Brazil’s energy auction landscape brings to light a crucial debate on cost-sharing for storage technologies, such as batteries.
The integration of different energy sources, including hydro, thermal, and, notably, battery storage systems in upcoming capacity reserve auctions, is intensifying the discussion on how these costs should be distributed. The Brazilian Association of Energy Storage Solutions (Absae) advocates that the financial burden be shared across the entire electricity sector, rather than falling solely on generators, as provided for in current legislation.
This paradigm shift occurs in light of the forecast by the Ministry of Mines and Energy (MME) to group these technologies in future auctions. According to Absae, this possibility requires equitable cost-sharing, challenging the rule introduced by Law 15,269/2025, which directs battery payments exclusively to generators.
New Auction Guidelines and the Demand for Equity
The regulation published by the MME for the years 2027 through 2029 opens the door to the joint contracting of various technologies. For Fabio Lima, executive director of Absae, this convergence in auctions reinforces the urgency to level the cost-allocation rules. He argues that current law, by stipulating a differential payment for batteries, creates a barrier to neutral competition between storage solutions and other energy sources.
Previous auctions focused exclusively on batteries were held separately. The most recent one, in March, contracted a significant amount of capacity, predominantly from gas-fired thermal plants. The new schedule, however, provides for the inclusion of batteries, pumped-storage hydro, as well as conventional hydroelectric and thermal plants, including those powered by biomass and waste.
The Impact of Legislation and the Search for a Fair Model
Absae welcomes MME Normative Ordinance 143/2026, which establishes a schedule for power capacity reserve auctions between 2027 and 2029. In the association’s view, this openness to various technologies demonstrates the need to evaluate solutions based on their attributes, such as power delivery duration and flexibility.
Fabio Lima questioned:
The question becomes ‘how do I compensate capacity?’ And that is where we reach the diagnosis that today the law prevents this question from being asked.
The law in question, specifically paragraph 6 of article 3-A of Law 10,848/2004, as amended by Law 15,269/2025, is the focus of the discussion. A bill (PL 3716/2026) is moving through the National Congress aimed at repealing this provision, proposing that batteries follow the general rule for capacity reserve funding.
Consumer Benefits and the Outlook for Competitive Prices
A study by Volt Robotics for Absae points out that installing battery storage systems can generate significant annual benefits for consumers, estimated at R$ 8.9 billion, exceeding projected gains for generators by approximately 16 times. This disparity reinforces the association’s argument for broader cost-sharing.
While Congress debates the legislation, the National Electric Energy Agency (Aneel) is preparing for the December auctions under the current regulation. Aneel director Agnes da Costa expressed the expectation that the decision on cost-sharing will take place after the auctions. Absae, for its part, emphasizes that Aneel must regulate existing law and conduct the auctions, while it is up to Congress to make the necessary legislative corrections.
The association also raises concerns about default risk, advocating that compensation for contracted developers be assured, as the business model in Brazil differs from other markets by not allowing revenue supplementation through energy trading. For the December auctions, Absae projects competitive prices for batteries, expecting values below R$ 1.5 million per megawatt per year, influenced by factors such as local content costs, financing terms, and legal certainty.
