Driven by falling technology prices, the expansion of renewables, and the operational needs of the system, batteries are becoming established as a solution to address the flexibility challenges of the electricity sector and energy consumption management.
According to Vinicius Berná, commercial and new business director at UCB Power, energy storage is beginning to gain traction in the Brazilian electricity sector, which is characterized by the diversification of applications and the emergence of new opportunities for agents such as generators, transmitters, traders, and consumers.
UCB recently underwent a corporate restructuring aimed at positioning the company for this new phase of the storage market. The investment fund GEF Capital Partners took control of the company by acquiring a significant stake in its capital.
More recently, the company also received a strategic investment from Vision, a Chinese battery manufacturer. According to Berná, the Asian company's involvement goes beyond just financial investment.
“They bring research and development capabilities within China and a very large production scale. Today, Vision has more than 12 GWh/year of installed battery production capacity,” he explains.
According to the executive, the partnership also opens up opportunities for efficiency gains in the supply chain, with the possibility of consolidating suppliers, reducing logistics costs, and gaining access to new technologies.
The founding family remains as a shareholder.
A UCB The company operates in two main segments: portable batteries, used in electronics such as cell phones and laptops, and stationary batteries, aimed at energy applications. Today, according to Berna, the two areas have a similar share in the company's business.
"The weight is practically fifty-fifty. Depending on the project cycle, the stationary segment can even surpass the portable one," he says.
While the portable battery market follows the dynamics of the electronics industry, the growth of stationary batteries is directly linked to energy management needs.
According to Berna, the stationary battery business in Brazil began primarily within programs aimed at universalizing electricity access. Projects such as "Light for All" and "More Light for the Environment" were key drivers of this growth. Amazon They began using hybrid systems, combining solar panels and batteries, to serve remote communities where expanding the distribution network would not be economically viable.
“Many of these communities are located in isolated regions or even in floating houses on Amazonian rivers. In these cases, installing a solar system with a battery is much more efficient than bringing the grid to them,” explains Berná.
Another important business area was the replacement of lead-acid batteries with lithium batteries. Although the initial investment is higher, lithium offers a longer lifespan and better performance under different operating conditions, which reduces the total cost over the equipment's life cycle.
Price drop
The expansion of the storage market is also driven by a sharp reduction in battery prices. In recent years, the global industry has undergone a technological and industrial transformation that has accelerated the downward trend in costs. "Since 2021, we have seen reductions of over 60% in some segments," says Berná.
One of the main factors was the widespread adoption of LFP (lithium-iron-phosphate) technology. Automakers began replacing nickel, manganese, and cobalt-based batteries with this chemistry, considered more stable and less dependent on critical minerals. Furthermore, the increased scale of production significantly reduced the costs of the technology.
Despite the structural downward trend, the market is currently facing a temporary price increase. Two main factors explain this movement: the appreciation of lithium carbonate in the international market and the rise in global logistics costs.
As a result, the price of low-voltage batteries has risen again in the Brazilian market, going from around R$ 1.100 per kWh to approximately R$ 1.500 per kWh.
Still, the expectation is that the movement will be temporary. "We don't see this as a structural price change, but as a cyclical shock."
The regulatory challenge
The consolidation of energy storage in Brazil also depends on regulatory advancements. According to Berna, one of the difficulties is that the technology doesn't fit perfectly into the traditional categories of the electricity sector.
"Storage is not generation, it is not consumption, and it is not transmission. Therefore, regulation needs to adapt to incorporate this new concept."
In recent years, however, the debate has evolved significantly. The discussion began with Public Consultation 39 of ANEEL This paved the way for building a clearer regulatory framework for the sector. Among the issues still under review are the charging of network usage fees and adequate compensation for additional services provided by batteries.
The federal government plans to hold the first battery capacity auction in Brazil this year, with an initial forecast of contracting 2 GW of power. For Berna, the initiative represents an important step towards scaling up the market.
Studies by the ONS (National System Operator), he says, indicate that Brazil may face an imbalance between generation and demand throughout the day in the coming years. "There is a scenario in which we could have up to 35 GW of renewable energy being cut off at midday and, at the same time, a deficit of about 5 GW of power in the early evening," he states.
In this context, batteries could store some of the surplus generation during the day and release it during peak consumption hours. Even so, the executive advocates caution at the beginning of the process. “A smaller initial auction makes sense. It's a technology that is still being integrated into the system, and all the players are learning.”
The role of traders
In addition to large-scale projects, energy storage also opens up opportunities for new business models in the free energy market. According to Berná, energy trading companies could become one of the main drivers of growth in this market.
Batteries allow for price arbitrage, shifting energy consumption to cheaper times. "If you disconnect the customer from the system when energy is expensive and consume when it's cheap, that has enormous value," he says.
In some scenarios analyzed by the company, this mechanism could generate savings of R$3 to R$4 per MWh, by reducing exposure to the PLD (Price of Settlement of Differences) during peak price hours. Furthermore, batteries can offer additional services to consumers, such as energy backup and improved supply quality.
Domestic production of BESS depends on scale.
UCB currently has two factories in Brazil, located in Extrema (MG) and Manaus (AM), where it already produces lithium batteries for lower voltage applications. However, the manufacture of larger systems, used in grid storage projects, still depends on market scale.
Holding auctions and growing the storage market can be decisive factors in stimulating local production. “Industrial production is directly linked to volume. To justify a larger battery factory, we need predictable demand,” says Berná.
Meanwhile, the company seeks to expand its operations across the entire storage value chain, including application engineering, installation, commissioning, and operation and maintenance services.
“Delivering a battery system goes far beyond the equipment itself. There’s a whole layer of engineering and support throughout the project’s lifecycle.”
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Given the insecurity that exists in Brazil, they'll probably invent a law for those who use batteries soon. (I won't give any ideas, what if some distributor director reads this?) Today I have a hybrid system and another on-grid system. Installed in Dec/22, my cost per kW is R$ 2,00. Since the expansion will remove my exemption from the B wire (connection line), I opted for a hybrid system with 20kW of storage, which I use to reduce my dependence on the utility company.