The cost allocation debate has emerged as the central point of contention in public consultations 22 and 23/2026, which address the improvement of auction notices and contracts for capacity reserve battery storage. Law 15.269/2025, which modernized Brazil’s electricity sector, explicitly assigned battery storage costs exclusively to generators, excluding consumers from bearing these expenses. Consumer representatives including ABRACE and distribution companies grouped under ABRADEE support maintaining this exclusive generator allocation. ABRACE argues that challenges in defining an adequate payer base do not justify transferring obligations to consumers, while FIESP contends that entities contributing to system flexibility needs should bear the associated costs.
Generator associations have countered with proposals to broaden cost sharing. The National Institute for Clean Energy argues that storage delivers systemic benefits in security, reliability and operation that reach all consumers across Brazil’s interconnected grid, justifying proportional cost distribution among final consumers. The Independent Power Producers Association suggests auction documents should not fix generator responsibility in ways that prevent incorporating future legislative changes. These entities recommend contract language that references applicable legislation rather than hardcoding specific payer categories, anticipating that Bill 3.716/2026 currently in Congress may overturn the generator-only allocation established in Law 15.269/2025.
The two December battery auctions will contract 15-year agreements with supply beginning August 1, 2028, requiring projects of at least 30 MW individually. More than 6,000 projects have registered for the auctions, which aim to address the grid flexibility gap created by high solar generation during daylight hours and peak evening demand.
This article was curated and published as part of our South American energy market coverage.
