The energy storage market in Brazil and its value for the development of data centres

Ana Carolina Calil

Cescon Barrieu, São Paulo

anacarolina.calil@cesconbarrieu.com.br

Rafael Baleroni

Cescon Barrieu, São Paulo

rafael.baleroni@cesconbarrieu.com.br

Yasmin Yazigi

Cescon Barrieu, São Paulo

yasmin.yazigi@cesconbarrieu.com.br

Fernanda Silva

Cescon Barrieu, São Paulo

fernanda.silva@cesconbarrieu.com.br

Data centres are physical establishments which purpose is to process, store and distribute data. In order to manage such amount of information, they require a complex infrastructure to operate, including a solid transmission network. Therefore, data centres are intensive power consumers and rely on a constant power supply to operate efficiently and without failures, as power outages can cause significant damage, ranging from service interruptions to the loss of critical data.

There has been much discussion about the introduction and expansion of energy storage systems in Brazil and around the world. The most common form is through battery energy storage systems (BESS), with the aim of offering, among other services, energy management, ancillary services, flexibility, power reserve, reliability, predictability and electrical system balance. These features may play a crucial role to electricity-intensive consumers such as data centres, as detailed in this article.

Brazil is progressing on the creation of a clearer and more efficient regulatory environment to ensure economic viability, and attract investment to both BESS and data centres.

Development opportunities for data centres in Brazil

Brazil stands out as a host country for data centres, being the largest market in Latin America, home to 189 facilities,[1] and housing the fifth largest data centre complex in the world (located in the city of Barueri in the state of São Paulo). There are also 22 data centre pipeline projects under analysis by the Ministry of Mines and Energy (MME) related to these consumers’ access to the transmission network.[2]

In 2024, Brazilian data centres’ energy consumption reached 740 megawatts (MW), and it is expected by the MME to reach 2.5 gigawatts (GW) by 2037 – only considering the new projects in the states of São Paulo, Rio Grande do Sul and Ceará.

In 2025, important regulatory reforms to support data centre development have been addressed through Provisional Measures (MPs), which are temporary laws issued by Brazil’s federal government with immediate effects, subject to later Congressional approval. The recent MPs – 1300/2025, 1304/2025, 1307/2025 and 1318/2025 – impact data centres primarily by reshaping energy acquisition and operational costs. They introduce new rules for energy procurement (including free market and self-production), create tax incentives, revise sectorial charges and subsidies, and enable data centres to operate in export processing zones (ZPEs) with additional tax incentives.

Considering that artificial intelligence (AI) is powered by data, it is understandable to associate its development with that of data centres. But the operationality of AI causes a high increase in power demand, as generating a single image can require as much energy as charging a mobile phone. In this context, studies suggest that generating 1,000 images could produce an amount of carbon dioxide equivalent to driving approximately 6km in a gasoline-powered car.[3]

In this context, the choice of energy sources to meet the growing global demand presents both a challenge and an opportunity for renewable energy and related technologies – such as storage systems – to emerge as viable solutions, especially in light of the greenhouse gas reduction targets set by companies and countries worldwide. This scenario positions Brazil as a key player in attracting investments in the sector.

Potential businesses for batteries and data centres

Ancillary services

Data centres must have power 100 per cent of the time, which demands solid transmission facilities to avoid supply interruption or fluctuation (such as power surges and outages) which can damage electronic devices, and even cause fire risks. For that reason, it is common that data centres request the National Electric Energy Agency (Agência Nacional de Energia Elétrica or ANEEL) for an authorisation to operate private transmission facilities.

In view of the importance of reliable transmission networks, BESS can provide ancillary services, which refer to supplementary mechanisms that maintain the safety of the electric system’s operation and the parameters of frequency, voltage, synchronism and emergency (self-restoration or ‘black start’) of the grid. In this sense, lithium batteries are a growing trend to power data centres.

These attributes are essential for the resilience of transmission networks and for the allocation of power reserves capable of maintaining a balance between load and generation, guaranteeing the frequency stability of the National Interconnected System (SIN). This attribute is even more important considering that data centres often require a lot of space, so a way to reduce installation costs is to seek locations farther from urban centres, where reliable transmission facilities may be scarce.

Although it is necessary to modernise Brazilian regulation so that these services can be offered in a competitive market, as a differentiated product from energy supply, there are already existing cases of agents using BESS in transmission and distribution systems in order to obtain greater stability in their networks.

Generation near the load

In addition to the traditional use of BESS by data centres for ancillary services, there are other innovative uses of BESS that may reduce energy supply costs. According to MME, electric power represents more than 60 per cent of the operating cost of a data centre,[4] so business models that mitigate this risk can leverage investments in this segment.

One of the most discussed trends for the future of the power sector is to bring energy consumers closer to the place where their energy supply is generated. This associates a large power consumer with a power generator, so that the power plant injects energy directly to the consumer facilities, exempting the parties from paying tariffs for the use of the transmission system (TUST) for that portion of energy. This association can be made through structures that are well known and practised in the Brazilian power sector, such as self-production, in its various forms (ie, equivalence, consortium and leasing), which exempt power consumers from paying certain electricity sector charges (other than TUST).

BESS is part of this context, given that Brazil’s energy matrix is mostly renewable and, especially for self-production projects, is made up of wind and solar generators. The main obstacle to these sources is dependence on weather conditions: on cloudy days, periods of low sunlight or windless days, energy generation is compromised.

BESS stand out as an alternative to mitigate this intermittence risk, since surplus generation can be stored and used in the future. This time shift is extremely valuable because it adds an element of control to intermittent generation, enabling solar and wind plants to supply energy to the consumer at times when plant generation is not possible. It also reduces power costs by injecting power at peak load times, when the price of energy is higher.

In addition, BESS make it possible for data centres to join the Demand Response Mechanism, which is a strategy promoted by the National Grid Operator (ONS) where consumers adjust their power consumption in response to signals from the power grid, such as high prices or grid instability. That means that data centres may store energy when prices are low or the grid is under stress and discharge it during peak demand, reducing reliance on the grid and saving on costs.

BESS regulatory overview

The use of batteries in the Brazilian electricity sector has been under development since 2016, when ANEEL launched Strategic R&D Call No 21/2016, which included 20 storage system projects and investments of more than BRL 370m.

In August 2025, ANEEL issued a technical note assessing the inputs obtained with the conclusion of the second phase of Public Consultation No 39/2023, concerning the regulatory adjustments necessary for the insertion of storage systems in the SIN. Among other topics, the discussion focused on:

• criteria for characterising storage systems;
• specification of the services to be provided and their forms of remuneration;
• granting process, ie, whether there will be a specific or simplified grant for BESS;
• access and use to the grid, including how to contract and pay for use of the transmission and/or distribution systems;
• definition of applicable charges and fees, including exemptions and adjusted parameters; and
• rules for ancillary services, allowing stacking and remuneration for multiple services.

There have been recent discussions among ANEEL, the National System Operator (ONS), MME and the Energy Research Company (EPE) over the inclusion of BESS in capacity reserve auctions in the form of power (LRCAP). The ‘power’ product refers to the provision of reliability and security to serve consumers at peak load times: ie, specific, less frequent times of shorter duration, when the availability to meet the instantaneous load is scarce.

Furthermore, EPE has pointed out that BESS are capable of recharging at times of excess energy for discharge at times of greater scarcity of resources, which may coincide with the most critical hours for the electricity system, and therefore may be able to meet power capacity needs.

Most recently, the MME has opened Public Consultations Nos 194/2025 and 195/2025 to discuss the guidelines for a LRCAP based on BESS to be launched in 2026. The goal is to combine short-term firm capacity assurance with the expansion of cleaner energy transition solutions. The MME has proposed a series of internal technical meetings alongside ANEEL to support the alignment between institutions regarding the upcoming capacity auction and the regulatory framework to be established on BESS.

It is expected that batteries will be increasingly included in upcoming tenders, either in association with other power plants or on a standalone basis. The regulation of storage systems would benefit greatly from the refinement and modernisation of current regulations to better characterise the different energy products that can be offered by agents, from the provision of ancillary services to the supply of energy in the form of power. Only with an adequate regulatory signal will a fair remuneration be defined for the different services provided by BESS, ensuring the viability of its application in all segments.

Storage systems in the global context

International experience shows the growing trend of investments and partnerships in the storage systems sector in recent years, such as the partnership established in 2022 between the European Battery Alliance and the United States’ Li-Bridge. Both entities aim to strengthen the national supply chain for lithium production, a key raw material for lithium battery manufacturing. The partnership seeks to promote the decarbonisation of the automotive industry and the storage of renewable energy to mitigate the global climate crisis. In 2024, the Eighth Annual Meeting of the European Battery Alliance took place, focusing on implementing actions to ensure Europe’s leadership in innovation, sustainability and competitiveness in the face of increasing international competition, particularly from the US and China.

Regarding the Asian market, China stands out as a prominent player in the sector, bolstering its position through regulations that encourage the integration of energy storage into new photovoltaic plants. Furthermore, the country plans to inaugurate a mega sustainable power generation plant in 2025, combining wind turbines, solar panels and energy storage via batteries. This innovative project highlights China’s strength in the sector, as it accounts for 85 per cent of the global battery cell production capacity and over half of the world’s lithium processing.

Finally, in Latin America, Chile stands as a noteworthy example. Chile has become an attractive hub for battery investment due to its growing solar power generation capacity and the energy dispatch challenges that have led to many curtailment episodes. In this context, 2024 marked the inauguration of the largest battery energy storage park in Latin America, the BESS Coya Battery Park, with a capacity of 638 MWh and an installed capacity of 139 MW. Its purpose is to store renewable energy through lithium batteries.

It is evident that the global movement is geared towards the development of battery technology, particularly lithium-based. The global outlook is favourable for expanding and supporting projects using such technology, whether integrated with power plants or operating independently.

Conclusion

The intersection of data centres and BESS presents significant opportunities for Brazil and the broader global market. As the demand for data processing and storage continues to grow, fuelled by innovations such as AI, the need for reliable and sustainable energy solutions becomes increasingly critical.

Brazil’s commitment to modernising its regulatory framework and integrating renewable energy sources positions the country as a key player in this emerging sector. By leveraging BESS, not only can data centres mitigate energy supply risks but also reduce operational costs and enhance grid stability. The international experience underscores the importance of battery technology in addressing energy challenges, offering valuable lessons for Brazil’s continued development of a competitive and sustainable energy storage market. It is essential that regulations evolve to adequately support the integration of BESS into energy systems, ensuring a balanced, efficient, and sustainable energy future for data centres and other energy-intensive industries.