The National Electric System Operator (ONS) published, on Wednesday, September 30, a Technical Note with the remaining connection capacity figures for the Capacity Reserve Auction (LRCAP) dedicated to battery energy storage systems. The document's main conclusion is that more than 80% of the points registered by developers have available margin to receive this type of project. For those preparing bids for the auction, the study works as a map of where the grid can absorb new installations and where plans will need to be revised.
What the ONS released
The Technical Note gathers the operator's assessment of the capacity still remaining at the grid points indicated by developers during registration for the LRCAP. In simple terms, the ONS checked, point by point, whether the transmission infrastructure can accommodate battery systems without compromising the secure operation of the interconnected system.
The result shows that the vast majority of the indicated points have room for connection. This does not mean that all registered projects fit at the same time in each location, but it signals that, in most cases, there is a starting margin for bids to move forward. The remaining share, below one fifth of the points, does not have this headroom, and projects located there are likely to face restrictions.
Why connection margin matters so much in the auction
Connection margin is the amount of power that a grid point, usually a substation or a busbar, can still receive from new projects without requiring reinforcements. In auctions such as the LRCAP, whose goal is to contract available capacity to serve the system at times of peak demand, this information is decisive: a project that is competitive on paper makes little sense if it has no way to connect to the grid.
In the case of battery energy storage systems, known as BESS, the issue has a particular feature. This equipment sometimes draws energy from the grid to charge and sometimes injects it when discharging. Therefore, the connection analysis must consider the asset's behavior in both directions, which makes the operator's technical assessment even more relevant to project design.
In addition, the choice of connection point affects the costs of a dedicated transmission line, construction timelines, interaction with other plants in the region and even the battery's operating strategy throughout the day. Official and up-to-date information on margin reduces uncertainties that would otherwise be priced into bids.
How developers should use the Technical Note
The immediate effect falls on those who intend to compete in the auction. The most logical steps are:
- Check each registered point: verify in the Technical Note whether the chosen location appears with remaining capacity and in what volume.
- Compare the margin with project size: even where there is headroom, it may be smaller than the intended capacity or contested by several competitors.
- Assess relocation: projects located at points without margin may be moved to alternatives that have capacity, provided the auction rules allow it.
- Review cost and schedule assumptions: a change of point alters the connection engineering and, consequently, the budget.
What this means in the Northeast
A survey by ENLACE of 86 substations in the Northeast eligible for the LRCAP, cross-referenced with the ONS margin note itself, shows that the region is well positioned in the overall picture. In Piauí, all 15 substations assessed are listed with connection margin. In Bahia, the ENLACE survey identified 14 substations with margin equal to or greater than 500 MW, which opens room for larger projects.
This does not eliminate the need for case-by-case analysis. Ample margin attracts competition, and the combination of grid availability, equipment logistics and permitting is what, in practice, determines the viability of each project in states such as Ceará, Piauí and Bahia.
Our take
In our assessment, the Technical Note is a positive signal for the battery market in Brazil. By indicating that most registered points have margin, the ONS shows that the grid, in general, should not be the main bottleneck for the first major round of storage procurement. We see this as an incentive for competition to focus on cost, technology and execution capacity.
There are, however, issues that remain open. Margin is calculated per point, but several projects may compete for the same headroom, and the final outcome will depend on how capacity is allocated among the winners. It is also reasonable to expect that projects at points without margin will seek alternatives, which may increase competition at locations with headroom. Hasty location changes carry engineering and budget risks.
In the coming weeks, we see as a priority monitoring any updates to the Technical Note, the next steps in the LRCAP schedule announced by sector authorities and guidance on registration adjustments. We recommend that developers treat the document as a basis for decision-making, but not as a guarantee of connection.
What changes in practice for the BESS value chain
- Developers: should immediately review their registered points, prioritize locations with confirmed margin and prepare alternative plans for projects without capacity.
- EPCs: may be called on to redo connection studies and construction estimates on short deadlines if projects are relocated.
- Manufacturers: gain more clarity on the potential volume of eligible projects, which helps in planning supply and commercial proposals.
- Suppliers: transformers, power conversion systems and grid engineering services are likely to be in demand as connection decisions are consolidated.
In short, the ONS information reduces an important uncertainty, but shifts to developers the task of turning available margin into a viable and competitive project.
Original source: ONS — ONS identifica mais de 80% dos pontos cadastrados com margem de conexão para projetos do LRCAP de Armazenamento de Energia em Baterias
Julio Martinez