By Brazil Stock Guide – Brazil’s electricity regulator Aneel approved on Tuesday a 46-day public consultation on rules for the country’s local-content battery auction, advancing plans to add storage capacity to the national grid while leaving a key cost-sharing question unresolved.
Comments will be accepted from July 30 through Sept. 14, with a public hearing scheduled for Sept. 1 at Aneel’s headquarters in Brasília. The final auction notice is expected to be published on Oct. 29.
The tender will procure batteries under a capacity-reserve mechanism designed to provide additional power during periods of system stress. Storage units can absorb electricity when supply is abundant and return it to the grid when demand increases or generation falls.
That flexibility is becoming more important as Brazil adds intermittent renewable sources such as wind and solar power. The auction’s local-content requirement is also expected to encourage domestic production and investment in energy-storage technology.
Generators face battery costs
Aneel’s technical staff recommended that generators bear the full cost of the contracts. Director Gentil Nogueira, who reported on the auction rules, supported the proposal.
The requirement was introduced by Law 15,269/2025, which updated Brazil’s electricity-sector framework and excluded consumers from directly funding battery capacity contracts.
Congress may still change that arrangement. Bill 5,017/2019, introduced by former lawmaker Beto Rosado, is under consideration in the Senate. A second proposal, Bill 3,716/2026, sponsored by Representative Arnaldo Jardim, is pending in the lower house.
Aneel will address the allocation methodology in a separate regulatory proceeding. The unresolved question is how much each generation category should pay, given that different power sources contribute differently to the grid’s need for backup capacity.
Decision may come before auction notice
Nogueira said the regulator could establish the cost-sharing formula before the auction notice is released. An early decision would allow bidders to assess payment risks and price their offers more accurately.
“Knowing in advance who will bear the cost of the charge is relevant to bidders, as it allows them to assess the default risk associated with the procurement and, consequently, price it into their proposals,” Nogueira said.
The lack of clear rules may prompt prospective bidders to add a risk premium to their offers. The allocation mechanism will affect both the reliability of contract receivables and the financial structure supporting the projects.
“The technical departments recognize that the absence of rules introduces significant uncertainty regarding the receivables structure that will support the contracts resulting from the auction, affecting the proper composition of the transaction’s risk matrix,” Nogueira said.
Generation sources may receive different treatment
A uniform allocation across all generators may be difficult because power plants have different levels of availability, predictability and production control.
Dispatchable plants and intermittent renewable facilities do not have the same effect on system operations or on the need for capacity reserves. Aneel will need to decide whether those differences justify separate payment criteria for each generation category.
The consultation will also cover the tender’s local-content requirements and contractual conditions. The cost allocation proceeding will advance separately from the auction rules.
Directors clash over early assignment
The timetable for the cost-sharing case triggered a disagreement among Aneel directors during Tuesday’s meeting.
Director Fernando Mosna proposed an early draw to select the director who would oversee the proceeding regulating the battery charge. Director-General Sandoval Feitosa responded that the issue was not part of the matter under consideration and said the authority to order an extraordinary assignment rested exclusively with his office.
Feitosa argued that the proposal should first be discussed at an administrative meeting and follow the agency’s internal procedures. Mosna later clarified that he was suggesting that the director-general evaluate the possibility of bringing the draw forward.
Nogueira agreed that the funding issue required an expedited review but declined to add Mosna’s proposal to his vote on the auction notice. He said he would submit a separate request seeking authorization for an early draw, subject to Feitosa’s approval.
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