Chile’s energy storage sector: The state of play

Chile has a 4.98GW pipeline of energy storage projects in the environmental review phase.

The bulk of planned capacity, 4.36GW, corresponds to storage projects linked to renewable energy parks, according to a July report from Chile’s renewable energy and storage association Acera.

The balance of 617MW is accounted for by standalone projects, the biggest being 560MW molten salt initiative Alba, planned by generator AES Andes at coal-fired generation complex Angamos in Antofagasta region. Investment is under analysis, according to an August company presentation. 

The bulk of renewable energy projects seeking the green light include battery storage elements, mainly reflecting strategies to mitigate transmission congestion risk and tap favorable non-solar-hour spot prices.

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Battery projects are online and being built and planned. According to Acera data, 64MW of standalone storage capacity is operational, 57MW is in the testing phase, 416MW is under construction and 118MW has an environmental license. 

In terms of systems incorporated into renewables parks, 113MW is operational, 150MW is under construction and 1.22GW has an environmental license. 

With muscle to shoulder risk associated with the entrance into emerging segments, Chile’s four biggest power generators – Engie, Enel, Colbún and AES Andes – have formed the vanguard.

Among those built or commissioned is Colbún’s 8MW Diego de Almagro Sur system, incorporated into the 230MW solar PV plant of the same name. Among those under construction is Engie’s BESS Tamaya (68MW) linked to the firm’s 114MW Tamaya solar PV farm (pictured), and BESS Coya (139MW) linked to its 181MW Coya solar PV plant. 

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AES Andes brought online in July the biggest storage system in Latin America: 112MW Andes Solar IIb.

Projects being carried out by smaller players include 35MW BESS San Andrés, belonging to Innergex.

According to some estimates, Chile may need several gigawatts of energy storage to support a planned retirement of roughly 5.5GW of coal-fired capacity – a process that is currently underway.  

Given Chile’s geographic features, pumped storage is seen as another option. BNamericas is tracking a US$1bn pumped storage project, Espejo de Tarapacá.

BATTERY STORAGE TRAILBLAZERS

In 2009, AES installed the first battery system of its kind in Chile, 12.8MW BESS Andes at its Andes substation. This was followed in 2012 by 20MW BESS Angamos at the company’s coal-fired plant of the same name, and in 2016 by 20MW BESS Cochrane at its coal-fired plant of the same name. These were followed in 2019 by Engie’s 2MW BESS Arica at one of its substations. 

Of the 64MW of standalone capacity operational as of July, 52MW is short-duration capacity of 15 minutes, which supports grid reliability but does not participate in the injection and capacity markets.   

REGULATIONS 

Work is underway on the regulatory front, in areas such as coordination and operation and capacity transfer rules.

Officials are also drafting the secondary legislation that will guide implementation of the 2022 energy storage and electromobility law, a key pillar of which is spurring development of the standalone storage segment.   

As things stand, the regulatory framework for storage systems incorporated into renewable energy plants is largely complete. All eyes are chiefly on rules for standalone plants, particularly those concerning remuneration, which will be vital for some smaller players to secure financing.

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Claudia Rahmann, director of solar energy research center SERC Chile and an academic at Universidad de Chile’s department of electrical engineering, underscored the importance of ancillary services to help unlock the segment’s potential.   

“Regarding the existing barriers and challenges for BESS systems, I think that for some technologies investment costs are still an issue," Rahmann told BNamericas. "However, I believe that the most important thing today in Chile is to improve the ancillary services market, in order to generate mechanisms that encourage the adequate provision of services associated with the frequency regulation of the system.

"The idea is that the correct economic signals are sent that encourage different storage technologies to provide these services in order to guarantee an economical and reliable operation of the system in a context of high levels of [non-conventional renewable energies] NCRE."

AUCTIONS

A regulated power supply auction underway contains incentives for renewables projects that incorporate storage. 

In parallel, the government is planning to auction systems. An associated bill in congress, if approved, would lead to studies to establish what is actually required in terms of storage systems and the preparation of bidding rules. Under an initial proposal, winning bidders – which could be a generator or a transmission firm – would receive a fixed payment from consumers that recognizes capex and opex, from which revenue obtained from load shifting, capacity and ancillary services would be deducted.

Chile, working to decarbonize its economy, faces the challenge of expanding transmission and distribution infrastructure without overburdening end-users, who pay for this type of work through their electricity bills.