Brazil’s energy sector has undergone significant legislative and regulatory developments throughout 2026.

The groundwork for these changes, however, was laid in 2025, with attempts to reform the electricity sector through Provisional Measures No. 1,300/2025 and No. 1,304/2025. Both were subsequently enacted into law as Laws No. 15,235/2025 and No. 15,269/2025, respectively, albeit with significant amendments introduced by the Brazilian Congress.

Topics such as generation curtailment, energy storage and the opening of the free energy market to low-voltage consumers were addressed - albeit at a more general level - by the new legislation.

In addition, at the end of 2025, Decree No. 12,772/2025 introduced a new framework for access to Brazil’s transmission grid, including a competitive allocation mechanism where the aggregate capacity requested by prospective users exceeds the remaining capacity available at a given connection point.

These matters have been further developed throughout 2026, as outlined below.

Access to the Transmission System

One of the innovations introduced by Decree No. 12,772/2025 was the establishment of specific application windows (“access seasons”) for new users seeking access to the transmission system.

These access seasons - which must be held at least twice a year - were further regulated by Ordinance No. 129/2026 issued by the Ministry of Mines and Energy (MME).

Key aspects of the regulation include the registration and admission requirements applicable to prospective users, whether generators or consumers; the parameters for determining the remaining capacity at each connection point; the use of the highest premium offered (BRL/MW) as the selection criterion in competitive allocation procedures; and the issuance of a preliminary access assessment to successful bidders.

Compensation for Losses Arising from Generation Curtailment

Law No. 15,269/2025 introduced the possibility of compensating wind and solar power generators for losses arising from generation curtailment ordered due to external unavailability and electrical reliability constraints, subject to certain conditions.

MME Ordinance No. 140/2026 further develops these conditions by establishing a process for the future execution of compensation agreements. The process begins with a non-binding and cost-free expression of interest, followed by a qualitative and quantitative assessment of the curtailment experienced by the relevant generator. The Ordinance also sets out rules for calculating and implementing compensation for the resulting losses. If the parties agree on the outcome, the process culminates in the execution of a commitment agreement between the generator and the Federal Government.

More than 90% of generators affected by generation curtailment expressed an interest in participating in the compensation arrangement.

Market participants have, however, expressed disappointment regarding the current exclusion of losses resulting from curtailment caused by electricity oversupply. Such losses were not covered by Law No. 15,269/2025 and, consequently, are also outside the scope of Ordinance No. 140/2026.

Battery Storage Auctions

With at least two capacity reserve auctions involving battery energy storage systems expected to take place this year, the Brazilian Electricity Regulatory Agency (ANEEL) submitted the draft tender documents for both auctions to public consultation. Auction No. 05/2026 is scheduled for 2 December 2026, while Auction No. 06/2026 is scheduled for 4 December 2026. The consultation process is intended to gather market feedback and proposals for improving the rules governing the upcoming auctions.

The two draft tender documents have more similarities than differences. Both provide for supply obligations to commence on 1 August 2028, with a four-hour availability commitment per full cycle and up to two full cycles permitted per day. Projects must provide at least 30 MW of maximum available capacity and will be limited to 366 full cycles per year, with compensation structured as a fixed annual payment. The proposal is for the associated costs to be borne exclusively by generators through the execution of a Capacity Reserve Power Use Agreement (COPCAP).

The draft tender documents also provide for an estimated investment benchmark of BRL 10 million/MW and a bid bond of BRL 100,000/MW. Other provisions include restrictions on the formation of bidding consortia - for example, preventing companies under common control from participating in the same consortium - and provide that prior environmental licensing will not be required for the qualification of storage projects before the Energy Research Office (EPE).

The main difference between the two auctions concerns local-content requirements. The draft tender documents for Auction No. 05/2026 require the storage system to comply with the minimum local-content requirements established by the Brazilian Development Bank (BNDES). Execution of the corresponding capacity reserve agreement will therefore be conditional upon evidence that the storage system has obtained the required BNDES accreditation.

Opening of the Free Energy Market

As part of the broader electricity-sector reform, Decree No. 13,097/2026 established the conditions under which low-voltage consumers - i.e., consumers connected at voltages below 2.3 kV and currently supplied exclusively by electricity distribution companies in the regulated market - may purchase electricity in the free contracting environment (Ambiente de Contratação Livre – ACL).

Under the Decree, migration to the ACL must be notified to the relevant distribution company at least 90 days in advance, although ANEEL may establish a shorter period for simplified migration procedures. Once migration has been completed, consumers must purchase electricity exclusively through a retail market agent authorised to operate before the Chamber of Energy Commercialisation (CCEE).

Consumers may, of course, elect to return to the regulated contracting environment (Ambiente de Contratação Regulada – ACR) and resume purchasing electricity from their local distribution company. In such cases, the consumer must notify the distribution company at least one year in advance. This period may be reduced at the distribution company’s discretion or pursuant to future ANEEL regulations.

Supplier of Last Resort (SUI)

In connection with the opening of the free energy market to low-voltage consumers, Decree No. 13,097/2026 also regulated the Supplier of Last Resort (Supridor de Última Instância – SUI), a mechanism previously introduced in general terms by Law No. 15,269/2026.

The SUI will operate as a safeguard against disruptions affecting electricity supply arrangements entered into by low-voltage consumers in the free market, provided that such disruptions arise exclusively from circumstances attributable to the relevant generator or supplier, including contractual default or the supplier’s removal from the CCEE.

Initially, the SUI function will be performed by electricity distribution companies. After 31 December 2030, the role will be opened to other interested companies, subject to further regulation by ANEEL.