Government evaluates batteries in energy generation auction – 03/16/2024 – Market

After receiving suggestions from the private sector, the federal government is considering including electricity storage batteries in the capacity reserve auction scheduled for the end of August. If this intention is confirmed, it will be the first time that this type of system will be part of an event conducted by Aneel (National Electric Energy Agency).

ISA CTEEP, one of the largest electricity transmission companies in the country, is one of those that advocate the use of batteries as an energy reserve alternative to provide security to the national electrical system. Today, this insurance in Brazil is mostly carried out by thermal plants, especially those that use gas, a fossil fuel.

The company’s president, Rui Chammas, addressed the topic in an interview with Sheet.

ISA CTEEP, controlled by the Colombian company ISA, is in 18 states and operates a transmission network through which around 30% of Brazil’s electricity and 95% of the state of São Paulo travel. The company was a pioneer in the use of batteries as a backup and claims that the alternative is viable.

On the 8th, the Ministry of Mines and Energy launched a public consultation to discuss increasing the installed capacity of flexible sources in the country, such as thermoelectric and hydroelectric plants. ISA CTEEP’s proposal is to guide the discussion on the use of storage systems in this modality.

At the same time, on Monday (11), representatives from ABSAE (Brazilian Association of Energy Storage Solutions) met with the Minister of Mines and Energy, Alexandre Silveira, in Brasília to discuss the topic.

The entity expects that the inclusion of storage in the next auction will stimulate up to R$9.8 billion in investments, mainly in Minas Gerais, due to the lithium reserves in the Jequitinhonha Valley, even though the production of these batteries is not in Brazil. According to participants at the meeting, the minister, who is from Minas Gerais, liked the idea.

Members of the government also state, with reservations, that the PT administration is in fact evaluating this possibility. Based on this public consultation, the federal government will decide the rules for the auction on August 30th. Technically, this is a reserve capacity auction.

“If the Ministry understands that it is viable, it can include batteries. In the public consultation, we will position ourselves, together with other actors, that this is an alternative that should be appreciated”, says Chammas. The consultation runs until the end of March.

Chammas reinforces that sustainable energy, wind and solar, is intermittent — that is, it fluctuates based on the supply of wind and sun, which increases the complexity of operating the system and maintaining energy supply and supply stability. The executive says that investment in batteries is an alternative to provide more operational stability to the new environment.

The company has been testing this alternative. It operates the first large-scale battery energy storage network in the Brazilian transmission system, located in Registro, on the south coast of São Paulo.

Opened at the beginning of last year, the station is connected to the country’s transmission network. During the summer, when energy consumption in the region is higher due to the increase in tourists, the company charges the batteries at times of lower demand and, during peak periods, inserts this energy into the grid. These batteries have the capacity to deliver up to 60 MWh for two hours.

“When there is greater demand than supply for that region, you have two ways to solve the problem. One is to build a new transmission line [para levar mais energia], which would be possible in this case, but we would have to cross Serra do Mar once again to take the energy to the south coast, at the cost of a line that would be used only a few times of the year. And the other solution is this [adotar baterias]”, says Chammas.

Among consumers, the evaluation of the proposal is also considered valid.

The system needs solutions to balance the energy supply at peak consumption, recalls Paulo Pedrosa, president of Abrace Energia, an entity for large industrial consumers. This can be done by new plants, explains Pedrosa, and can also occur with finer management of the system, which, for example, turns off some less vital areas, such as air conditioning in offices or shopping malls, as is already happening in the United States. and in the European Union.

According to him, it is necessary to include batteries in the national debate.

“We need to evaluate all options, and the important thing is that it is fairly debated and not imposed, as has happened with other alternatives”, says Pedrosa.

“The battery should enter the competition and be used if it can show the market that it can be a good answer, maintaining the efficiency and price ratio.”

ISA CTEEP has also been active in advocating for Brazil to export renewable energy to neighboring countries. This is because the expansion of solar panels and wind turbines has changed the dynamics of energy generation in Brazil.

“There are times when there is excess energy in Brazil. When there is excess generation, we are able to export energy. And this can generate a business opportunity, because the interconnections within Brazil are increasingly robust, between South American countries still don’t have that many. And I think it would be extremely interesting if we had this generation potentially being exported, as we did a lot last year for our neighbors”, says Chammas.

Industry experts point out that regional integration in Latin America has been studied for decades and has many projects that make economic sense, such as the expansion of transmission lines.

“If made viable, they could even enable an increase in demand for Brazil”, explains Luiz Augusto Barroso, CEO of PSR, a consultancy that is a reference in the sector.

However, Barroso remembers that the challenge of regional integration lies in how to make projects financially viable — that is, which country pays for what and how. It is also necessary to make it clear what will happen when there is a drought or other climate event that compromises generation.

“In times of scarcity, no country will export its own security of supply. These are not insurmountable challenges, but they need to be addressed”, he states.

In 2023, Brazil exported 844 average MW (average megawatts) of electrical energy to Argentina and Uruguay, raising R$886 million. This sale allowed the disposal of surpluses from hydroelectric plants, which would have needed to spill water if there was no such outlet.

The energy currently sold to Argentina and Uruguay is transmitted through lines that connect the city of Uruguaiana (RS) to the Argentinean Paso de los Libres, and Santana Livramento (RS) to the Uruguayan Rivera. Brazil also today has connections with Paraguay and Venezuela.

ISA CTEEP maps the possibility of Brazil exporting energy to Andean countries. In this case, according to him, the transmission structure could be simpler, since in some of these countries, such as Colombia and Peru, the frequency used is the same as in Brazil (60 hertz) – Argentina and Uruguay adopt 50 hertz and, therefore, , it is necessary to convert the frequency in the export process.

For interconnection with Andean countries, Chammas points to the potential of the transmission network formed around the Madeira River, in Rondônia, a system created through a consortium led by ISA CTEEP.

“The president of ISA, who is the controller of ISA CTEEP, is Colombian. And when he was here last year, he brought this agenda to the [presidente] Lula and said that continental interconnection is important. When I see the interconnection that Europeans can have […] I think that our continent, if it had a more integrated infrastructure, roads, highways, energy, could join forces and enhance our growth”, he states.

“We would be able to export only green energy, instead of pouring hydroelectric power or instead of having, at some point, not to use wind and solar. We would do this at off-peak peak times, because of the time difference with some neighbors ours”, he adds. As challenges, however, he cites the need to align the regulatory framework in the region to provide security for attracting capital.

A 2019 study by EPE (Energy Research Company) points out that Guyana, Paraguay, Peru and Uruguay deal with integration projects with Brazil in their national energy plans. According to the survey, there are three interconnection projects involving Brazil and countries on the continent: 1) Peru, Brazil and Chile; 2) Brazil, Guyana, Suriname, French Guiana and Venezuela; 3) Bolivia, Brazil, Argentina, Chile. There is no forecast, however, for these projects to become reality.