SAO PAULO, Jan 22 (Reuters) - Brazil's first-ever

auction to add batteries and storage systems to its national

power grid, scheduled for later this year, is seen generating

$450 million in investments, according to an estimate by

consultancy firm Oliver Wyman.

WHY IT'S IMPORTANT

The batteries would be able to store energy from wind and

solar power, renewable sources which, although growing in

importance for Brazil's power grid, remain limited in that as

they are less predictable than thermoelectric or hydro power

units.

ADDITIONAL CONTEXT

Brazil's government often holds auctions to buy power

capacity to be used when demand is high but supply is lower,

such as in the late afternoons when solar power units stop

producing energy.

The June auction will be the first from the government

allowing batteries and storage systems to participate, and will

be exclusive to such technologies.

BY THE NUMBERS

Oliver Wyman estimates that, if the government purchases

around 300 megawatts of energy capacity, the winners of the

auction could spend $450 million to get their projects online.

According to the consultancy firm, if Brazil were to have

those batteries and storage power systems working already, the

nation could have reduced the amount of fossil fuels burned by

thermoelectric plants by 21% between April and December of 2024.

KEY QUOTES

Oliver Wyman engagement manager for energy and natural

resources Rodrigo Borges said that the estimated investments

required could still change depending on details about the

auction which have not yet been made public.

"One of the main doubts is regarding the size of power

demand and its location," Borges told Reuters. "This can create

more bottlenecks or fewer bottlenecks, or encourage more or less

investment," he added.

WHAT'S NEXT

According to the government's proposal, the auction will

take place in June and will offer 10-year contracts, with supply

beginning in July 2029. The systems will have to deliver maximum

power availability equal to four hours a day, receiving a fixed

price for this.

Power companies, such as Portugal's EDP and

Brazil's ISA Energia, have indicated their interest

in taking part in the auction.