Brazil Regulation - linked to Article #4
Front-of-the-meter (FTM) & Behind-the-meter (BTM) ES
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Brazil holds an outstanding position in renewable energy solutions, having added nearly 27% of wind and 60% of solar PV in 2021 alone [17]. In July 2022, energy from solar PV has overtaken thermal generation (natural gas + biomass) to become the third largest source in the national electricity mix (after hydro and wind power).
However, ANEEL (National Electric Energy Agency) i) has not yet established rules for the formation of hybrid or associated power plants using storage [18]. Also, ii) inadequate regulatory framework for front-of-the-meter (FTM) applications, and iii) high implementation costs affect the use of BESS in the power grid.
Current Regulation
In fact, current regulation does not address the use of energy storage for the provision of i) ancillary services and ii) T&D investment deferral. At the same time, high prices of BESS components, mainly driven by taxation, which peaks 80% for batteries, inverters, and converters, impact projects involving storage [19].
Nevertheless, some behind-the-meter (BTM) BESS applications are already possible: the use of BESS i) to reduce peak demand and ii) as a backup to rise system uptime can be legally deployed to meet customers’ needs [20].
Moreover, capacity reserve auctions, provided for in Law No. 14,120/2021, tend to favor the use of batteries. This, added to adjustments in the regulatory framework and tax reliefs, could warm up the BESS market in Brazil in the near future [21].
Brazilian Lithium Reserves
As reported in Article 3, Brazil holds 8% of global Lithium reserves, and also the largest hard-rock Lithium project in the Americas (Grota do Cirilo – Sigma Lithium), with an estimated production of 531,000 tons of Li concentrate (5 to 6%) in its second phase.
Adding to the production of AMG Mining, another major mining company operating in the country, Brazilian annual production of Li concentrate could exceed 660,000 tons (89,700 tons of LCE) in just a few years, allowing a yearly production of more than two million electric vehicles (40 kg of LCE per battery pack) [22], which matches to all Brazilian light vehicle production in 2021 [23].
CBL, another major mining company and a pioneer in Li concentrate production in Brazil, with operations since 1991, produces battery-grade Lithium carbonate in its chemical plant since 2019. Sigma and AMG also plan to install their own chemical plants in the country in near future. More details can be found in Article #3.
References
[18] https://canalsolar.com.br/usinas-hibridas-sao-regulamentadas-pela-aneel/
[22] https://www.researchgate.net/publication/358743029_IRENA_Critical_materials_Lithium_2022