Chile energy storage legislation, regulation work advancing

Wheels and cogs continue to turn in Chile’s nascent energy storage space.

The energy ministry aims to split into two a planned auction of energy storage systems and is preparing to publish, within days, long-awaited capacity rules.

Those were among the key takeaways from industry event Energy Storage Latin America, being held this week in capital Santiago.

Outlining developments on the regulatory and legislative fronts, Alex Santander, the energy ministry’s policy and research chief, said storage will play a key role.

In terms of the auction, expected to involve around 2GW of capacity in the sundrenched north, one process would center on the physical infrastructure and the other the provision of energy management services, Santander said, adding that public-private coordination was vital. Stakeholders are awaiting further details.

Installing storage systems – along with the leveraging of flexible gas generation and grid technology – is seen as vital to help mitigate the intermittent nature of the country’s growing fleet of wind and solar parks and support a wider drive to decarbonize the power generation sector via the retirement of coal-fired power stations.

An associated energy transition bill in congress opens the door for the auction process. National energy commission CNE would devise the auction framework.

Meanwhile, the capacity transfer rules – which would still need the green light from the comptroller general’s office – are seen as a critical part of the regulatory jigsaw puzzle. 

Potential investors are awaiting regulatory clarity, particularly with regards to revenue/payments, the event was told. This would help ease access to financing, particularly important for smaller players with less financial clout.

The regulatory framework for storage systems incorporated into power generation parks is largely established but gaps exist into the framework for standalone installations, that is, those not part of a power plant. 

Event panelist Daniela González, who is director of Chilean regulation consultancy Domo Legal, confirmed this trend to BNamericas.

“Today, it is necessary to resolve some regulatory elements so that it is possible to evaluate and develop storage projects, especially standalone,” González said.

“Authorities must give stable and specific signals concerning revenue sources of storage systems with regards to all the services that this very versatile type of technology can deliver.”

Other areas requiring clarity concern rules of scheduling and dispatch, which encompasses charging and injection matters and the best way of establishing opportunity costs and provision of ancillary services, the latter area requiring changes to the tender model, González said.

Research published by grid coordinator CEN indicates that 2GW of batteries installed by end-2026 would provide optimal economic benefits – of US$513mn – and help fine-tune requirements through 2032. 

Major battery segment players in Chile include Huawei and Fluence, with YOU.ON and Tesla among firms entering the arena.

Investment incentives in Chile, meanwhile, center on areas including capacity payments and services provision, Javier Dib, CEO of local generator AES Andes said in a presentation. AES is due to bring 267MW of battery storage capacity online over the next 12 months and through 2027 expects to incorporate a total of 757MW.

Overall, Chile has 176MW of battery storage systems in operation – chiefly those linked to power plants – and has 667MW in the construction phase for 2023-24. Over 1,000MW is in the development phase, an AES presentation said.

Echoing comments of other delegates, Arthur Deakin, energy director at research firm Americas Market Intelligence, said time was of the essence in Chile.

Ana Lía Rojas, executive director of local renewables and storage association Acera, underscored the importance of storage to reducing electricity wastage or curtailment, which as of September had reached the full-year total of 2022, of around 1,400GWh.

This trend “will continue increasing if measures aren’t taken” Rojas said.

A combination of transmission congestion factors and renewables oversupply has generated headwinds for the sector, particularly pureplay solar generators in the country’s north with power-purchase agreements further south.