During Chile’s annual Cuenta Publica presidential speech held in Congress on June 1, Gabriel Boric announced that the government was working on a bill to tender 5.4GW of large-scale energy storage systems set to become operational in 2026.
The impetus to support the development of energy storage in the country comes as Chile suffers transmission bottleneck issues, but the country is essentially starting from scratch. According to data from the Chilean Renewable Energy Association (Acera), there was 72MW of storage capacity in operation as of April 2023, representing a mere 0.21% of the total national energy capacity.
Most of that capacity is operated by AES Andes. The company owns two storage facilities, the 12MW/4MWh Los Andes project, the first utility-scale lithium-ion battery project to come online in the world, and the Angamos facility, a 20MW/5MWh storage project located in the Antofagasta region.
AES has an ambition storage capacity growth plan in Chile with the company planning to invest $400 million by 2023 with the aim to double Chile’s total storage capacity. Among some of the projects, AES is looking to repurpose one of its coal plants.
Project Alba, as it is dubbed, will see unit 1 and 2 of the Angamos power plant converted into molten salt storage generating up to 560MW of output.
With AES leading the charge, many have joined in on the trend and energy storage projects are sprouting across the country.
As of April, there was 223MW of storage capacity under construction and another 130MW of solar- plus-storage capacity according to Acera.
Another 116MW of storage had been approved by authorities while more than 600MW were in advanced stages of environmental review. The same figures for renewable-plus-storage assets were as high as 1,100MW and 3,583MW, respectively.
“All the solar assets that we want to acquire or the ones that we’re assessing already come with permitting for BESS,” said
Cristóbal Santa Cruz, investment principal responsible for Chilean investments at Qualitas Energy. The Spanish renewable
energy-focused investment firm which recently entered the Chilean market is planning on further deploying renewable assets, including energy storage.
The appeal of storage is also rooted in shortcomings of the transmission grid in Chile. In recent years, the country has been riddled with transmission bottleneck problems and attention has turned to storage as a potential way to alleviate energy losses and decoupling issues.
“There are some projects in distress. So, lenders are a little bit more reluctant to finance, but they are looking at ways that will make other projects more economically sustainable and that’s where batteries come in,” said Daniel Parodi, director of the banking & finance department at Philippi Prietocarrizosa Ferrero DU & Uría (PPU).
Last month, Innergex closed the financing of a 35MW/175MWh battery energy storage system that will be connected to the company’s 50.6MW San Andres solar plant. The developer landed a $49.5 million bridge-loan for the asset, one of Chile’s first pure battery financings.
“Most banks will be financing batteries in the near future because our transmission infrastructure is not going to get better for the next seven years or so and these projects have about a 20–30-year lifespan. So, we’re going to have batteries everywhere in a few years and the market’s getting ready for that,” said Parodi.
While the introduction of energy storage system into the matrix is an efficient way to relieve stress on the grid, it doesn’t provide an all-encompassing solution to all of Chile’s transmission and pricing issues that the country has yet to solve.
