Brazil includes batteries in capacity auction calendar through 2029

Battery energy storage is among the technologies eligible for annual capacity reserve auctions that Brazil’s Ministry of Mines and Energy (MME) has scheduled for the second half of 2027, 2028 and 2029, subject to system studies.

The MME published Normative Ordinance No. 143/2026, establishing one capacity reserve auction in the second half of each year from 2027 through 2029. The ordinance is dated Sept. 28 and was published in an extra edition of the Official Gazette on Sept. 29.

The auctions may consider electrochemical batteries, hydraulic energy storage systems, hydropower plants and thermal power plants. The ordinance explicitly includes thermal plants fueled by biomethane, biogas, biofuels and waste.

The capacity auctions are not automatic. Their realization depends on studies by the Energy Research Office (EPE) and the National Electric System Operator (ONS), which must be submitted to the MME by April 30 each year. The ordinance also states that the schedule is an estimate and can be adjusted in response to legislative changes or electricity-sector planning requirements.

The ordinance also sets out schedules for other electricity auctions.

In 2027, auctions for capacity reserves from hydropower plants of up to 50 MW and for isolated systems are scheduled for the first half of the year. Auctions for new and existing power plants are scheduled for the second half.

In 2028, an auction for hydropower plants of up to 50 MW is scheduled for the first half, followed by auctions for new and existing power plants in the second half.

In 2029, an auction for hydropower plants of up to 50 MW is scheduled for the first half. Auctions for new and existing power plants and isolated systems are scheduled for the second half.

The isolated-systems auction will only be held if EPE studies identify a need for additional supply or to replace fossil-fuel generation with renewable sources.

For auctions covering new power plants, distribution companies must submit their expected contracting needs by Nov. 16 of the preceding year. The forecasts cover supply commencement years from A-4 to A-6, and the schedule can be updated based on those requirements.

The ordinance repeals Normative Ordinance No. 57/2022, which established the previous auction schedule.

The Brazilian Energy Storage Solutions Association (Absae) welcomed the new schedule, saying it provides greater predictability than a system based on individual procurement rounds. The association said developers, manufacturers and investors can use the three-year outlook to prepare projects, supply chains and investment decisions.

Absae also said the schedule indicates that Brazil’s need for capacity is not limited to a single auction, with peak demand, flexibility and system security expected to remain part of sector planning in coming years.

Fabio Lima, executive director of Absae, said a three-year schedule is important for developers and equipment manufacturers to prepare mature projects. He also welcomed the prospect of technology neutrality in capacity planning, saying that contracting based on system attributes with greater predictability would represent an evolution.

The association, however, said the cost-allocation rules for batteries undermine that principle. According to Absae, costs for eligible capacity resources are allocated between consumers and generators under the circumstances established in Article 3-A of Law 10,848/2004, while battery storage costs are assigned exclusively to generators.

Absae said this could undermine the technology neutrality expected from the planning process.

The association said frequent, almost daily short-duration deficits of less than four to six hours should preferably be addressed by flexible resources such as batteries, hydropower with storage and demand response. Thermal power plants, it said, should instead address longer-duration and secondary risks.

Absae cited a study by Volt Robotics commissioned by the association, which found that batteries can meet requirements such as evening peak demand with fixed costs up to 60% lower than thermal plants. The study also estimates that batteries could reduce charges paid by consumers by up to BRL 1.6 billion per year.

To change the cost-allocation rules, Absae is calling for the repeal of paragraph 6 of Article 3-A of Law 10,848/2004 through the urgent approval of Bill 3716/26.

Regarding Brazil’s battery capacity auction scheduled for this year, the LRCAP-BESS, Absae said the new calendar shows that the country is building a capacity market for the coming years. Lima described the 2026 auction as an important part of that process.

From pv magazine Brazil