MME launches Public Hearing regarding the 2026 Energy Storage Auction in Brazil

On November 10, 2025, the Ministry of Mines and Energy (MME) published Normative Ordinance No. 878/2025, dated November 7, 2025, announcing the opening of Public Consultation No. 202. The consultation refers to the draft ordinance establishing the guidelines and procedures for conducting the Capacity Reserve Auction in the form of Power through new battery energy storage systems (“2026 LRCAP – Storage”). The consultation period will run from November 10 to December 1, 2025.

The 2026 LRCAP – Storage, expected to take place in April 2026, aims to ensure the continuity of electricity by meeting the power needs of the National Interconnected System (SIN) through the contracting of electrochemical battery-energy storage systems (SAEs). The total Capacity Reserve amount to be contracted will be defined by the MME, based on studies by the Energy Research Office (EPE) and the National System Operator (ONS), in compliance with the general supply security criteria established by the National Energy Policy Council (CNPE).

Highlights

• SIN Connection

The auction will negotiate the Power Storage Product, in which the delivery commitment consists of power availability in MW. Eligible participants include new SAEs that are:

(i) Directly connected to the SIN connection point without sharing dedicated-use facilities with other agents; or

(ii) Installed at the same SIN connection point as other agents, sharing their respective dedicated-use facilities.

• Charging and Discharging Dispatch

Projects contracted under the 2026 LRCAP – Storage must comply, as defined by the ONS, with all charging and discharging dispatches included in the daily operating schedule and in the real-time operation of the SIN.

• Maximum Charging Time

The storage system must be capable of completing a full charge within up to six hours.

• Availability Commitment

The daily delivery commitment for maximum power availability is four hours, as defined by the ONS. The ONS may dispatch the resource for more than four hours per day at power levels proportionally lower than maximum availability.

• Revenue

For the availability of contracted power, the project owner will be entitled to fixed revenue, in BRL/year, paid in 12 monthly installments.

• Location Bonus

Prior to the start of registration, EPE and ONS will identify SIN connection points where new SAEs offer additional systemic benefits. When connected to such points, exclusively for LRCAP competitiveness purposes, SAEs will be entitled to a reduction in the power availability price through the application of a location bonus constant. This constant will be defined by the MME, based on studies by the EPE.

Technical Qualification Requirements

• Environmental Licensing

Submission of the Preliminary License, Installation License, or Operating License for the SAE is not required in the registration and technical qualification phase before the EPE. The Auction Notice will establish specific deadlines for obtaining environmental licensing.

• Restrictions

The following projects will not be technically qualified by the EPE:

(i) SAEs with a Variable Unit Cost (CVU) greater than zero;

(ii) SAEs with maximum power availability below 30 MW;

(iii) SAEs unable to operate continuously for at least four consecutive hours at maximum power;

(iv) Projects where the candidate busbar has remaining capacity insufficient for both injection and required charging;

(v) SAEs with a round-trip efficiency below 85%;

(vi) SAEs with a maximum full charging time exceeding six hours; and

(vii) SAEs that do not meet the minimum connection requirements for battery storage systems established in Technical Note NT-ONS DPL 0111/2025, including grid-forming capabilities.

The Auction Notice will also reflect the transmission system connection requirements for SAEs defined in that technical note.

Capacity Reserve Power Contracts

• Supply Term

Capacity Reserve Power Contracts (CRCAPs) will have a 10-year supply term, with supply scheduled to begin on August 1, 2028.

• Short-Term Market Exposure

Energy used for charging and energy injected by SAEs will be settled in the Short-Term Market (MCP) at the Settlement Price of Differences (PLD). Any difference will be allocated to or funded by the Capacity Reserve Power Account (CONCAP).

The amount of charging energy funded by CONCAP will be limited to the quotient between injected energy and round-trip efficiency. Any amount of charging energy exceeding the 85% round-trip efficiency will be funded by the project owner.

• Penalties

Penalties will apply in case of:

(i) Unavailability above the reference indices informed during registration;

(ii) Failure to meet the power availability commitments contracted in the LRCAP; and

(iii) Failure to comply with centralized dispatch instructions, both for charging and injection.

• Early COD

CRCAPs must include the possibility of requesting early commercial operation, subject to evaluation and approval by the Electric Sector Monitoring Committee (CMSE), provided that:

(i) The requested advancement offers technical and/or financial benefits to the SIN; and

(ii) Systemic requirements for commercial operation are met, including connection availability on the new supply start date.