The blooming of Chilean energy storage

Chile briefly led the world in batteries in 2009. That's when the world's first commercial grid-scale battery storage system was turned on in the Atacama Desert, in the north of the South American country.

That 12MW / 4MWh lithium-ion system, called Los Andes, was developed by AES Energy Storage and A123 Systems to ensure a stable power supply for a key mining area. It led to a bigger scheme, the 20MW / 5MWh AES Angamos in 2011, on which AES Gener worked with Empresa Electrica Angamos.

But since that trailblazing move, activity in Chilean battery storage has cooled.

Between 2009 and 2016, the country only deployed approximately 56MW of battery storage, along with an extra 460MW of molten salt thermal storage systems linked to concentrated solar. Little of note has happened since then.

Now, though, the Chilean storage market is moving once more.

Energy storage players have turned their attention to the country as the government has started awarding more support. In this article, we look at what’s happening in Chile and whether it will be seen as a pioneering storage market once more.

Green Chile

In 2019, Chile committed to decarbonise its electricity grid by 2050. This includes closing all coal plants by 2040 and going carbon neutral by 2050.

The country’s ‘Energy Roadmap for 2050’ plan also aims to obtain 70% of electricity from renewables by 2050. However, the plan states that with the current electric grid structure, only up-to-41% of power can be generated from intermittent renewables.

The government has been looking to fix this. In November 2020, Chilean authorities announced plans to conduct a 2,310GWh renewable generation and storage auction this year, and this is due to happen this month. It was scheduled to happen last year but was postponed due to the impact of the Covid-19 pandemic.

The largest opportunity for renewables is in Chile’s northern territories, and notably the Antofagasta Region in the Atacama Desert. That is the location of the highest solar incidence in the world and, as a mining epicentre, it has the country’s largest energy demand. That means that potential for storage is greatest there too.

At present, renewable developers looking to invest in Chile face a risk posed by the fluctuations in power prices, driven by supply from solar projects that can push prices down to around zero. Battery storage and flexible grids can help them mitigate this risk by storing power to sell it when prices are higher.

Chile also has a unique grid, due to its long and thin layout. This means that its transmission system is susceptible to bottlenecks and it limits the amount of energy that can be transmitted. As a result, national law was changed to allow storage to serve as transmission network reinforcement in emergency cases.

For example, storage-as-transmission projects can be submitted for consideration in Chile’s National Transmission Plan.

Key developments

Huge batteries are now on the way, and not just in the northern regions.

In late 2020, Fluence and AES broke ground on a 112MW / 560MWh battery project in the northern region of Antofagasta, which will be paired with a 180MW solar farm. This project is the largest of its kind in Latin America and is to complete this year.

In February, Enel Green Power announced that it is developing over 1.7GW of solar and storage projects; and Sonnedix sought environmental permitting last month for a 175MW solar farm with energy storage in the centrally located O’Higgins, which will require an investment of $140m (€115.6m).

Likewise, storage in Chile isn’t just about batteries.

Engie has committed to developing green hydrogen. Hydrostor is advancing a pipeline of large-scale advanced compressed air energy storage (A-CAES) totalling over 2GW, with Chile one of its target countries.

And ESS Inc. has started work on supplying a 300kW / 2MWh flow battery system in the Patagonia area of Chile for commissioning later this year.

This shows the market is blooming. Among other incentives Chile has created to enlarge the appetite for their storage sector are capacity payments for long duration storage, an intraday price differential, and an ancillary services market.

These storage-friendly policy changes have led to an uptick in development activity, and we only see that trend continuing.