Brazil's Utility Outlook Improves as Storage, Transmission Gain Momentum, UBS Says

Brazil's utility sector shifted its focus toward reliability and flexibility in June, with transmission, storage, and grid investment emerging as the industry's key growth themes, UBS said in a note on Thursday. UBS said uncertainty surrounding the Leilao de Reserva de Capacidade na Forma de Potencia or the Capacity Reserve Auction in the Form of Power auction eased after the Federal Court of Accounts upheld the auction results while continuing to review alleged overpricing. The decision reduced near-term risks for thermal power developers, particularly Eneva. The ruling also shifts an estimated 2.3 billion Brazilian reais ($447.89 million) in capacity charges from April 2026 through April 2027 into consumer tariffs. Separately, authorities disqualified nine thermal projects totaling about 1.7 gigawatts, while J&F failed to secure late qualification, UBS said. UBS said Brazil also established its first credible framework for battery storage after regulators eliminated double grid charges for qualifying battery energy storage systems and scheduled two December storage auctions with 15-year contracts and delivery in August 2028. The firm said battery.