Could Brazil hold an energy storage tender in 2024?

Brazil's mines and energy (MME) minister, Alexandre Silveira, said on Thursday that the government intends to hold an auction later this year exclusively to contract energy storage systems. 

The MME had been studying the possibility of contracting battery projects, possibly coupled with solar and wind power plants, through the backup capacity tender, which was scheduled for August, but was postponed and no new date has yet been set. Thermal and hydroelectric projects would also compete in the auction. 

Highly dependent on hydroelectricity, Brazil is going through its worst drought in nearly a century. Wind and solar sources are driving growth of the country's generation capacity, but they are intermittent, so batteries are seen as an ideal complement. 

Contracting storage systems as a capacity backup could be carried out rapidly, especially if the MME chooses to contract systems coupled with renewable power plants, local electricity storage solutions association ABSAE said in a statement sent to BNamericas. 

“There are no regulatory obstacles to this modality, and the adjustments to be made to the contracts used for the capacity reserve auction would be minimal,” the association said. 

Paula Padilha, energy partner at law firm Vieira Rezende, warned that the lack of specific regulations for the use of batteries and storage systems has been a significant impediment to these projects being included in regulator Aneel's auctions. 

She underscored that the backup capacity tender initially planned for this year is also facing challenges due to the absence of final guidelines. 

“This indicates that there’s complexity in coordinating and regulating the processes needed to ensure the viability of the planned auctions,” she told BNamericas. 

“Although there’s a clear intention by the government to go ahead with these auctions, holding them within the established deadlines will depend on the resolution of regulatory gaps and the effective publication of the necessary guidelines, which may make holding them this year unfeasible,” Padilha added.