The ABSAE (Brazilian Energy Storage Solutions Association) predicts that the installed capacity of energy storage in the Brazilian industrial and commercial sector will exceed 2 GWh by 2026. Additionally, the organization expects that in the auction scheduled for April, the procurement volume will be approximately 8 GWh, and these projects will be delivered starting from 2028.
ABSAE believes that in 2026, there will be consolidation in the industrial and commercial battery sector as well as in the regulatory aspect in Brazil. The executive director of the association, Fabio Lima, said in an interview with the media that the demand for industrial and commercial energy storage systems is strong and they are being rapidly deployed. "There is also a dynamic market effect," he explained, adding that the users who have already deployed them often spread encouraging information, which accelerates the market acceptance curve.
Although the final data for 2025 has not yet been settled, based on the project volumes observed by the member units, the deployment speed will continue until 2026. Lima stated that the passage of new regulations related to renewable energy has also encouraged the market. "We consider 2026 as the year of regulatory integration."
Furthermore, we observe that industrial and commercial applications are advancing, including within agricultural conglomerates, whether at the end of the line or in off-grid solutions, in rural or urban environments. Hospitals, educational institutions, and shopping centers have many applications, as these places are load centers with fluctuating loads throughout the day and significant consumption during the night.
Growth drivers
The core of the positive expectations lies in the capacity reserve auction. Although the rules are still under discussion, they indicate that projects with a capacity of at least 30MW and scheduled for delivery starting from 2028 will be given priority.
At present, many projects are being developed and adjusted to accommodate the auction process, which should mark a turning point for the market as it involves large-scale systems. Lima stated that he expects the capacity auction to take place in the first half of this year. "The auction volume is a secret, but it is expected to reach the scale of approximately 2GW/8GWh of energy storage capacity, which will enable the current Brazilian market to grow exponentially."
The ongoing efforts to decarbonize the Amazon region and the development of data centers will also be factors that drive the increase in energy storage deployment.
The Brazilian energy regulatory agency Aneel is currently conducting in-depth discussions on time-of-use pricing. Lima believes that, depending on its specific implementation method - which is predictable and legally certain - this could become an important incentive factor, including promoting the participation of energy storage in residential electricity units, although this is still in the regulatory development stage.
Furthermore, with appropriate incentives, reducing power generation cuts can become part of the compensation for the energy storage system. "There have been some legal advancements, but the regulatory discussions are still ongoing," said this executive from ABSAE.
Large-scale projects other than auctions
Lima stated that the feasibility of large-scale energy storage projects beyond the scope of capacity reserve auction contracts depends on the further clarification of other revenue sources. Typically, energy storage projects are established through a revenue overlay model, which includes a fixed component and a variable component.
"In the capacity auction model, the project only participates in the fixed income portion," Lima said. "This results in almost entirely dedicated energy storage systems specifically deployed for the auction. In other countries, capacity payment is used as a supplement and also allows for energy price arbitrage."
Currently, the company's projects are mainly focused on auctions. "Under the new regulatory framework, the diversity of services should be more clearly demonstrated in related projects (such as those combined with solar power stations)," Lima said, adding that this is the spirit of the updated regulations, which "allows energy storage to play a role in facilitating new grid connections and participate in more flexible competition mechanisms, similar to demand response."
In this context, having a stable income base and being able to add to it the income derived from reducing power generation cuts, lowering electricity bills, and other user services will make it possible for the "multi-service" project to be realized.
Lima added that some projects are being analyzed to consider adjusting their directions, especially in those power stations that have been more severely affected by power generation cuts. However, this is a case-by-case decision made within the company.
"Our goal is to create an environment where energy storage can develop independently, including a fair taxation system and full participation in auctions and competition mechanisms," concluded the executive director of ABSAE.
More broadly, he believes that the power sector still faces an increasingly serious challenge of system flexibility. "With the delay in capacity auctions, new competition mechanisms and solutions to encourage flexibility must be developed to create space for the expansion of energy storage in the country," he said.
