The energy storage market still faces unfavorable development conditions in Brazil. Although the topic is gaining relevance in discussions about system security and flexibility, economic and regulatory barriers continue to limit the expansion of these technologies in the country.
According to a study by the consultancy PSR, the tax burden is one of the main obstacles: the average costs of storage systems increase by 76% after taxes are applied.
The analysis, titled "Acceleration of the Brazilian Energy Transition – Comprehensive Meta-Analysis of Energy Storage in Brazil," evaluated both battery systems and pumped-storage plants. The diagnosis is straightforward: the combination of high taxation and regulatory uncertainty has impeded the advancement of projects in the country.
“While solar and wind assets have received tax incentives in the past, current tax rates may act as a disincentive to battery investments in Brazil,” says PSR.
Brazil has REIDI (Special Incentive Regime for Infrastructure Development), created by Law No. 11.488/2007, which reduces taxes on infrastructure projects. However, energy storage is not yet explicitly covered by this mechanism.
According to the PSR, a legal update would be required to include storage systems among the eligible projects. Furthermore, any project seeking membership in the scheme must undergo an approval process with the ANEEL (National Electric Energy Agency) – a procedure that, according to the consultancy, may represent an additional obstacle to implementation.
Price arbitrage: economic limits
One of the best-known applications of storage systems is price arbitrage, the purchase of energy at low prices and the sale of energy when prices rise. This practice, common in mature markets, still faces challenges in becoming viable in Brazil.
According to the PSR, for a battery system to be economically viable in Brazil, an average daily price difference of between US$72 and US$152 per MWh would be required, sustained for four hours a day, and considering a 15-year useful life. In the case of pumped-storage plants, the required difference would be between US$65 and US$161 per MWh, for eight hours a day and a useful life of 40 years.
However, current hourly price formation in the Brazilian market still presents low granularity throughout the day, which reduces arbitrage opportunities. In 2025, the minimum and maximum spot prices are set at US$10,24/MWh and US$269,50/MWh, respectively.
The challenge of “revenue stacking”
With isolated arbitrage unable to sustain investments, the PSR emphasizes that the solution involves allowing storage systems to accumulate multiple revenue sources—known as revenue stacking. This includes participating in capacity mechanisms and offering ancillary services such as voltage and frequency control and emergency start (black start).
The study cites the creation of regulatory "sandboxes" (experimental environments for testing new business models) as a positive, but still incipient, step. One of the planned projects is the acquisition of reactive power support services, currently provided primarily by thermal and hydroelectric plants. For 2025, the remuneration for this service has been set at US$1,72/Mvar-h.
There is also an expectation of opening sandboxes for secondary frequency control and black start, with fixed remunerations currently at US$11.735 and US$8.801 per year, respectively, amounts paid mainly to hydroelectric plants.
"The lack of clear mechanisms for capacity, ancillary services, and flexibility remuneration limits the economic viability of storage projects. Developing a comprehensive revenue framework is essential to unlock private investment and enable large-scale deployment," the study highlights.
With the increasing penetration of intermittent sources such as solar and wind, the need for flexibility in the electrical system becomes increasingly urgent. The PSR points out that Brazil has great potential to develop the storage market, but this depends on adjustments to tax policy, improved regulation, and the creation of new remuneration models.
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