Brazil Energy Storage Study: System Costs To Reduce By Up To 16% By 2029

 

Brazil Energy Storage Study: System Costs to Reduce by Up to 16% by 2029, Requires 58GW of Flexibility

 

According to a PSR study, energy storage technology plays a key role in increasing the share of renewable energy and ensuring grid flexibility. It is estimated that by 2029, the application of energy storage technologies such as lithium-ion batteries and pumped hydroelectric storage could reduce Brazil's average power system costs by up to 16%, while also enhancing power supply reliability and reducing reliance on fossil-fuel thermal power plants.

 

The study indicates that Brazil's power structure is undergoing profound changes. The share of hydropower will decrease from 65% in 2014 to 48% in 2025, falling to 40% when distributed generation is included. Wind power's share will increase from 2% to 16%, and solar power, starting from zero, now accounts for 8% of centralized power generation capacity. This structural change is leading to a continued increase in the system's demand for flexible resources, and energy storage systems can provide critical services such as capacity support and frequency regulation.

 

Research estimates show that by 2029, the demand for power system flexibility will increase dramatically: 1-hour load ramping will require an average of 5 GW, with extreme scenarios reaching 16 GW; 4-hour load ramping will require 19 GW, with peaks reaching 47 GW; and 7-hour load ramping will require 30 GW, with extreme scenarios reaching 58 GW. Model analysis shows that deploying 32 GW of 4-hour battery storage can reduce demand response costs by 13%, while 32 GW of 100-hour pumped hydro can reduce costs by 16%. A gas-fired thermal power unit of the same size can only achieve a 4.1% reduction.

 

Currently, energy storage projects still face economic challenges. Batteries require a daily price differential of $72 to $152 per MWh over a four-hour period to guarantee profitability over a 15-year operating period, while pumped hydro requires an eight-hour price differential of $65 to $161 per MWh to support 40 years of operation. However, Brazil's current electricity price mechanism only fluctuates by an average of $29 per MWh per day. Furthermore, the tax burden on battery equipment is 76% higher than that on conventional power generation, and the regulatory framework is still incomplete. The energy storage regulatory roadmap launched by the Brazilian National Electricity Agency in 2023 is expected to be completed in 2027, and breakthroughs are still needed in capacity bidding, environmental permits, and market rules.