The costs of Brazil’s planned battery energy storage auctions are likely to reach electricity consumers even though legislation assigns the charge exclusively to generators, according to Markus Vlasits, president of industry group Absae.
Law 15,269 established that generators, rather than consumers, should pay the charge associated with the battery storage auction. Vlasits said this would not prevent generators from passing the cost through to customers.
Vlasits said generators would ultimately pass the additional charge on to consumers, speaking during a webinar hosted by Auren Energia.
Vlasits said the mechanism for passing on the cost would depend on the type of power contract. In Brazil’s regulated electricity market, generation contracts provide mechanisms for incorporating new charges into costs. For self-generators, he said, the additional cost would also ultimately be absorbed by the consumer that is also a generator.
In the liberalized market, where contracts are less standardized, Vlasits said adjustment or economic rebalancing clauses could have a similar effect.
Absae modeled the potential allocation of auction costs using Technical Note 101/2026 from Brazil’s National Electricity Regulatory Agency (Aneel). Its simulations indicate that between 40% and 46% of the charge would be allocated to consumers in the regulated market, 30% to 35% to consumers in the liberalized market, with the remainder assigned to self-generators.
“Regardless of the legal provision, this cost will end up with the consumer,” said Vlasits.
Battery storage could also reduce renewable energy curtailment, benefiting not only wind and solar generators but the wider power system, according to Absae. Vlasits said this could also reduce perceived risks for new projects and contribute to more predictable investment conditions.
He questioned, however, the principle of assigning the battery auction costs exclusively to wind and solar generators. The rationale for the charge is linked to the non-dispatchable nature of these sources and the growing need for flexibility in Brazil’s power system.
Vlasits said the concept of inflexible generation should not apply only to wind and solar. He cited thermal power plants and distributed generation, including Brazil’s micro and mini distributed generation segment, which are also not subject to centralized dispatch.
Brazil currently has about 100 GW of non-dispatchable renewable generation, including centralized and distributed generation, in addition to inflexible thermal generation, according to Vlasits. Absae therefore considers a charge targeting only one group of generators inappropriate.
Vlasits also called for the battery auctions to proceed according to schedule despite the unresolved question of how their costs will be allocated.
Proposals have been made to postpone the auctions until the charge issue is resolved. Vlasits said the two issues should instead be addressed separately.
The storage procurement is intended to address a need for power capacity and flexibility in Brazil’s electricity system, particularly during the evening peak, according to Absae.
The auctions are expected to procure around 4 GW to 5 GW of power capacity, corresponding to 16 GWh to 20 GWh of storage capacity.
The first auction will be restricted to projects using domestically produced content, while the second will be technologically open. Projects will have a minimum power capacity of 30 MW and receive 15-year contracts, with operations scheduled to begin in August 2028.
Vlasits said the large project pipeline compared with the relatively small 5 GW procurement supported holding the auction as planned, even as discussions over cost allocation continue.
From pv magazine Brazil
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