Markus Vlasits, President, and Adalberto Moreira, Vice President of the local energy storage solutions association ABSAE, suggest that Brazil should give preference to renewable-based generation projects coupled with energy storage systems over thermoelectric plants.
In a recent interview, they discussed the need to invest more in this sector and outlined measures necessary to facilitate the expansion of the battery market.
BNamericas: Could you provide an overview of the current energy storage landscape?
Vlasits: Energy storage is experiencing rapid global growth. In the past year alone, 23GWh of energy storage capacity was deployed. The primary markets for energy storage are China, the US, and the EU/UK.
Brazil's energy storage market is relatively small, with an installed base of around 250MWh. Most of this capacity has been deployed in rural areas in conjunction with solar panels.
BNamericas: Are there plans to include energy storage projects in regulated auctions overseen by Aneel?
Vlasits: Yes, particularly in backup capacity auctions. It is crucial to understand how energy storage can contribute to the expansion of renewable sources in Brazil and provide essential services to the electricity sector.
Moreira: For instance, in certain regions, energy distributors are ill-equipped to supply the energy required by electric cars when residents return home in the evening to recharge. Strengthening the grid is a challenge, and energy storage can play a vital role.
Vlasits: Furthermore, there is the matter of decarbonizing the Amazon. Over 200 localities in the Amazon region remain disconnected from the national grid, collectively emitting 10-12% of the electricity system’s CO2. These areas consume 3.7TWh, primarily from diesel oil and natural gas, which constitutes less than 1% of the national load, approximately 500TWh.
BNamericas: Is this related to the Amazon decarbonization program?
Vlasits: Yes, the government has outlined guidelines in a published decree. While a positive step, it lacks operational details.
Moreira: Energy storage is a versatile tool, offering a multitude of services to various stakeholders, including electricity generation, transmission, distribution, cost reduction during peak hours for end consumers, and enhancing generation reliability.
With the impending growth in renewables, especially solar and wind, which are intermittent sources, energy storage becomes critical in providing greater reliability.
Vlasits: Brazil has a significant pipeline of over 100GW of solar energy and 20-30GW of wind energy authorized by Aneel. However, accessing this potential is challenging due to grid congestion caused by limitations in the transmission network.
BNamericas: What steps should Brazilian authorities take to foster growth in the energy storage market?
Vlasits: Redefining the rules for the upcoming backup capacity auction, specifically regarding the potency product, is essential. We propose a specific product focused on operational flexibility to balance load and generation.
Moreira: It is crucial to have guidelines that allow energy storage technology to participate effectively, including defining the required autonomy time. A battery that can last for 36 or 48 hours is not competitive.
Flexibility is key, and we need a modern system that can accommodate new solutions for different needs. For daily operations with a systemic peak lasting three or four hours, an instantly responsive system is more efficient. The challenge lies in potency, as intermittent sources cannot guarantee sufficient load input.
Vlasits: Brazil lacks dispatchable power, not energy. The solution lies in synthetic inertia, provided by energy storage. These devices, either standalone or integrated with renewable power plants, offer a rapid response time of less than a second. This approach has proven successful in the US, Australia, and the UK.
Moreira: Taxation is another significant concern. The tax burden on energy storage is exorbitant, almost double that of generation, transmission, and distribution equipment in Brazil. Tax adjustments are necessary, not necessarily exemptions.
Vlasits: Despite the high tax burden, energy storage has managed to remain competitive, particularly for isolated systems and a growing number of consumers, especially given the current diesel prices. Improving tax conditions will further expand the market.
BNamericas: Batteries primarily use lithium, which has environmental impacts in its production. Is this not contradictory to sustainability efforts?
Vlasits: Lithium batteries are currently the most cost-effective option, but alternatives like sodium batteries are emerging, as seen in developments by Chinese companies. Lithium's challenge lies in its low concentrations, and it forms part of a competitive global supply chain involving countries like Chile, Argentina, Australia, and Asia.
Unlike mobility, stationary applications can explore other technologies apart from lithium.
BNamericas: ISA-CTEEP recently inaugurated an energy storage system on the south coast of São Paulo. Do you anticipate more similar projects in Brazil?
Vlasits: There are over 30 ongoing projects, with ISA's being the largest. The second largest is Vale's 10MWh project at the Mangaratiba terminal in Rio de Janeiro. Moreover, there are several projects aiming to hybridize isolated systems in northern Brazil.
Moreira: We participated in the first two isolated hybrid plants in Brazil, located in the far north of Roraima. These comprise thermal sources, including diesel, coupled with photovoltaic systems and energy storage.
We believe that the upcoming auction for isolated systems organized by the ministry of mines and energy will predominantly involve hybrid systems, aligning with the Amazon decarbonization program.