BRAZIL Law and Practice Contributed by: Débora Yanasse, Bruno Salzano and Luisa Tortolano Barreto, Tauil & Chequer Advogados in association with Mayer Brown
It is expected that the first BESS Reserve Capacity Auction, carried out in the second semester of 2026, will award a ten-year reserve capacity contract with fixed revenues to winning BESS standalone projects, as well as BESS associated with generation projects. Despite the positive outlook, significant regulatory challenges remain in the current framework. These include regulating the tax incentive regimes, ancillary services, open cycle and semi-open cycle pumped- storage hydroelectric power plants, storage systems associated with transmission and distribution facili- ties, as well as impacts on energy pricing. New Reform of Brazil’s Power Sector – Focus on Market Opening On 21 May 2025, Provisional Measure No 1,300/2025 (the “Provisional Measure” or “MP”), also known as the Power Sector Reform MP, was published in the Federal Official Gazette. This initiative of the MME was structured around three pillars, as designated by the In summary, the first pillar refers to the expansion of certain electricity tariff exemptions for low-income customers (the so-called “Social Tariff”). The second pillar introduced a gradual expansion of the free market. The third pillar addressed several measures to rebalance the burden of the sectoral charges between the free and captive markets, relo- cating certain charges to the free customers. The MP 1,300 was converted into Law No 15,235 pub- lished on 9 October 2025, maintaining the provisions regarding the Social Tariff and regulating a discount on the advance payment of the fee for the use of a public good ( Uso do Bem Público or UBP) for certain hydropower generators. In parallel with MP 1,300, Provisional Measure No 1,304 (“MP 1,304”) was published on 11 July 2025, originally intended to establish a cap on the Energy Develop- ment Account ( Conta de Desenvolvimento Energético government: • tariff justice; • freedom for the consumer; and • balance for the sector.
or CDE), limiting the growth of certain sectoral charges and creating a supplementary rebalancing mechanism known as the Resource Complement Charge ( Encargo de Complemento de Recursos or ECR). During the legislative process, MP 1,304 was substan- tially expanded through congressional amendments to incorporate a significant portion of the structural reforms originally proposed under MP 1,300, as well as provisions under Bill No 414/2021 on the modernisa- tion of the power sector. These amendments encom- passed measures related to the expansion of the free market, the supplier of last resort, modifications to self- production rules, tariff discounts, sectoral charges, new attributions to ANEEL and the CCEE, electricity stor- age regulation, treatment for curtailment of wind and solar generation and the cancellation of certain thermal power auctions, among other matters. MP 1,304 was subsequently converted, with 22 presidential vetoes, into Law No 15,269 published on 25 November 2025. Among the most notable vetoes, the following were removed from the enacted text: • compensation for wind and solar generation cur- tailment resulting from energy surplus; • the restriction of new self-production structures to greenfield power-generation projects; • P&D and efficiency obligations for traders; and • the possibility of reclassifying regulated mar- ket/free market ( Ambiente de Contratação Regulada / Ambiente de Contratação Livre or ACR/ ACL) plants as distributed micro and mini-genera- tion. The presidential vetoes are still pending voting in Con- gress. Provisions of Law No 15,269/2025 Law No 15,269/2025 (“the Law”) modernises the regu- latory framework of the Brazilian power sector and constitutes the main reform of the power sector since Law No 10,848/2004. Its main provisions are sum- marised below. The Law provides for the complete opening of the free electricity market, impacting 90 million consumer units responsible for approximately 60% of the energy con-
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