Snapshot: How much energy storage does Chile need – and where?

Battery storage systems with injection duration of 6-8 hours is the optimal configuration to cover expected oversupply during solar hours in Chile’s north.

That is among the takeaways of an energy storage study conducted by Chile’s grid coordinator CEN, which focused on the period 2025-32.

Researchers projected there will be up to 4.0GW of energy storage capacity installed in 2026-32.

Systems are deemed necessary to help mitigate the intermittent output of a growing park of renewables plants in the region, chiefly solar, and support decarbonization. 

Findings indicate that 2.0GW of batteries installed by end-2026 would provide optimal economic benefits – of US$513mn – and help fine-tune requirements through 2032. 

Required capex (generation and storage) and opex under this scenario is US$8.02bn (US$3.59bn investment and US$4.43bn operation), compared with US$8.53bn in a no-battery scenario, US$8.11bn in a 2.5GW battery storage scenario and US$8.25bn in a scenario where 600MW battery storage and 465MW molten salt storage is installed.

“The relevant thing here is that the most economic level, in terms of battery installation at the earliest date, which is the year 2026, indicates a volume of 2GW,” Juan Carlos Araneda, CEN’s deputy planning chief told a technical seminar. 

Market participants are waiting on some key regulations in the sphere of remuneration and revenue flows.

CEN researchers assumed coal-fired generation would be halted from 2030 and used hydrological data from the past 10 years, along with battery prices from the energy ministry’s long-term energy plan. 

Chile’s government has announced plans to auction energy storage systems, eyeing 2GW of capacity and estimated investment of US$2bn. An associated bill is in congress and the energy ministry is aiming to bring systems online by the end of 2026.

The private sector is already making incursions. In terms of systems incorporated into renewables parks, 113MW is operational, 150MW is under construction, 1.22GW has an environmental license and around 5GW of renewables-storage capacity is in the environmental review phase.  

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. Around 617MW of standalone capacity, chiefly corresponding to AES Andes' Alba molten salt project, is in the environmental review phase. 

NOT JUST BATTERIES

There is potential space for this and other types of energy storage systems.

“While battery storage is identified as a cost-effective element, results obtained could be extended to other technologies whose costs are equivalent to the estimates in this report for battery systems,” a CEN presentation states.

Araneda touched on this. “We think it is important that in a future auction, held based on the bill presented, there is freedom concerning storage systems, that different technologies can compete,” he said.

“The ideal thing is having the market itself identify what is the most economical solution.”

WHERE?

Researchers identified six northern substations near to which standalone or hybrid (renewables-storage) systems could be located: Lagunas (6-hour, 600MW), Kimal (8-hour, 400MW), Andes (6-hour, 100MW), Parinas (6-hour, 300MW), Cumbre (6-hour, 400MW) and Cardones (8-hour, 200MW).

To have a future grid that is 100% renewables-powered, systems, the presentation states, must also help bolster it by incorporating the likes of grid-forming inverters and providing ancillary services.  

Claudia Rahmann, director of solar energy research center SERC Chile and an academic at Universidad de Chile’s department of electrical engineering, recently 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 said. "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."

Luis Felipe Ramos, undersecretary at Chile's energy ministry, touched on this during the CEN event.

“It’s important that our country delivers the regulatory signals that facilitate the investment needed today,” Ramos said.

BEYOND 2030?

The initial target for energy storage deployment is the country’s sun-drenched north, but there is potential scope for eventual investment further south.

“The greatest urgency is in the northern zone. However, after 2030 we have identified strong growth in variable output generation, particularly, wind, that could also spur storage in the south,” Araneda said- 

He added that, given the region’s existing energy storage capacity provided by hydroelectric dams, renewables-hydropower coordination was the “first line of defense” to address the variability of renewables.  

Developers including Chile's biggest players have wind projects in the zone. 

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