Brazil eyes gigawatt-scale energy storage growth in 2026
Image: Fluence
From ESS News and pv magazine Brasil
BSAE believes consolidation will occur in 2026 in Brazil’s C&I battery sector as well as in the regulatory sphere. In an interview with pv magazine Brasil, ABSAE’s executive director Fabio Lima said C&I systems are in big demand and are being rapidly deployed. “There is also a dynamic market effect,” he explained, adding that those who have already deployed tend to spread the word of encouragement and this accelerates the adoption curve.
Although the 2025 balance sheet is not yet closed, based on the volume of projects that associates are seeing, the pace of deployment will continue into 2026. The passage of new regulations around renewable energy has also encouraged the market, said Lima. “We see 2026 as a year of regulatory consolidation.”
“In addition, we see C&I applications advancing, including in agribusiness, both in end-of-line and off-grid solutions, in rural and urban environments. There are many applications in hospitals, educational institutions and shopping malls, which are cargo centers with variation throughout the day and relevant consumption in the night period.”
Growth drivers
At the heart of the positive expectations is the capacity reserve auction. Although the rules are still under discussion, they indicate that projects with at least 30 MW of capacity will be prioritized for delivery from 2028.
There are many projects being developed and reviewed to suit the auction, which should be a turning point for the market, as it involves large systems. Lima said he expects the capacity auction to be held in the first part of the year. “The volume of the auction is a secret, but something of the order of 2 GW of power/8 GWh of storage capacity is expected, which would multiply the current Brazilian market.”
Ongoing policy efforts to decarbonize the Amazon will also be a contributing factor to increased storage deployment, as will data centers.
Brazilian energy regulator Aneel is currently in advanced discussions about hourly fares. Depending on how this is implemented – with predictability and legal certainty – it can become an important inducer, Lima believes, including for storage participation in residential consumer units, although this is still under regulatory development.
In addition, with the right incentives, reducing the generation cut can be part of the remuneration of storage systems. “There has been progress in the legal sphere, but there is still a long regulatory discussion,” the ABSAE exec said.
Large projects beyond the auction
The feasibility of large energy storage projects beyond contracting in the capacity reserve auction depends on greater clarity from other sources of revenue, Lima said. In general, storage tends to be established from the stacking of revenues, with a fixed part and another variable.
“In the capacity auction model, the project participates only in the fixed revenue,” said Lima. “This leads to the deployment of systems almost entirely dedicated to the auction. In other countries, capacity payment works as a complement, also allowing energy price arbitration.”
Currently, companies are developing projects developed mostly aimed at the auction. “The multiplicity of services should appear more clearly in associated projects, for example to solar plants, in light of the new regulation,” said Lima, adding that this is the spirit of the updated regulation, which he said “allows storage to act as enabling new network connections and participate in more flexible competitive mechanisms, close to the demand response.”
In this context, having a fixed revenue base on which it is possible to stack revenues from cut reduction, tariff reduction and other consumer services is what will enable “multiservice” projects.
Lima added that some projects are being analyzed for redirection, especially in plants that suffer more from generation cutting, but this is a case-by-case decision, within companies.
“The goal is to create an environment in which storage develops autonomously, with fair taxation and adequate participation in auctions and competitive mechanisms, summarized the executive director of ABSAE.
More broadly, he believes that the electricity sector still faces the growing challenge of system flexibility. With delays in capacity auctions, it is essential to foster new competitive mechanisms and solutions that encourage flexibility, making room for the expansion of storage in the country,” he said.