Chile’s Conditions Drive Demand for Energy Storage

Chile has been a pioneering market for energy storage in Latin America. The country is working to capitalize on its strong renewable energy potential, including some of the world’s best solar resources in the Atacama Desert. Approximately 56 MW of battery energy storage was deployed between 2009 and 2016 in Chile, along with 460 MW of molten salt thermal storage systems tied to concentrated solar power plants. While still small compared to other leading countries, Chile is working to take the next steps in its transition to a greater reliance on renewable energy. Its experience is providing valuable insights for other countries in the region.

Chile’s New Energy Challenges

The country’s geographic isolation and lack of substantial domestic fossil fuel resources makes the transition to renewable energy an easy choice. Solar and wind generation continue to play a bigger role in the Chilean energy mix with rapidly falling prices—particularly for solar in the northern regions. The most recent renewable energy auction saw very low prices, with solar contracts awarded for $34.40/MWh. These new resources will be key to supporting the country’s ambitious renewable energy goals in its 2050 Energy Strategy.

Much of Chile’s energy demand comes from its large mining industry in the north. Due to the remote location and fuel transportation logistics, these mining facilities face relatively high energy costs. Considerable new energy resources are required to keep up with growing demand both in the mining industry and throughout the country. A global trend toward deploying renewables in the mining industry is covered in a recent Guidehouse Insights report; Latin America was the leading region with more than twice the number of operational projects than any other region.

The Chilean Mining Ministry estimates that the country needs an additional capacity of 8,000 MW by 2020 just to keep up with demand in the mining sector. Long distances between these mining operations and load centers with limited transmission capacities require new resources to either be built closer to the point of demand or include costly transmission upgrades.

Energy Storage Solutions

In Chile, the growing penetration of renewable energy combined with rapidly increasing peak demand is driving greater interest in energy storage solutions. Numerous vendors are working to establish local connections and develop projects in the country, including both battery energy storage and innovative technologies offering large-scale long duration storage.

The UK’s Highview Power is among these companies working to establish new projects in Chile. The company’s CEO recently visited to explore opportunities for Highview’s cryogenic energy storage technology. Highview aims to use its technology to provide multiple gigawatt-hours of storage capacity. This and similar large-scale energy storage solutions would be sufficient to integrate higher penetrations of abundant renewable energy, optimize use of Chile’s existing transmission infrastructure, and allow for the effective retirement of uneconomical fossil fuel power plants.

Increasing attention from some of the industry’s leading energy storage developers and vendors indicates that Chile will likely continue leading the way for energy storage development in Latin America. The country’s mix of geographically isolated regions, rising demand, and renewable energy growth create a unique opportunity for energy storage solutions to demonstrate the diverse values they can provide.