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The cancellation of the first capacity reserve auction that would have contracted thermal power plants and the delay in publishing specific regulations for storage systems threaten to postpone the first tender that would have contracted large-scale battery systems in the country, precisely at a critical time for the reduction of renewable energy. The development of the storage market in Brazil is going through a crucial phase. The cancellation of the first reserve capacity auction, which was scheduled to include hydroelectric expansions and gas and biofuel thermal plants, has jeopardized the holding of the second Reserve Capacity Auction 2025 (LRCAP, for its initials in Portuguese), this time with room for the contracting of battery storage and initially scheduled for the second half of the year. To top it all off, the publication of the regulations on energy storage systems may also take longer than initially expected. This is because the term of the director of the National Electric Energy Agency (Aneel), responsible for reporting on the process, Ricardo Tili, ends on May 24, and Aneel has not included the outcome of Public Consultation 39/23, which addresses the issue, on the agenda for next Tuesdays meeting (today, May 20). The processes under the directors responsibility that have not been analyzed by the end of his term will be redistributed among the other directors. Shortly after the first auction was cancelled, associations and companies expressed their support for holding a second auction . “Since the government canceled the first one, it could also postpone the second one. And postponing it is very bad for Brazil in general. Its not bad for the Canadian who sells storage. We have a big problem right now, which is the restriction, for which the government hasnt provided a solution. And the battery is a solution. But no one is going to install a battery without having regulations on how they can use that battery,” Samir Moura, managing director of Canadian Solar in Brazil, told pv magazine in April. “If I can also use it for ancillary services, without knowing what the discharge rule is, what tariff will I receive?” Canadian Solar is one of the module manufacturers that has begun offering battery storage systems in response to the growing need for grid flexibility in several countries, with the rise of intermittent sources. In the first quarter, its energy storage unit, e-STORAGE, recorded 91 GWh contracted, with an estimated order value of $3.2 billion. In Brazil, the company believes investors are still waiting for obstacles to be resolved before considering the development of battery storage projects. “In reality, they [the generating companies] are one step behind. They want to solve the restriction problem and then think about storage. One issue is linked to the other,” Cristiano Piroli, the companys commercial director, explained to pv magazine . “In 2024 alone, we had 400,000 hours in which the National Electric System Operator (ONS) suspended the generation of 445 photovoltaic projects. And today there are no regulations for these people, the money is wasted and unpaid. This represents an average of 14.6 TW hours of wasted energy, or 1.6 billion reais (US$283 million) that we will be throwing away by 2024.” According to the Brazilian Photovoltaic Solar Energy Association (Absolar), the rules for compensating generators for limited outages only cover a small portion of the outages, and most cases go uncompensated. At the same time, holding a capacity reserve auction to contract battery storage systems could be essential to reducing curtailments and improving the energy efficiency of renewable generation, executives argue. Furthermore, with appropriate regulations, these projects will be able to provide ancillary services, in accordance with ONS operational guidelines, increase operational flexibility and system reliability, and smooth ramps and load changes at critical times. The public consultation is over; they have to publish it. Before, we were afraid that too much contracting would be done for the thermoelectric LRCAP, leaving little demand for the battery LRCAP. But now were afraid they wont stick with the battery LRCAP, because theyre going to push this thermoelectric LRCAP; theyre pushing the storage LRCAP even further. So well be waiting for more than a year, Piroli commented. The decision to suspend the ordinance establishing the guidelines for the first LRCAP of 2025, which led to the cancellation of the auction, also ordered the Ministry of Mines and Energy (MME) to conduct a new public consultation on the new auction system, including how to calculate the bid price. The MME has opened a public consultation proposing changes to Ordinance No. 88/2024/GM/MME of October 31, 2024, which defines the operating standards for thermal power plants under different conditions to meet energy demand. The proposed ordinance does not mention the LRCAP. |
