Exploring Brazil’s auction for battery energy storage projects

Brazil’s Ministry of Mines and Energy is looking to launch its first battery storage auction. Initially postponed from June to the second half of 2025, and with a date not yet set, it is looking increasingly likely that it will be carried out in 2026.

The announcement marks the first time Brazil will allow batteries to compete in a government-led capacity auction.

The country’s energy storage association (ABSAE) welcomed the development, saying it could strengthen overall grid reliability. Response was immediate: Prominent power companies, including Portugal’s EDP and Brazil’s ISA Energia, have already expressed interest.

How the auction will work

The government will offer 10-year contracts, with participating systems expected to begin supplying power by July 2029. Awarded projects must deliver electricity for up to four hours a day and provide 30 MW of discharge capacity.

The central goal is to deploy enough BESS to help reduce persistent load shedding (deliberate power cuts to certain areas to prevent system-wide outages).

While Brazil’s distributed generation (mostly solar) now meets 28% of grid demand, it’s not enough to reliably cover evening peaks. Output drops sharply between 7 PM and 9 PM, and operators are often forced to shed load during these hours to prevent straining the distribution network. BESS should help stabilize supply by absorbing excess solar generation when it’s available and discharging stored power during peak hours. 

Brazil’s multi-track energy strategy

The upcoming market call is just one segment of Brazil’s broader energy planning for 2025. Other tenders expected this year include:

• The A-5 auction for projects set to begin supplying power in five years.

• The capacity auction, which pays generators to remain on standby during peak demand.

• The isolated systems auction to supply areas not yet connected to the national grid (SIN).

• The transmission auction to expand and strengthen high-voltage infrastructure.

The energy ministry clarified that BESS will not replace thermoelectric plants. Instead, these storage systems will complement traditional generation sources by increasing grid flexibility and helping lower long-term energy costs for consumers. They will act as a balancing asset during periods of variable demand and intermittent supply.

Why BESS is critical to Brazil’s next energy phase

Brazil’s decision to hold a BESS auction could push storage projects forward and support the wider use of renewables, particularly solar and wind, which have become increasingly crucial for the national energy mix.

Interestingly, even though Brazil is South America’s largest solar PV market, it struggles to catch up with regional peers when it comes to BESS. Chile has already installed around 1 GW of battery capacity and recently auctioned land for 13 GWh of standalone BESS in four major regions. By comparison, Brazil had only 685 MWh in 2024, and roughly 70% of that capacity remains off-grid.

The country has seen minimal large-scale storage development to date. Among the few notable examples is a 30MW/60MWh ISA CTEEP installation launched in 2022, which covers 5,000 square meters and uses 180 lithium battery modules. It provides backup during peak summer demand and has an annual revenue cap of 27 million reais (USD $4.6 million), the maximum allowed for a transmission operator.

Despite the slow start, the local market is expanding fast. Demand for BESS components rose 89% from 2023 to 2024, and projections suggest the sector could reach a market value of BRL 22.5 billion (USD $3.79 billion) by 2030. The upcoming battery auction could attract up to $450 million in private investment, the projected cost for developers to install 300 MW of storage capacity. 

Developers push for clearer rules and fairer pricing 

Most stakeholders support the BESS tender, but several industry voices have raised concerns about the rules, saying that it’s unclear how contracted services will be defined and how operators will be paid.

Some developers flagged potentially problematic usage tariffs, especially the proposed dual charges for grid consumption and injection. They also questioned why the government appears to favor standalone storage systems over co-located ones, which could share infrastructure with solar or wind farms and reduce overall costs.

The cancellation of Brazil’s 2025 backup capacity tender has added more uncertainty. Market participants worry that, as the government puts all resources on revising this cancelled framework, the BESS auction could be further delayed.

Setbacks from rising import costs

Recent changes to Brazil’s tax and subsidy policies may slow near-term BESS growth. The government removed import subsidies on PV panels (mostly from China) at the start of 2025. While this may promote local manufacturing and protect domestic jobs, it also raises development costs for new projects.

Brazilian solar trade group ABSOLAR projects that new investments could exceed $8 billion this year. Still, developers worry that supply gaps and price hikes could delay installations and grid connections. The country’s ability to meet its solar targets will depend on whether local producers can scale up quickly and maintain competitive quality. 

Brazil’s solar outlook depends on infrastructure, pricing, and BESS

Brazil leads Latin America in solar development with 113 GW of capacity in pre-construction, more than any other country in the region. Globally, it now ranks just behind China in the scale of planned solar projects. 

It currently generates about 35 GW from photovoltaic sources and aims to nearly double that to 68 GW within five years. To achieve that goal, the country needs to build new solar farms on a tighter schedule, speed up permitting and interconnection processes, upgrade transmission infrastructure to handle additional load, and adopt pricing mechanisms that reflect the value of solar during peak demand hours.

But those efforts won’t be enough on their own. Solar also needs storage. Without systems to hold excess energy and release it when demand spikes, Brazil could face sharper price swings and waste valuable generation that can’t reach the grid.

The success of BESS in Brazil could set the pace for storage adoption in Latin America.

The country’s position as the regional solar leader means that its choices will ripple across neighboring markets. If it can scale up local production and efficiently connect BESS to generation assets and the grid, the country could lower costs and improve project timelines in this part of the world.