Energy storage in Brazil: what’s needed to take off?

Article published in Canal Solar Magazine

“Energy storage comes to boost renewables” It is “Storage has to be on the entrepreneur’s agenda”. These are some of the statements made by industry experts, who see this technology as an investment opportunity with interesting return conditions for consumers.

According to Markus Vlasits, director of NewCharge Projetos and coordinator of the storage GT (working group) of ABSOLAR (Brazilian Photovoltaic Solar Energy Association), the Brazilian storage market is growing and could reach an installed capacity of 18 GWh and cumulative revenue of more than R$ 40 billion by 2030. 

However, according to him, there are still measures that need to be adopted for this market to take off in the country. For the executive, there are three major areas where Brazil needs improvement: regulation, technical standards and taxation.

Regulation 

To talk about this topic, it is good to remember that we have three areas of application:

• The so-called 'behind the meter' storage systems, which are small and medium-sized ones installed by individual consumers and whose main functionality is to reduce costs and improve the quality of energy supply;
• 'Ahead of the meter' systems, which are large systems that provide services to large generating plants or the electrical grid. An example of this application would be a battery bank installed at a point on the network with chronic excess demand. “In many cases it would be cheaper to put in a battery bank instead of pulling a new transmission line,” says Vlasits;
• Off-grid systems, which operate outside the electrical grid.

“Evidently, each of these applications requires specific regulatory proposals. For behind-the-meter systems we need to improve PRODIST [electricity distribution procedures in the national electrical system] and Normative Resolution 482 [from ANEEL], in order to allow the operation of storage systems connected to the grid. Today there are specific regulations for diesel generators, but there are no regulations for battery storage,” he explained.

Regarding the regulation for 'ahead of the meter' systems, the expert commented that it is necessary to quantify the benefit that a system can bring to the electricity grid, quantify a fair remuneration for the owner and then define an efficient mechanism for contracting these ahead-of-the-meter storage services, such as specific auctions, for example.

In the case of off-grid, an important tool, according to him, will be the inclusion of storage and/or hybrid systems in auctions of isolated systems. “This is already being considered by ANEEL (National Electric Energy Agency), but in my opinion there are still points that are not sufficiently clarified”. 

Technical standards

Currently, INMETRO (National Institute of Metrology, Standardization and Industrial Quality) ordinance 004/2011 is the main document that establishes technical standards for photovoltaic and stationary storage systems. 

However, for batteries this standard only covers two technologies: lead-acid and nickel-cadmium. “There is nothing for lithium or other electrochemical technologies and other forms, such as fuel cells. It is worth remembering that this ordinance dates back to 2011. On the one hand this makes life easier, but on the other hand it also represents a risk. It would be good to have well-designed technical standards, as long as the requirements make sense and the bureaucratic procedures are easy”, pointed out the director of NewCharge Projetos.

“It's a topic that worries me a lot, because for photovoltaic components we see that INMETRO's technical requirements are quite lax, but the bureaucratic complexity of obtaining and renewing registrations is enormous and creates a huge burden and headache for manufacturers and distributors. . My fear is that this story could repeat itself for batteries and storage systems as a whole”, he highlighted. 

Taxation

In May last year, the Federal Revenue determined that storage systems should be included in the same NCM codes (common Mercosur nomenclature) of the accumulators (cells and batteries) they use. 

The problem with this, according to Vlasits, is that the tax burden of these codes is extremely high. “In the case of lithium batteries, it is more than 80%, that is, a technology capable of modernizing the electrical sector and reducing CO2 emissions in energy generation is taxed as if it were an alcoholic beverage, an imported car or a weapon. It really doesn’t make sense,” he concluded. 

More reviews

Marcelo Taborda, commercial manager and responsible for the solar energy and batteries area at BYD, also analyzed the measures that need to be adopted for the exponential growth of the storage market which, according to him, is one of the main pillars when it comes to energy efficiency. 

“For this reason, the sector needs public policies and tax incentives aimed at growth, in addition to accelerating the process of regulating hybrid systems with ANEEL, also creating specific Brazilian standards for the certification of batteries, hybrid inverters and ESS (energy storage systems)”, he pointed out.