has elapsed, subject to a minimum deadline of Feb. 7, 2027.

From pv magazine Brazil