BATTERY AUCTION: ELECTORAL HASTE AND REGULATORY DISREGARD
- EnergyChannel - United States.
- 9 hours ago
- 4 min read
By Arthur Oliveira
In recent months, I’ve been closely following the debate surrounding the battery auction proposed by Brazil’s Ministry of Mines and Energy (MME)
As someone directly involved in regulatory and energy market issues, it’s impossible not to notice the urgency — and the risk — behind this initiative. Under the leadership of Minister Alexandre Silveira, the MME plans to hold, as early as December 2025, the country’s first auction for battery energy storage systems (BESS), with a goal of contracting 2 GW of capacity.
The official narrative is about ensuring energy security. However, the pace and manner in which this process is being carried out raise legitimate concerns: is this truly a State policy, or a political showcase ahead of the 2026 elections, when the Minister is expected to step down to run for office?
What we’re witnessing is an auction being pushed through “at full speed,” even though Brazil’s energy regulator, ANEEL, has yet to finalize the necessary regulations — particularly regarding the “tarifa fio”, which defines the transmission and distribution charges applicable to standalone batteries. This omission creates uncertainty and instability, where political decisions override technical discussions.
In practice, a rushed process without a solid regulatory foundation tends to generate higher costs, lower competition, and amplified regulatory risks — and, as always, it’s the consumer who ends up paying the bill. Below, I present a direct analysis of what’s truly at stake in this so-called “Battery Auction”: political interests, regulatory risks, and the hidden costs that may soon reach all of us.
THE REGULATORY SHORTCUT: AN AUCTION WITHOUT REGULATION
The most critical issue is the growing tension between the MME and ANEEL. ANEEL’s technical staff highlighted the need to regulate how the tarifa fio applies to standalone batteries, which, under the current framework, could face double charging — once when storing and again when discharging energy — the so-called “double taxation.”
Instead of waiting for this regulatory process to conclude, the MME requested the issue be removed from ANEEL’s agenda in August 2025, seeking a more “agile” solution. The “solution” — later endorsed by ANEEL’s Director-General, Sandoval Feitosa — was to move forward by defining batteries as “transmission assets,” thereby allowing the auction to proceed based solely on the terms of its public notice (edital).
Although this approach is technically legal, it represents a dangerous shortcut:
“The agency understands that, to conduct a battery auction as a transmission asset, an exhaustive regulation is not necessary — we can regulate through the auction notice itself.”— Sandoval Feitosa, ANEEL Director-General
Regulating through the auction notice is a “drawer solution” — an improvised, ad hoc fix that may allow one specific auction to happen but fails to establish a consistent, long-term framework for Brazil’s broader energy storage market.
THE NEGATIVE CONSEQUENCES: WHO WILL FOOT THE BILL?
Political haste comes with a price — and it will be passed on to consumers. Conducting an auction in an environment of legal and regulatory uncertainty increases the perceived risk for investors.
NEGATIVE CONSEQUENCE | DESCRIPTION | COST TO THE CONSUMER |
REGULATORY INSECURITY | The absence of a stable Normative Resolution (NR) from ANEEL forces investors to price the risk of future changes in the rules (e.g., incidence of the wire tariff). | Rising Energy Prices: Investors will factor regulatory risk into bids, resulting in more expensive contracts and, consequently, higher tariffs. |
RESTRICTION OF COMPETITION | The tight deadline and lack of clear rules limit the participation of new players and foreign companies, favoring those who already have privileged access to information and capital. | Suboptimal Contracting: Less competition leads to less competitive pricing, resulting in a higher cost for the capacity reservation service. |
Technical Misalignment | Bringing the auction forward, contrary to the MME's own technical schedule (which indicated 2026), suggests a misalignment with the long-term planning of the ONS and EPE. | Unnecessary Costs: Risk of contracting assets that do not perfectly fit the future needs of the National Interconnected System (SIN), generating charges that could be avoided. |
DOUBLE TAXATION (RISK) | If the wireline tariff issue is not resolved definitively and clearly, the cost of double taxation will be passed on to the consumer. | Direct Tariff Increase: The higher operational cost of battery projects, due to charges, will be fully passed on to the electricity bill. |
In short, the cost of the MME’s political urgency will ultimately fall on the end consumer, through higher electricity tariffs, driven by regulatory risk and suboptimal contracting.
THE REAL BENEFICIARIES OF THE “RUSH JOB”
Behind the stated goal of “energy security,” the acceleration of this auction benefits a few key players:
THE MINISTER: The political gain is immediate. Contracting 2 GW in battery storage is an unprecedented achievement that can be showcased during an election campaign, fulfilling a promise to stabilize the system and offset renewable intermittency.
MAJOR TRANSMISSION AND GENERATION COMPANIES: By framing batteries as transmission assets, the MME favors large players already experienced in infrastructure auctions and capable of mobilizing significant capital.
GLOBAL BESS SUPPLIERS: The assurance of a 2 GW market attracts major international battery manufacturers, who gain a guaranteed customer base regardless of Brazil’s regulatory instability.
WHAT TO EXPECT
Despite technical warnings and clear regulatory instability, all signs indicate that the auction will proceed in December 2025, as promised by the MME. Once completed, the government will have created a fait accompli, forcing ANEEL to adapt future regulations to contracts already in place.
The auction could, in theory, mark a turning point for Brazil’s energy security. Yet the way it is being conducted — with electoral urgency taking precedence over regulatory maturity represents a disservice to the sector and, above all, to consumers, who will bear the cost of insecurity and the lack of technical planning.
BATTERY AUCTION: ELECTORAL HASTE AND REGULATORY DISREGARD
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