Battery energy storage systems in Brazil: current regulatory and investment scenario

April 2025  |  SPECIAL REPORT: INFRASTRUCTURE & PROJECT FINANCE

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April 2025 Issue

Historically, the Brazilian electricity matrix has been based on hydropower. However, over the last two decades, the mix of installed capacity has changed significantly through the introduction of different energy sources.

There has been a surge in the introduction of wind and solar power, especially small-scale, distributed generation projects, mainly solar photovoltaic, which reached an installed capacity of 37GW in 2025.

While a harbinger of good news from a sustainability perspective, the introduction of significant variable energy sources also means that operating Brazil’s interconnected electricity system is becoming a significant challenge.

Flexible generation and correlated solutions, including battery energy storage systems (BESS), are therefore likely to be at a premium in the future. Accordingly, in this article we delve into some key themes regarding the development and exploitation of battery storage solutions in Brazil, including in the context of energy transition and electrification in general.

Current regulatory scenario

The battery storage business is still in its infancy in Brazil, and no comprehensive rules governing the deployment of such technologies exist – either for utility-scale or small-scale projects.

So far, only a few projects or businesses have been disclosed, namely: (i) ISA CTEEP, with batteries imported from China; (ii) Vale, with lithium-ion batteries supplied by Tesla; (iii) Neoenergia, also with lithium-ion batteries; and (iv) Matrix Energia, which started offering an ‘energy as a service’ storage solution while partnering with Huawei. A few other businesses exist in Brazil as well, such as Micropower, Aldo Solar and YouOn, for instance.

The deployment of BESS can take various forms, and business initiatives may vary. To address this, the National Electric Energy Agency of Brazil (ANEEL) has identified a regulatory gap and initiated a three-phase roadmap. Such process has not been concluded. In this context, below we provide a short summary of the current regulatory scenario in Brazil divided by segment.

Power generation, trading and storage agent. In most typical power generation arrangements, generators must obtain an authorisation from ANEEL if installed capacity exceeds 5MW. Renewable power projects with installed capacities not exceeding 5MW are subject to straightforward online filing with ANEEL. Notwithstanding, the current framework does not expressly regulate the implementation of BESS projects (except in isolated systems) by generators. ANEEL provided an initial framework draft creating a storage agent to whom it would issue a specific authorisation. However, roadmaps have not been concluded yet and no formal decision has been made.

In parallel with ANEEL’s regulation efforts, the Ministry of Mines and Energy, which is responsible for planning and public policies related to the power market, plans to hold an auction to introduce the deployment of storage systems into the grid in 2025, subject to a centralised dispatch by the National Electric System Operator. It would require from each storage system a minimum capacity of 30MW and the ability to operate for at least four hours daily to qualify. The idea is to kickstart storage projects on a large scale. The consultation process has ended, but no additional details have been announced regarding the specifics of the framework for such an auction.

Power consumption. Brazilian law allows small-scale distributed generation projects (capacity not exceeding 3MW or 5MW depending on the technology) to be installed with storage systems, provided certain criteria are met. In addition, arguably there would be no restrictions on the installation of batteries for consumers in general, provided that the relevant regulatory framework, contracts (especially wheeling contracts made with the relevant distribution utilities) and technical regulations are observed (batteries should be treated as any other equipment that consumes power from the grid), and that no power is injected into the grid.

Power transmission. Power transmission services are awarded to market participants after bidding proceedings carried out by the federal government. While so far no transmission auction has contemplated large-scale BESS and no specific regulations exist, in one case at least, ANEEL has authorised the deployment of battery systems as reinforcements to the transmission grid and the corresponding compensation of such systems through grid tariffs.

Power distribution. Similarly, power distribution services are awarded to market participants after bidding proceedings carried out by the federal government and execution of a concession contract. In this context, storage systems can and have been implemented, including as part of the federal government’s programmes to provide electricity to the population in remote areas.

Investment, incentives and taxation scenarios

According to Brazilian law, there are no legal restrictions on direct foreign investment in the battery storage businesses or in the power sector (except in very specific segments or sectors of the economy).

In May 2024, the Brazilian Ministries of Development and of Science and Technology issued an ordinance to provide tax and non-tax incentives for the production of BESS in Brazil. The ordinance establishes the concept of a ‘basic production process’ and a points-based system for lead and lithium batteries.

The idea is to incentivise the local manufacturing of such battery systems. Companies that rank highly in the ordinancee point-based systems may receive tax credits and may also be given preferential treatment in acquisitions by the federal government and state-owned companies and entities.

The development of battery system projects may qualify under the Brazilian Special Incentives Regime for Infrastructure Development (REIDI) programme. Under REIDI, payment of certain social contributions (essentially, Program of Social Integration and Contribution for the Financing of Social Security) levied on the acquisition and the importation of goods and services related to infrastructure projects are exempted. Currently, storage systems (and related investments) are not classified as standalone ‘infrastructure projects’ but can qualify when integrated into broader infrastructure.

For instance, ISA CTEEP’s grid reinforcement storage project qualified under the REIDI programme. ANEEL is aware of the matter and sector entities are lobbying the government to grant to autonomous storage systems the treatment afforded to other infrastructure projects under the REIDI programme.

Additionally, the Fundo Constitucional de Financiamento do Nordeste (FNE), through its green fund, FNE Verde, is developing a subsidised line of credit to support innovative projects in energy storage systems. Beyond addressing the growing demand and stimulating investments in large-scale energy storage technologies, FNE projects that this credit line will complement the upcoming auction.

Lastly, the Paten, an initiative that reinforces Brazil’s commitment to sustainable development, was created in January 2025. As such, one of Paten’s strategies is the prioritisation of innovative energy solutions, which includes the development and integration of energy storage systems. To support these efforts, the law also creates a dedicated fund, known as the Green Fund, which is managed by the Brazilian Social and Development Bank. This fund operates as an independent financial vehicle with its own assets and obligations, specifically designed to reduce the financing risks for projects by providing collateral to lenders.

Conclusion

Although energy storage solutions have yet to be widely deployed in Brazil, generation flexibility remains a scarce commodity. Therefore, storage projects, including pumped hydro, could be the missing piece needed to enhance the country’s energy system.

With well-designed policies and regulations, Brazil has significant potential to follow in the footsteps of jurisdictions like California and Chile for large-scale battery storage, Germany for distributed and large-scale storage, and Australia for both pumped hydro and large-scale battery systems.

 

Marcos Ludwig, Daniel Engel and Alberto Büll are partners at Veirano Advogados. Mr Ludwig can be contacted on +55 (21) 3824 4668 or by email: marcos.ludwig@veirano.com.br. Mr Engel can be contacted on +55 (11) 2313 5945 or by email: daniel.engel@veirano.com.br. Mr Büll can be contacted on +55 (11) 2313 5871 or by email: alberto.bull@veirano.com.br.

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Marcos Ludwig, Daniel Engel and Alberto Büll

Veirano Advogados

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