Sliding battery prices seen reigniting interest in Chile PMGD investment

Interest is resuming in Chilean PMGD distributed generation projects thanks to a downward trend in battery prices, BNamericas was told.

In terms of new projects being developed, the PMGD segment began losing steam after a boom period. The deceleration was linked to a 2020 decree, known as DS88, that changed a flat stabilized price regime for one based on time blocks.

The change provided monetary incentives for injecting power after the sun goes down, particularly between 8pm and midnight, but was not viewed favorably by the industry, given cheaper energy storage was needed to support profitability. 

ALSO READ: Chile's distributed generation growth slowing amid regulatory rumblings

However, a reduction in battery prices since then has reignited interest in developing these plants, which are under 9MW and mainly connected to the distribution network.

Vicente Walker, regional business development manager of Trina Storage, a unit of Chinese solar PV plant component manufacturer Trina Solar, said the company was working on projects with PMGD developers. 

“We see, with the current prices of storage, PMGD projects are going to be feasible as long as they are solar PV plus BESS [battery energy storage system],” said Walker. “We’ve got some clients that are going to launch their projects this year. We’re participating in BESS tenders.”

ALSO READ: With 3 Chile projects, Trina Storage strides into Latin America BESS arena

An annual battery price survey conducted by research provider BloombergNEF found a 14% price drop from 2022 to 2023, to US$139/kWh.

Trina Storage, which recently established a Latin American base in Chile, is providing quotes for PMGD projects with injection capacity of three and four hours.

Installed capacity of PMGD plants has climbed rapidly over the past decade, reaching 2.66GW in December 2023.

On top of this, 2.07GW of additional PMGD capacity, almost all solar PV, was under construction that month and due to go into operation over the course of this year and next.

Without a solid resurgence in interest, as things stand, from 2026, the PMGD buildout will likely grind almost to a halt as the pipeline of projects eligible for remuneration under the price regime will be in service by then and, so far, only a handful of new initiatives – chiefly solar PV with battery storage – have been put forward under the time block-based mechanism that replaces it.

The government has launched a review of PMGD regulations. 

After entering the BESS storage space in 2019, Trina now constitutes a one-stop shop for developers, providing not only battery and enclosure solutions of 4MWh and 5MWh, but also solar panels and trackers, as well as construction and development stage technical support.