Chile energy storage: The (long) wait for regulatory clarity

Greater certainty in two key regulatory facets of Chile’s energy storage segment may not fully materialize until 2025, BNamericas was told.

Like other countries decarbonizing their power grids and requiring solutions to mitigate increased renewables penetration, Chile is entering unexplored energy transition territory.

Some private investors are waiting for regulatory clarity particularly concerning project remuneration, a vital aspect for companies that need external financiers to bankroll projects.

Ricardo González, CEO of clean energy-focused technical and financial consulting firm Anabática Renovables, said: “Clearly, the priority at this moment is the capacity transfer regulation, which was submitted to the general comptroller’s office in November 2023.”

A modification of the coordination and operation regulations is also pending and expected to be submitted to the office by the end of next year. The capacity transfer rules have been around four years in the pipeline.

González, whose Santiago-headquartered firm is entering the green hydrogen consulting segment, said: “Based on the above, it is anticipated that only in the year 2025 could there be a higher degree of certainty regarding the regulatory framework applicable to these facilities. These timelines serve as a barrier to the development of private initiatives.” 

The regulatory changes are led by the executive branch of government and do not need the approval of congress. 

During a recent energy storage conference, delegates were told that regulatory agility was needed, including for longer-duration energy storage plants, which will likely enter the arena post-2026 against a backdrop of a significant reduction in coal-fired generation and increased renewables penetration.   

The country’s biggest generators by installed capacity, meanwhile, with deep pockets and the capacity to shoulder higher risk, have embarked along the battery storage highway. Others have also joined it despite the uncertainty, among them the local unit of Canada's Innergex, a company that also operates in the US and France. 

The focus so far has chiefly been on battery systems incorporated into renewable energy parks.

ENERGY STORAGE

Chile’s pipeline of energy storage projects is growing, driven by those linked to wind and solar plants.

The country’s biggest generator by installed capacity, Enel, has until now focused on two-hour duration battery systems but is mulling longer-duration options, more suited to the energy-shifting business. 

A planned government storage auction, along with the capacity rules, should spur interest in the standalone storage segment from next year. While consensus exists in the industry over the need for storage capacity, there is disagreement over the mechanism/model. Chile’s big players highlight that they are building and financing systems under their own initiative.

In an October report, local renewables and storage chamber Acera said that 6.07GW of renewables-storage systems were in the environmental review phase. 

In November, the energy ministry and the ministry of national assets launched a plan to spur development of standalone storage systems via the direct assignation of government land. The objective is that these systems enter service in 2026, for a combined capacity of 13GWh. 

INSTALLED GENERATION CAPACITY

At end-October, installed power capacity in Chile stood at 35.3GW, according to Acera. Non-conventional renewable energy (NCRE) plants accounted for 15.4GW, thermoelectric 12.8GW, conventional hydro 6.78GW, standalone storage 260MW and NCRE storage 113MW.

In terms of clean energy projects being built, 6.49GW is underway. NCRE accounts for 5.99GW, standalone storage 346MW and NCRE storage 150MW.

BNamericas will publish the full interview with González in the coming days.