By Brazil Stock Guide – Brazil will hold its first auctions to contract large-scale battery storage systems in December 2026, under new rules published by the Ministry of Mines and Energy that create 15-year contracts for projects designed to provide power capacity to the national grid.
The rules establish two capacity-reserve auctions. The first, scheduled for Dec. 2, will be restricted to battery systems that meet national-content requirements. The second, scheduled for Dec. 4, will be open to battery storage projects more broadly. Both auctions will contract power availability in megawatts, with supply scheduled to start on Aug. 1, 2028.
Energy Minister Alexandre Silveira framed the move as a historic step for Brazil’s energy transition. In a post on X, he said the country would publish the rules for its first battery auction and linked the initiative to the goal of storing energy generated by wind and solar power. He also said the auction would attract investment, create jobs and support technological development.
Brazil is presenting batteries not only as a grid-management tool, but also as part of a broader industrial and energy-transition agenda under President Luiz Inácio Lula da Silva’s government. The national-content auction gives that strategy a concrete regulatory form.
National priority
The national-content auction will come first. Projects that win in that round will not be able to submit bids in the second auction, and the grid capacity available for the broader auction will be reduced by the volumes already contracted in the national round.
To qualify for the national product, battery systems will have to meet minimum localization criteria under rules linked to BNDES, Brazil’s development bank. Contract signing will depend on proof that the system has been accredited under the bank’s CFI framework. Failure to prove compliance during implementation may lead to contract termination.
That structure gives the auction an industrial-policy component. The government is trying to encourage a local supply chain for battery systems, equipment integration and related services.
Capacity, not trading
The auctions will not remunerate batteries mainly as merchant assets seeking to profit from short-term power-price swings. Winning projects will receive fixed annual revenue for making capacity available to the system, paid in 12 monthly installments and subject to reductions based on operational performance.
The National Electric System Operator, known as ONS, will determine when the contracted batteries charge and discharge, both in daily programming and in real-time operation. The project owner will carry the risk linked to dispatch uncertainty, including the number of starts and stops, operating hours, injected power and recharge requirements.
The rules also state that the fixed revenue offered by bidders must be sufficient to compensate all use of the battery by ONS, with no additional revenue outside the capacity contract. Energy used for charging and energy injected into the grid will be settled at the short-term PLD price, but positive and negative settlement results will go to the capacity-reserve account within the limits established by the rules.
Technical bar
The requirements are demanding. Projects with maximum power availability below 30 MW will not be technically qualified. Battery systems must be able to provide at least four consecutive hours of maximum power availability, with up to two full cycles per day and a limit of 366 full cycles per year.
The systems must also be capable of completing a full recharge within six hours and maintaining roundtrip efficiency of at least 85% over the contract period. Projects will need to comply with minimum technical connection requirements defined by ONS and the Energy Research Office, including grid-forming capabilities.
Those requirements show that batteries are being treated as grid-support infrastructure, not just storage equipment. They may be used to increase system flexibility, improve operating security, mitigate energy surpluses and manage network restrictions, including when connected to distribution systems.
Location signal
The rules include a locational incentive. Battery projects connected to points in the grid identified as providing additional system benefits will receive a competitiveness bonus in the auction. For those projects, the price used for bid ranking will be multiplied by 0.9, effectively giving them a 10% advantage for classification purposes.
The remaining transmission capacity available for the auctions will be calculated by considering both discharge and recharge needs. If constraints are found that limit or prevent charging at a given connection point, the initially calculated capacity may be reduced or eliminated.
Developers will be able to register projects with the Energy Research Office from June 15 to July 31. For this auction, preliminary, installation or operating environmental licenses will not be required at the technical qualification stage, although the final auction rules will define licensing deadlines for winning projects.
Brazil’s first battery auction is therefore being designed as more than a technology procurement. It combines long-term regulated revenue, centralized dispatch, local-content incentives and strict technical rules. For investors, the prize is a 15-year contract. The trade-off is that the battery will operate largely as an asset of the system, not as a free commercial bet on electricity prices.