First battery auction will be in December and will have 15-year contracts

The MME (Ministry of Mines and Energy) published this Wednesday (3), in the Official Gazette of the Union, the guidelines for the first capacity reserve auction aimed exclusively at battery energy storage systems in Brazil. The ordinance creates two distinct competitions, one reserved for projects with national content and the other open to all suppliers, in an attempt to stimulate local industry without restricting competition.

The auction will be held on December 2nd and will be aimed at projects that meet minimum nationalization requirements defined by BNDES. Two days later, on December 4th, another competition open to other storage systems will take place. Both auctions will contract power to meet the needs of the SIN (National Interconnected System).

The publication comes one day after Aneel approved the regulations for energy storage systems, consolidating the regulatory framework that the sector was waiting for to make the first commercial-scale projects viable.

The guidelines establish that the winning ventures will have capacity reservation contracts lasting 15 years and supply starting on August 1, 2028.

One of the central points of the ordinance is the definition of the minimum technical requirements for participation. The batteries must be capable of supplying the contracted power for four consecutive hours per complete cycle, and can perform up to two cycles per day, limited to 366 cycles per year. The National Electric System Operator (ONS) may, however, dispatch the systems for up to 12 hours.

Projects will also need to be able to perform a full recharge within six hours and maintain a minimum efficiency of 85% over the contractual horizon. Projects with a power of less than 30 MW will not be able to participate in the competition.

The ordinance also makes it clear that entrepreneurs will assume the operational risk related to the order made by the ONS. The contracts will determine that the winners fully comply with both the unloading and reloading commands defined by the operator, without additional remuneration beyond the fixed revenue contracted in the auction.

In the case of the national auction, participation will be subject to the accreditation of the equipment in the BNDES CFI System, following specific local content rules.

The guidelines also introduce a locational incentive mechanism. Projects installed at points on the network considered strategic by EPE (Energy Research Company) will receive a bonus that artificially reduces their offer price for competitive purposes in the contest, increasing their chances of being hired.

Source: CNN