Brazil proposes stricter rules for first battery storage auction

Brazil’s electricity regulator, Aneel, has published draft rules for the country’s first capacity reserve auction for battery energy storage systems (LRCAP-BESS), proposing stricter project qualification requirements, higher financial guarantees, and new disclosure rules for investment funds.

The proposals are set out in Joint Technical Note No. 10/2026, released ahead of a public consultation on the auction rules and draft contracts. The consultation is scheduled to run from July 30 to Sept. 14, with the auction planned for Dec. 2.

The draft rules would allow developers to replace the battery supplier identified during project registration with another manufacturer accredited by Brazil’s National Bank for Economic and Social Development (BNDES), provided local content requirements continue to be met. The Brazilian Energy Storage Solutions Association (ABSAE) said the change would increase supplier competition while reducing project risk.

The proposal would also bar certain co-located battery energy storage systems from participating in the auction, including projects linked to generators already contracted through regulated market auctions, distributed generation contracts, or Brazil’s Incentive Program for Alternative Electricity Sources (Proinfa). Restrictions would also apply to systems connected outside the national transmission network and to projects co-located with another standalone BESS.

Aneel has proposed increasing bid and performance guarantees by basing them on an estimated investment cost of BRL 10 million ($1.96 million)/MW of installed capacity rather than developers’ own cost estimates. Bid bonds would be set at BRL 100,000/MW, while performance guarantees would rise to BRL 1 million/MW. The regulator said the measures are intended to discourage speculative bids and reduce execution risks in Brazil’s first storage capacity auction.

The draft rules would also require investment funds participating in the auction to disclose all investors holding at least a 5% stake and provide ownership structures identifying ultimate investors. Aneel said the measure is intended to improve transparency and strengthen accountability.

ABSAE welcomed the proposed supplier flexibility but said the regulator should accelerate project approvals to keep developments on track for operation by August 2028. The association also reiterated concerns about the proposed allocation of capacity reserve costs among electricity generators, arguing that legislative changes are needed to provide greater legal certainty.