Regulatory barriers to battery storage integration in Brazil: moving beyond curtailment challenges

Battery energy storage is a strategic technology for modernizing and decarbonizing the power sector. In Brazil, the growing penetration of variable renewable energy sources poses new challenges for the operation of the National Interconnected System (SIN), demanding greater flexibility and reliability. The sector’s structural transformation, driven by high renewables penetration, is complicated by a relative decline in hydroelectric storage capacity and an increasing demand for flexibility. The frequent curtailment of wind and solar generation exemplifies this need well. Despite technological advancements, Brazilian regulations still have significant gaps. These include the absence of a specific legal classification for batteries, a lack of remuneration models for stacking multiple services, and the risk of double taxation on stored energy, which compromises project viability, as shown in the economic analysis. This article examines the current state of energy storage regulation in Brazil and compares it with international experiences from mature markets like California, Australia, and the UK. These markets successfully enabled battery integration by creating specific regulatory categories, removing tariff barriers, and implementing market structures that reward the technology’s multifunctional nature. The findings highlight that a robust and adaptive regulatory framework is essential to allow batteries to capture value and ensure their economically viable integration into the SIN, thereby positioning Brazil for a more sustainable and resilient power system. Moreover, the paper includes an economic analysis on the role of storage systems in reducing curtailment, based on a real wind farm in Brazil, concluding that investment exclusively for this use is not yet economically viable at current costs.