Electric power grids – how to achieve reliability, resilience and security with a growing share of intermittent sources. Are smart grids and BESS the solution?

Raphael Gomes

Lefosse, São Paulo

raphael.gomes@lefosse.com

Pedro Dante

Lefosse, São Paulo

pedro.dante@lefosse.com

Christiano Rehder

Lefosse, São Paulo

christiano.rehder@lefosse.com

Bruno Crispim

Lefosse, São Paulo

bruno.crispim@lefosse.com

Renato Edelstein

Lefosse, São Paulo

renato.edelstein@lefosse.com

Roberta Arakaki

Lefosse, São Paulo

roberta.arakaki@lefosse.com

Fernanda Dal Fabbro

Lefosse, São Paulo

fernanda.fabbro@lefosse.com

Thanks to its continental size and abundant natural resources, Brazil has a long-standing tradition of maintaining a consolidated renewable power matrix,[1] primarily based on hydropower.

Growth of solar and wind power in Brazil

In recent years, Brazil has emerged as one of the global leaders in solar generation. In 2025, solar power surpassed 60 gigawatts (GW) of installed capacity, representing 23.5 per cent of the national electricity matrix and becoming the second-largest source of power generation in the country. According to projections,[2] solar and wind power combined could account for up to 47 per cent of Brazil’s electricity matrix by 2031 – a dramatic shift from 2002, when hydropower made up nearly 90 per cent of the matrix, and other renewable sources were barely present.

Challenges of integrating intermittent renewables

Yet, the rapid growth of intermittent renewables – particularly solar – introduces new challenges: the variable nature of these sources coupled with the absence of centralised dispatch by the National System Operator (ONS) has led to grid issues such as overloads and curtailment within the National Interconnected System (SIN).

In this scenario, a question arises: is it possible to reliably and resiliently expand the Brazilian power system in the coming years with intermittent renewable sources?

Smart grids: technology and functionality

In the new technological paradigm, smart grids and energy storage systems stand out as two of the main solutions, alongside adequate regulatory development

Smart grids use advanced technology and two-way communication to efficiently manage energy supply and demand. They provide two main groups of functionalities:

1. Real-time visibility: smart meters, distributed sensors and advanced SCADA (supervisory control and data acquisition) systems offer granular monitoring of grid conditions, enabling fine-tuned control of voltage, frequency, and power flows.
2. Decentralised and active control: order algorithms, demand side response and automatic reconfiguration which allow consumer units, distributed generators and microgrids to act as balancing agents, mitigating fluctuations from intermittent sources.

Grid intelligence also help reduce technical losses, isolating sections affected by contingencies, and coordinating protections more effectively.

Battery energy storage systems: a strategic role

With regards to energy storage, according to the 2034 ten-year plan (PDE 2034)[3] issued by the Energy Research Company (EPE) – the entity which carries out studies and research aimed at supporting energy sector planning in Brazil – the current scenario points to a business environment increasingly favourable to the development and deployment of storage technologies, where battery energy storage systems (BESS) emerge as a strategic asset to resolve Brazil’s energy paradox - vast renewable potential, but limited dispatchability.

Battery energy storage systems offer a technological pathway to balance supply and demand, ensuring consistent and reliable energy flow, storing excess generation during periods of high output and releasing it during peak demand.

The EPE study emphasises BESS’ versatility and wide range of applications, as they are capable of functioning as a load, a generator or a provider of high value-added services. Some examples are frequency regulation, load shifting and spinning reserves to support voltage stability. These batteries can help to stabilise grid frequency by storing excess cheap solar energy during peak sunlight hours, then supply energy from late afternoon into the evening, thereby reducing reliance on gas-based power plants.

Therefore, the BESS market in Brazil holds strong growth potential, which is fuelled by the accelerating integration of renewables, the need for more resilient infrastructure, and the rising strategic relevance of energy security.

International experiences with BESS

International experience shows that BESS can be a viable solution. In California, for example, in response to a severe supply-demand imbalance the state implemented an aggressive policy promoting BESS, which today amounts to around 10 GW of installed capacity. In Australia, following a major blackout, a power reserve programme was launched in 2017, with 150 MW of batteries whose investments were rapidly recovered due to the strategic value of the technology.[4] Integration of BESS, particularly in residential storage systems, also played a critical role in Germany’s energy transition and energy network decentralisation.[5]

For Brazil, the integration of BESS into the SIN represents a strategic opportunity to mitigate intermittency and strengthen system reliability, as well as to enhance overall grid flexibility and efficiency.

Economic and regulatory barriers in Brazil

Notwithstanding, large-scale adoption of smart grids and BESS in Brazil face a few economic and financial barriers. The capital cost of batteries, although declining, still represents a significant investment, especially for long-duration storage better suited to seasonal variations in wind and solar availability. Moreover, the operational characteristics of a highly centralised system of continental scale — with more than 180,000km of transmission lines – require appropriate regulatory innovations to enable the consistent and high-quality deployment of BESS.

As for smart grids, the main challenges include cybersecurity and data protection risks, high upfront costs, the need for infrastructure modernisation, lack of consumer knowledge, and the need for technologies that ensure interoperability between different systems across the country’s extensive territory.

In this context, it becomes clear that technology alone cannot drive the energy transition. The effective deployment of smart grids and BESS must be embedded within a holistic approach – one that prioritises coordinated grid planning and encourages diversification through strategic regulatory reform.

Regulatory developments for energy storage and smart grids

Brazil has only recently begun to improve energy storage regulation. The federal energy regulator’s (Agência Nacional de Energia Elétrica or ANEEL) Resolution No 1,000/2021 and Module 3 of the Distribution Rules and Procedures (PRODIST) authorise the connection of battery storage systems in consumer units, and the energy storage associated with micro and mini distributed generation (ie, net metering projects up to 3 MW) is already authorised in Brazil under Law 14,300/2022.

Moreover, ANEEL launched Public Consultation No 39/2023 to gather public input on improving Brazil’s regulatory framework for electricity storage. This consultation marks the first cycle of debates that ANEEL has scheduled for the coming years on the topic of energy storage.

Based on the results of the public consultation, several regulatory improvements are recommended for implementation, including:

• defining an authorisation model for standalone BESS and incorporating its granting requirements into ANEEL’s normative resolution, which already regulates the authorisation of wind, solar and thermal, among other sources;
• regulating requests for modifications to BESS technical characteristics;
• updating transmission regulations to account for BESS integration into the system, including connection requirements, contracting procedures and billing for the use of the distribution network; and
• including standalone BESS as a reverse energy user as well as enabling individualised metering.

The 2025 capacity reserve auction and future prospects

Alongside the development of regulations, on 27 September 2024, the Ministry of Mines and Energy (MME) launched Public Consultation No 176 to establish guidelines for the 2025 capacity reserve auction in the form of power, through storage systems — the 2025 LRCAP.

The main innovation of the 2025 LRCAP was the contracting of storage systems using batteries.

Within the public consultation conducted by the MME for the 2025 LRCAP, institutional perceptions regarding the inclusion of batteries in the auction indicated that the instantaneous response capacity, as well as the operational and locational flexibility of BESS, make them potential candidates for various applications in the Brazilian electricity sector. This includes meeting peak system demand, even considering the regulatory challenges that need to be overcome for the consolidation of this energy source.[6]

According to the technical guidelines released in the 2025 LRCAP, the risk associated with the ONS orders’ uncertainty would be borne by the developer, including factors such as the number of start-ups and shutdowns, operating hours and the total energy delivered. Additionally, the developers would be entitled to a fixed annual revenue, in BRL/year, to be paid in 12 monthly instalments, which may be reduced based on the assessment of operational performance in previous months. The assessment of operational performance would be carried out on a monthly basis, taking actual availability into account, and these terms would be subject to future regulation by ANEEL.

The 2025 LRCAP, however, was cancelled due to legal disputes involving the criteria used in the LRCAP 2025 guidelines for assessing the availability of thermal power capacity. According to the MME, this prevented the auction from moving forward. The MME expects to launch a public consultation by the end of the year for the implementation of a battery-centred auction, which is expected to take place in 2026. This upcoming auction should serve as a turning point for the integration of BESS in Brazil.

For smart grids, ANEEL has encouraged its adoption through regulations such as ANEEL’s Normative Resolution No 966/2021 and MME’s Ordinance No 111/2025, which sets general guidelines to encourage the gradual digitalisation of low-voltage electricity distribution networks and services.

Summary and path forward for Brazil’s energy transition

In summary, Brazil stands at a pivotal moment in its energy transition. The integration of smart grids, BESS and regulatory innovation is not merely a technological challenge, but a comprehensive transformation that requires coordinated action across regulatory, institutional and industry spheres. By advancing clear regulations, establishing effective price signals and promoting targeted initiatives, Brazil can unlock the full potential of its renewable resources while ensuring grid reliability and resilience.

To keep up with the global pace, however, the country must adapt its regulatory and operational framework with greater flexibility, intelligence and decentralisation. For this to happen, it is essential that the entire decision-making chain – regulators, legislators and industry stakeholders – mobilises urgently to ensure that Brazil advances at the necessary pace towards a safer, cleaner and more efficient energy matrix.

Smart grids, BESS and regulatory innovation together form the foundation of a modern, reliable and resilient power system. When combined with diversification and decentralised management, these solutions will allow Brazil to advance its energy transition without compromising supply quality or continuity, which are essential to economic and social wellbeing. To ensure the effective integration of these solutions into the Brazilian power grid, it is necessary to advance along several regulatory and institutional fronts, including the development of clear and precise regulation and definition of pricing-signalling criteria, in addition to specific initiatives to promote such technologies (eg, the LRCAP).

The path forward will demand adaptability, collaboration and a commitment to modernisation. If these efforts are successful, Brazil will not only guarantee secure and reliable electricity for its population, but also reinforce its leadership in the global movement towards a sustainable and innovative energy future.