The Capacity Reserve Auction (LRCap) is shaking up the energy sector with strategies that go beyond fixed contracts, focusing on asset optimization through Battery Energy Storage Systems (BESS).
The upcoming Capacity Reserve Auction (LRCap), scheduled for December, has pushed investors and developers to refine their financial strategies.
While a 15-year guaranteed revenue provides the foundation for the bankability of battery projects, the actual profitability of these assets will increasingly depend on operational efficiency and the mitigation of costs associated with the national power grid.
Clean Energy Latin America (Cela) points out that bid modeling is now incorporating significant marginal gains.
The core strategy lies in coupling battery projects with existing solar or wind farms, creating an ecosystem that maximizes return on investment (ROI) through operational synergies.
The Value of Efficiency and Cost Reduction
One of the pillars of this new approach is the concept of avoided curtailment.
By installing storage systems near renewable parks, operators can capture energy that would otherwise be wasted due to transmission constraints, thereby increasing the volume of marketable generation.
Furthermore, managing the Transmission System Usage Amount (Must) has become a competitive differentiator.
Co-located projects can reduce this cost by up to 30%, a crucial factor in an auction where the discount on the Transmission System Usage Tariff (Tust) will not be applied.
Vinicius Henrique stated:
“We see various players approaching this in very different ways. It is the first auction, so there are still many novelties and uncertainties. We don’t have complete clarity, and each company views the scenario in its own way. It is very interesting to observe how these approaches ultimately impact the bid for the auction,”
remarked Vinicius Henrique, Senior Manager of Strategy and Investment Analysis at Cela, during the Storage Leaders event organized by Absolar.
Challenges and Long-Term Horizons
Investor planning is also looking beyond the 15-year contract term.
With an estimated useful life of 20 years, batteries are sparking a debate regarding the operational viability of the final five-year period.
The post-contract cost structure, with special attention to the impact of Tust on charging and discharging, will determine the long-term financial sustainability of these projects.
Another point of focus is grid connection.
Projects located at already operational plants gain a competitive advantage by avoiding schedule risks and the regulatory uncertainties of new transmission access processes.
This time saving reduces the required Capex and attracts investors seeking greater execution security.
Looking Ahead: Augmentation and Technology
The augmentation strategy—the expansion or replacement of battery cells over time—is emerging as a key piece of the financial puzzle.
Cela emphasizes that to be competitive, companies must integrate detailed capacity replacement curves into their spreadsheets, considering both the battery usage profile and financing conditions.
The clean energy sector in Brazil is currently in a state of high anticipation.
As the market awaits the final terms of the LRCap, the ability of investors to balance fixed contract revenue with operational intelligence will determine who secures the most robust margins in this new storage market.
