Batteries Can Reduce Curtailment by Up to 50% and Change the Profitability of Renewable Power Plants

Battery energy storage systems (BESS) can reduce mandatory curtailment of wind and solar generation in Brazil by 40% to 50%, according to estimates from the National Operator of the Electric System (ONS). This potential depends on the outcomes of the capacity reserve auctions scheduled for December 2026 and the effective implementation of the contracted projects.

This perspective gains relevance amid the rise in curtailment in the country. In 2025, restrictions on renewable generation caused estimated losses of 6.5 billion reais, according to a survey by Volt Robotics. Approximately 20% of the potential energy from solar and wind plants was not utilized, equivalent to an average of 4,021 MW.

The problem continued in 2026. Data from ONS compiled by STEMIS indicate that wind and solar generation curtailment totaled 29.3 TWh between January and September, a volume 16.3% higher than that recorded in the same period in 2025. The restrictions accounted for 21.6% of the reference generation of the analyzed plants, with approximately 69% resulting from excess supply relative to the system’s absorption capacity.

In this context, the expansion of energy storage emerges as an alternative to harness part of the energy that is currently not produced or delivered to the grid. Beyond contributing to operational flexibility, the technology is beginning to gain weight in the economic assessment of new renewable energy projects.

Excess supply widens curtailment of solar and wind generation

The indicators for August 2026 reinforce the pressure on generators. A survey by FSET shows that curtailment reached 26.6% of the reference generation from wind farms and 32.8% from solar farms, the highest percentages recorded in that year up to that point.

The recurrence of these restrictions affects the cash flow of projects, especially those whose remuneration depends on the energy actually made available or delivered. The impact also alters investors' risk perception and the assumptions used in the financial structuring of projects.

For Gustavo Sozzi, CEO of Lux Energia, the sector now faces a challenge different from the one that marked the expansion of the renewable energy matrix: making use of already-installed generation capacity. “For a long time, the main challenge for the sector was to expand generation capacity. Now, we are facing a situation where there is available energy, but we do not always manage to use it. For the generator, this means losing revenue on an investment that has already been made. Storage begins to change this equation because it creates the possibility of using part of the production that would be curtailed and making it available at another time.”

Batteries shift energy between periods of supply and demand

BESS systems allow electricity to be stored during periods of high generation and low consumption, and returned to the grid when demand increases or renewable energy availability decreases. In solar power plants, for example, the technology can absorb surplus during peak insolation hours and make it available in the early evening, when photovoltaic production declines.

The mechanism can reduce constraints associated with oversupply, but its effectiveness depends on grid connection conditions, equipment location, and installed storage capacity. Batteries, by themselves, do not eliminate structural transmission limitations or congestion at specific points in the grid.

The integration of these systems also changes the feasibility analysis of projects. In addition to generation costs and electricity selling prices, investors now consider curtailment history, the possibility of production recovery, storage investment, and potential revenues from power availability and system service provision.

Sozzi emphasizes that the selection of equipment capacity must be aligned with the operational and commercial characteristics of each project: “Energy storage cannot be analyzed solely as a technological solution. It is an economic decision that must consider how much energy is being lost, how much of that volume can be recovered, and what the resulting revenue will be. A poorly sized battery can increase investment without delivering the expected return. Therefore, the history of curtailment and the commercial strategy must be part of the analysis from the outset.”

December auctions record 296.8 GW in registered projects

Investor interest in energy storage has grown significantly in the run-up to Brazil's first auctions dedicated to procuring large-scale batteries. According to the Energy Research Company (EPE), 6,091 projects have been registered, with a total capacity of 296,807 MW.

This volume reflects market interest and does not mean that all projects will be qualified or contracted. Nevertheless, the number of projects underscores the expectation of expanding this technology within the Brazilian power system. The auctions are scheduled for December 2 and 4, 2026. One of the competitions will be directed at domestically manufactured systems, while the other will cover other eligible projects.

Contracts will have a 15-year term, with supply expected to begin in August 2028. Among the established technical requirements are a minimum capacity of 30 MW, a four-hour supply capability, and availability to respond to operational commands from the National Operating System (ONS).

Procurement could create a new front for investment in flexibility infrastructure, enabling the integration of storage capacity into power system operational planning. For renewable generators, this outlook also opens up possibilities for integration between power plants and battery systems.

Rules for curtailment and storage advance at ANEEL

The advancement of BESS is occurring in parallel with regulatory discussions regarding the distribution of generation curtailment and the funding of storage systems.

On October 6, the National Electric Energy Agency (ANEEL) approved new rules to organize mandatory curtailment, establishing criteria for distributing restrictions among different energy sources. The regulation provides for the progressive participation of hydropower generation in curtailment driven by oversupply, with the aim of increasing operational predictability.

The following day, the agency opened a public consultation on the funding of storage systems contracted as capacity reserves. The discussion includes the methodology for allocating costs among sector participants, a topic relevant to defining remuneration and cost allocation for such projects.

The definition of these rules will be crucial for the economic structuring of projects, especially because the viability of storage depends on predictable revenues and clear criteria for the use of equipment by the operator. Another favorable factor is the reduction in technology costs. According to the International Energy Agency (IEA), the global average prices of battery storage systems fell in 2025 to approximately one-third of the level recorded in 2020.

The decline enhances the competitiveness of BESS, but it does not eliminate financing challenges. Connection costs, maintenance, battery degradation, and uncertainties about future revenues continue to influence investment returns.

Energy storage is becoming an integral part of project risk assessments

The integration of batteries into energy planning expands the criteria used to assess the competitiveness of renewable generation. The analysis no longer considers only production costs and contracted prices; it now includes the ability to deliver energy during periods when the system requires it.

In Sozzi’s assessment, this shift represents a new variable for investment and marketing decisions: “We are beginning to incorporate a new variable into energy planning. It is no longer sufficient to evaluate how much a plant can produce or how much a company pays per megawatt-hour. It will become increasingly important to understand when that energy will be available, whether there will be capacity to use it, and what the cost of losing that opportunity is. Energy storage fits precisely into this discussion about predictability and risk management.”

Despite the potential to reduce curtailment by up to 50%, the expansion of storage systems does not replace investments in transmission, grid modernization, and the refinement of operational rules. The outcome will depend on the geographic distribution of the equipment, its ability to absorb surplus energy, and the system's operating conditions.

For the market, the most significant change is the integration of flexibility as an economic component of projects. In a scenario of renewable energy expansion and increasing constraints on generation, the ability to store and deliver energy at different times is expected to gain importance in the assessment of asset profitability.