A multi-billion dollar market is open, and a 25GW energy storage gold rush is on the way!

Brazil's Energy Storage market is booming!

Recently, the Brazilian government officially promulgated Law No. 15.296, establishing a comprehensive legal framework for energy storage for the first time and introducing supporting incentive measures. This marks a new stage of standardization and large-scale development for Brazil's energy storage industry.

As South America's largest economy, Brazil boasts abundant Renewable Energy resources and its installed capacity ofnew energy sources is growing rapidly, gradually becoming a major destination for global new energy investment.

At the same time, Brazil's power system also faces some real challenges. On the one hand, the low utilization rate of local renewable energy generation and the mismatch between power generation capacity and peak-valley electricity demand urgently require energy storage to regulate these issues.

On the other hand, the ambiguous positioning of energy storage, with its dual role as both a power generator and a power consumer, has led to cost pressures from double taxation, hindering the further development of the energy storage industry.

Data shows that in 2024, Brazil added only 269 MWh of new energy storage capacity, with a total installed capacity of 685 MWh, of which about 70% were Off-Grid Systems, indicating a serious lag in development.

The enactment of Law No. 15.296 has accelerated the development of Brazil's energy storage industry. With increasingly clear market rules and more unified government regulation, Brazil's energy storage market is ushering in boundless opportunities and also pointing a new direction for China's energy storage industry to expand overseas.

Legislative Support to Stimulate the Vitality of Brazil's Energy Storage Market

Law No. 15.296 introduced a series of support measures for the energy storage industry.

Firstly, it clarifies the industry's status and function. The law not only establishes energy storage's independent status but also defines its multiple service values ​​within the power system, including ensuring power supply, providing ancillary services, and participating in energy commercialization.

Secondly, it optimizes costs and provides incentives. Authorized by the law, Brazil's electricity regulator, Aneel, will be responsible for developing energy storage technology standards, which will be a prerequisite for power generation companies to connect to the grid. Before these standards are met, the related backup energy costs must be shared by power generation companies, end consumers, and self-generated energy users according to the contract.

Notably, the law makes special provisions for the sharing of backup costs related to energy storage; these costs are borne solely by power generation companies and cannot be passed on to end users. This contrasts sharply with the cost-sharing mechanism commonly used in Brazil.

The law also includes energy storage within the special incentive scheme for infrastructure development, with an annual cap of 1 billion Brazilian Reais (approximately 1.32 billion RMB), valid from January 2026 to December 2030. This primarily includes taxes such as PIS/PASEP and COFINS, and in practice, federal taxes on contract services and imported equipment and materials can be exempted, significantly improving the profitability of energy storage projects.

Furthermore, the law reduces import tariffs on battery Energy Storage Systems and their key components to zero. Previously, Brazil's high import tariffs were a major factor driving up the price of its domestic energy storage systems. This tariff reduction is expected to significantly lower the initial investment costs of energy storage projects.

This is also a major boon for the Chinese energy storage industry going global. The elimination of tariff barriers in Brazil will directly enhance the market competitiveness of Chinese energy storage products in Brazil and facilitate long-term localization for Chinese companies in the country.

In addition, the law also focuses on stimulating demand and further opening up the market. On the one hand, Brazil has systematically constructed a free market framework and formulated a phased implementation timetable. By November 2027, industrial and commercial users will be fully open to free trading, and by November 2028, all consumers (including residents) will be able to choose their electricity providers. On the other hand, it stipulates that new distributed generation systems must be equipped with energy storage to enjoy relevant subsidies and benefits, directly stimulating the gigawatt-scale "photovoltaic + energy storage" incremental market.

With this opportunity looming, China's energy storage sector has already made its move.

The Brazilian Association of Energy Storage Solutions (ABSAE) predicts that Brazil will need to add 5.5GW of peak-shaving capacity by 2028, and by 2030, Brazil's installed energy storage capacity is expected to reach 25GW, attracting direct investment of approximately 44 billion reais (58 billion yuan).

This provides a clear window of opportunity for China's energy storage industry.

Recently, the Brazilian government announced that it will officially launch the first national auction of battery energy storage system capacity in April 2026, inviting global energy storage companies to participate.

Brazil's energy authorities expect the energy storage equipment awarded in this tender to operate at maximum power for four hours continuously per day. The contracts are for a 10-year term, and the projects are expected to be operational by July 2029.

These battery energy storage projects are designed as backup power capacity, providing strategic support to Brazil's power grid and transmission lines during peak demand periods or off-peak hours to ensure a secure and reliable energy supply.

The Brazilian Energy Storage Solutions Association estimates that approximately 18 GW of battery energy storage projects are ready to enter the registration and auction process. Contracting just 2 GW of these projects could drive approximately 10 billion reais (about 13.2 billion yuan) in investment.

Currently, Chinese companies not only possess core technologies and strong production capacity in the field of energy storage batteries and key materials, but also hold a significant share of the global energy storage system and battery market. With these combined advantages, Chinese companies are confident in becoming important players in Brazil's energy storage market development.

On October 24, during his visit to Asia, Brazilian Minister of Mines and Energy Alexandre Silveira held bilateral meetings with several leading Chinese energy storage companies. Representatives from companies such as BYD, CATL, Envision, Sungrow Power, Hibiotech, Haichen Energy Storage, and Huawei Digital Energy participated in the meetings, showcasing their battery energy storage and smart grid technologies and engaging in in-depth discussions with their Brazilian counterparts regarding investment and cooperation opportunities.

To seize the clear opportunities in Brazil's energy storage market, several Chinese companies have actively begun their strategic deployments.

Specifically, on August 12th, Sungrow Power Supply Co., Ltd. signed an agreement with MOBS and TCCMC, subsidiaries of Brazil's Roca Group, to supply 400MWh of battery energy storage systems over three years.

In February, Risen Energy reached a 1GWh energy storage system cooperation agreement with Brazil's MTR Solar. Subsequently, on December 9th, the company further disclosed that it had established a strategic partnership with Brazil's leading industrial company WEG, planning to provide it with large-scale and commercial energy storage system solutions with a total capacity of 3GWh between 2026 and 2028.

In addition, Huawei Digital Energy recently signed a memorandum of understanding with Brazil's SECPower, with both parties agreeing to jointly promote the large-scale application of battery energy storage in commercial, industrial, agricultural, and critical infrastructure sectors.

With the enactment of Law 15.296, it is foreseeable that more Chinese companies will appear in the Brazilian energy storage market in the future.

But is there room for complacency? Challenges remain in Brazil's market.

For Chinese energy storage investors, making a sound investment in the emerging Brazilian market requires recognizing both its broad prospects and the inherent challenges and risks.

Firstly, Brazil's energy storage regulatory details need further refinement. Law 15.296 establishes the basic legal framework, but profit-sharing details, including grid connection standards, revenue mechanisms, and cost-sharing mechanisms, have not yet been finalized.

According to the Brazilian power system's plan, there will be a transition period of approximately three years between the initial release of the rules and their full implementation. During this period, policy uncertainties will exacerbate the difficulty of project investment and planning.

Secondly, the Brazilian energy storage market is open to global players. Although my country's energy storage industry is strong, competition from suppliers in Europe, the US, Japan, and South Korea should not be underestimated.

Furthermore, in the long run, as a sovereign nation, Brazil, while actively attracting imports, will inevitably prioritize maintaining its strategic development space for its domestic industries. Faced with a global influx of energy storage companies, Brazil has provided special tax incentives and other policies to support its domestic supply chain, particularly for battery production. It's clear that the ultimate goal is to cultivate and strengthen the domestic energy storage industry chain, gradually achieving energy self-sufficiency and security.

From BYD's establishment of a factory in Brazil to other companies' plans to set up assembly lines, it's evident that exporting energy storage equipment and key components directly to Brazil may face greater pressure in the future. A certain degree of localization in assembly or production may become a crucial condition for Chinese companies to maintain long-term competitiveness in Brazil.