Local content requirement for battery auction tests industry
The requirement for local content for Brazil's first battery auction has become one of the main focuses of concern among developers, manufacturers and investors interested in the event scheduled for December. The market questions how to meet a possible minimum nationalization requirement in a segment that does not yet have a consolidated production chain in the country.
Although Normative Ordinance No. 136/2026, from the MME (Ministry of Mines and Energy), has created a specific auction for systems with nationalization, the effective criteria for classification still depend on the BNDES accreditation rules. The reference is a minimum rate of 15% of national content, although the percentage does not appear explicitly in the ordinance.
The uncertainty occurs precisely at a time when the market is trying to understand whether there is sufficient industrial capacity to meet the government's requirements. The main question raised by sector agents is how to demand national content in an industry that does not yet have a consolidated production chain for battery energy storage systems.
Today, practically the entire technological core of storage systems is imported. Electrochemical cells, considered the heart of batteries, are mainly produced in Southeast Asia, especially in China. Companies like CATL, BYD, EVE, Hithium and other Chinese manufacturers dominate global production and operate at scales that are difficult for new entrants to replicate.
Faced with this reality, market sources state that the percentage of nationalization must be achieved initially through complementary components and integration stages carried out in Brazil. Among the items mentioned are refrigeration systems, containers, metallic structures, warehouses, electrical panels, management software and engineering and assembly activities.
In the assessment of market agents, nationalization tends to increase project costs. Companies consulted work with estimates that more robust local content requirements could increase investments by up to 40% compared to fully imported solutions. Agents argue that tax incentives or differentiated financing lines can compensate for part of the loss of competitiveness.
The calendar also became a central factor in the discussions. The auction contracts will begin supplying in August 2028. Considering the event will take place in December this year, manufacturers would have just over a year to install production lines, obtain certifications, accredit equipment with the BNDES CFI System and structure supply for the winning projects.
Industry still looking for scale
Some movements have already been announced. Moura has been expanding its operations in energy storage. WEG has one of the largest industrial parks in the country. Among the Chinese, BYD can scale the plant in Bahia to serve this market, Windey announced an investment of R$100 million in a factory in Camaçari (BA) and Huawei is evaluating partnerships with Brazilian companies.
Despite this, doubts persist about the scale of the market. It is worth building a factory to serve a single event. Another concern is whether there will be sufficient competition between suppliers or whether the market will end up concentrated in a few groups capable of meeting nationalization requirements.
When contacted by the report, the BNDES did not respond to questions about the reference to the 15% index of national content discussed by the market, which equipment must meet the nationalization requirements, how many companies are already accredited or in the process of accreditation in the CFI System, what national production capacity has been identified to meet the auction and whether new accreditation rules will be published before the event.
For some executives, the challenge is not just industrial, but economic. Without demand predictability beyond the first auction, companies may hesitate to make large investments in local production.
On the other hand, defenders of the policy argue that Brazil is following a strategy adopted in several countries that seek to develop sectors considered strategic for the energy transition. The United States, Europe and India have used incentives, local content requirements and financing programs to encourage domestic production of clean technologies.
The initiative also dialogues with the efforts of the Mdic (Ministry of Development, Industry, Commerce and Services) to densify production chains.
Source: CNN