The Brazilian electricity sector is at a strategic crossroads. In 2026, two regulatory moves could redefine the future of the electricity matrix: the power auction, scheduled for March, and the first battery storage auction (BESS), theoretically scheduled for April. Although both have complementary objectives, the way they are conducted could accelerate — or delay — the modernization of the system.
The MME (Ministry of Mines and Energy) has defined guidelines for the 2026 LRCAP (Capacity Reserve Auctions), focusing on guaranteeing firm power to the SIN (National Interconnected System).
The project will include the contracting of thermal power plants using natural gas, coal, and fuel oil, as well as hydroelectric expansions. The justification is clear: to ensure stability in the face of the expansion of intermittent sources, such as solar and wind power. If everything goes according to schedule, the first BESS system auction in Brazil will take place in April 2026.
Decree No. 878/2025 established rigorous technical requirements: a minimum power of 30 MW, delivery capacity for 4 hours a day, a minimum efficiency of 85%, and mandatory grid-forming technology. The contracts will have a duration of 10 years, with supply beginning in August 2028.
This initiative is historic. By allowing the integration of batteries into the National Interconnected System (SIN), Brazil is taking a step towards reducing its dependence on thermal power plants during peak hours, increasing operational flexibility, and enabling greater integration of renewables.
However, it is worth remembering that this risk of "sequencing" power before storage could result in a risky depletion. By holding the power auction first, the government may reduce the appetite for the storage auction.
This is because, by contracting thermal power plants to guarantee firm power, a sense of security is created that can postpone investments in more modern and cleaner solutions.
Furthermore, the proximity of the dates and the lack of complete regulation—such as rules for grid usage tariffs and remuneration for ancillary services—increase uncertainty. The result could be a depleted storage auction, compromising competitiveness and raising future costs.
For the Reserved Capacity Auction (LRCap) of March 2026, the Energy Research Company (EPE) completed the registration of projects totaling more than 12,5 GW of power on November 14, 2025. This value represents the amount of energy that has been enabled, but not the amount that will necessarily be contracted in the auctions.
The main question that remains is the expected amount of energy/power that could be contracted for the storage auction. This raises the question: Do we have enough time to boost the growth of the BESS solution?
Global experience shows that the adoption of BESS can be rapid when there are clear incentives and stable regulation:
- United States: Between 2010 and 2018, the cost of batteries fell by 85%, driven by policies such as tax credits and federal programs. Today, the US has more than 33 GW of installed capacity, with projects taking an average of 19 months from the start of construction to commercial operation. The fastest achieve this in 14 months, while the slowest take up to 28 months. In 2024, I had the opportunity to visit companies operating in BESS in Texas and was impressed by how the storage model is used strategically to distribute energy during times of need, providing economic signals to investors.
- China: Leads the global race, with accelerated expansion to integrate variable renewables. By 2025, more than half of the new BESS systems installed worldwide were in China, reflecting aggressive policies and clear decarbonization targets.
- Europe: Capacity is expected to grow sixfold by 2029, reaching 400 GWh. Despite this progress, adoption has been slower than in the US and China due to reduced subsidies and regulatory challenges. Even so, countries like Germany and the UK already operate large-scale projects, notably systems coupled with wind farms.
In Brazil, it is evident that the country will continue to expand intermittent energy sources. Solar and wind power already represent more than 23% of the electricity matrix and could reach almost 50% by 2031. This trend is irreversible, given the abundance of natural resources and the competitiveness of these technologies.
Without the swift and relevant integration of storage into the National Interconnected System (SIN), reliability and flexibility problems may arise, especially during periods of high renewable generation and low demand.
A new development has brought even more complexity to the coordination between auctions. Law No. 15.269/25, enacted on November 24, 2025, modernized the regulatory framework of the Brazilian electricity sector.
Among the main points, the long-awaited regulation of electricity storage activity stands out, including:
- (i) assignment to ANEEL to regulate and oversee storage systems, with rules for remuneration and access when connected to the National Interconnected System (SIN) or to isolated systems;
- (ii) creation of mechanisms to promote batteries (BESS), such as the possibility of reducing Import Tax to zero and inclusion in REIDI, with an annual tax waiver limit of R$ 1 billion between 2026 and 2030.
Despite the optimism, the sharing of charges has generated concern among investors. For BESS systems, specific costs will be shared only among generators, avoiding direct pass-through to the end consumer, who also benefits from a more flexible system.
Since the law defines this guideline, there is no room for the storage auction to adopt a different format regarding the allocation of charges.
What's the solution? Postpone the auction or stick to the schedule?
Law No. 15.269/25 creates a favorable regulatory environment, but its implementation requires fine-tuning to avoid a hollow auction — the worst possible scenario.
If Brazil intends to lead the energy transition in Latin America, it cannot adopt solutions that solve the present at the expense of the future.
The challenge goes beyond contracting power or storage: it is necessary to design an integrated strategy that values innovation, ensures predictability, and maintains attractiveness for investors.
The opinions and information expressed are the sole responsibility of the author and do not necessarily represent the official position of the author. Canal Solar.
