Banking on batteries in Chile – pv journal International

From pv journal July-August, 2024

Sometimes issues simply click on. In Chile, market circumstances seem like absolutely ready for a step change within the variety of hybrid tasks that mix renewable applied sciences. The timing could not be higher for a rustic grappling with a rising prevention drawback. About 1,911 GWh of extra renewable electrical energy was suppressed within the first 5 months of 2024 in Chile, representing a 159% enhance in electrical energy consumption in comparison with the identical interval in 2023, in line with the numbers from Acera, the Chilean renewable vitality affiliation.

At the identical time, photo voltaic technology capability has greater than doubled since 2020. The newest knowledge from consultancy Ember data 5.2 GW of recent capability put in in Chile from starting in 2021 till the tip of 2023, to achieve a complete of 8.5 GW. That is a powerful improvement however it’s proving to be an excessive amount of for the nation’s electrical energy transmission community. A extra numerous generational profile is desired.

Despite elevated stress on the grid, Chile’s photo voltaic increase shouldn’t be slowing down. Ángel Cancino of S&P Global Commodity Insights mentioned pv journal that Chile is “one of many strongest markets in Latin America” ​​for photo voltaic, second solely to Brazil. The market analyst for photo voltaic and different clear vitality applied sciences added that the “pequeños medios de generacion distribuida” (PMGD) tasks – “distributed technology” tasks between 500 kW and 9 MW at scale – driving loads of capability development. “From my predecessor, there are greater than 100 tasks being carried out proper now,” Cancino mentioned.

Banking batteries

That represents excellent news for headline capability numbers however dangers additional exacerbating Chile’s grid infrastructure issues. “I feel, since two or three years in the past there have been issues concerning the switch capability having the ability to stand up to extra renewables coming into the grid,” Cancino mentioned. The S&P analyst additionally warned that rising photo voltaic capability is placing downward stress on electrical energy costs. “As extra photo voltaic crops and even wind enter the grid, the danger of income cannibalization is greater,” he mentioned. “With increasingly photo voltaic tasks slated for improvement over the following 5 years, income cannibalization turns into a critical long-term menace. That’s why we’re seeing a lot curiosity in photo voltaic and storage mixed , a number of new tasks have been introduced.”

“Many” shouldn’t be an exaggeration. In July 2024, AES introduced plans to construct a 763 MW photo voltaic plant with a 1,063 MW battery providing 5 hours of storage, as reported by pv journal LatAm. Construction is anticipated to start in April 2025 within the Antofagasta area within the north of the nation, forward of the anticipated commissioning date of 2028. When it involves renewables in Chile, Antofagasta is the place the motion is.

The web put in storage capability in operation in Chile reached 404 MW / 1,602 MWh in June 2024, in line with the most recent figures launched by the nation’s Ministry of Energy. That capability is especially in Antofagasta. The quantity is about to double in only a few months with the federal government projecting an put in vitality storage capability of 806 MW/3,050 MWh by September 2024.

Push and pull

There are a number of elements driving the event of the battery in Chile. The low funding price did not damage. The annual battery value survey by analyst BloombergNEF, printed in November 2023, recorded a 14% discount in prices from 2022 to 2023, to a report low of $139/kWh.

Then there may be rising demand. Henrique Ribeiro, principal analyst for batteries and vitality storage at S&P Global Commodity Insights, mentioned that battery revenues in Chile have, till now, been pushed by arbitrage – saving electrical energy when tariffs are low to promote throughout at peak demand. Unpredictable arbitrage income alone shouldn’t be sufficient to justify an funding in battery vitality storage techniques (BESS), nevertheless, particularly for venture house owners who want exterior financing. .

The actuality going through venture builders right this moment is a extra elementary want for nationwide storage, Ribeiro defined.

“You have loads of photo voltaic technology within the northern a part of the nation and Chile, in fact, that could be a very distinctive geography by way of being very slim and excessive,” mentioned the analyst. “That is why it’s tough to convey that vitality useful resource from the north to the middle of the nation the place a lot of the demand is, within the area of Santiago. There is all the time a scarcity of transmission construction in Chile and storage is, in fact, an ideal resolution to assist remedy that sort of drawback. “

That is the view that the legislators in Santiago appear to share as they take their very own steps to strengthen the enterprise for saving in Chile.

Capacity mechanism

A brand new electrical energy adequacy regulation, which primarily acts as a capability mechanism – a way of guaranteeing adequate technology and storage property to ensure electrical energy provide – is anticipated to create higher alternatives of revenue for BESS in Chile. The regulation is outlined and the foundations are made public. The laws is about to be printed within the Official Gazette of Chile as pv journal went to the press. Under the rules, storage property will probably be eligible to obtain capability funds, which is able to open up new income streams for BESS house owners. The capability mechanism may even deal with the technology and storage components of hybrid crops as separate property, which means they are going to obtain separate funds.

For buyers contemplating BESS in Chile, Ribeiro mentioned that rules are favorable for storage property, and up to date modifications have prompted an inflow of venture bulletins.

“This is essentially the most enticing marketplace for financial savings within the area,” added the S&P analyst. The majority of BESS bulletins in Chile concern new installations, most of them solar-plus-storage websites though there are some standalone battery storage tasks. That stands out as the case for now however as Chile’s photo voltaic capability continues to develop, so does the issue of cannibalization inside the photo voltaic market. Ribeiro means that storage may additionally play a job right here.

“Savings is one thing which may assist remedy that, even when just for some time, however I personally imagine that extra modifications are coming,” he mentioned. It positive appears to be like that means.

Strategic storage

Fernando Meza, head of enterprise improvement at Enel Green Power Chile, mentioned pv journal that batteries are one of many “strategic pillars” the enterprise is growing to make its portfolio in Chile “extra versatile and numerous.”

“We are growing a BESS venture pipeline associated to our renewable crops (photo voltaic and wind farms),” Meza mentioned. “Our 2024 to 2026 strategic plan considers a number of photo voltaic tasks related to the storage system that can begin operation within the coming years. The use of batteries in our renewable crops will assist to maneuver the renewable sector [electricity] technology to instances the place the decline is minimal, and even non-existent.”

Enel presently has roughly 2 GW of put in photo voltaic capability in Chile, along with about 900 MW of wind energy capability. Meza mentioned the corporate’s pipeline now consists of a mixture of tasks that mix totally different applied sciences, comparable to photo voltaic and wind, BESS and wind, and BESS and photo voltaic. Such hybrids are nothing new for the enterprise.

Another reply

In August 2022, business operations started in what Enel Chile described because the nation’s first hybrid renewable energy plant on an industrial scale. Located in Antofagasta, the venture consists of the 60.9 MW Azabache photo voltaic plant working alongside the 90 MW Valle de Los Vientos wind park.

Why mix photo voltaic and wind? For one, they’ll have complementary energy technology cycles. There are additionally “important advantages” in lowered stock prices related to substitute elements, in line with Meza.

“It is feasible to cut back operational prices associated to waste disposal, consuming water, and safety, and so forth.,” mentioned Meza, referring to the advantages of co-location. “Furthermore, there are funding financial savings as they interact in financial savings; upkeep and operation amenities; and infrastructure comparable to the usage of current roads; and about electrical installations, comparable to transmission strains and substations.”

Co-location is a method that Enel places its emphasis on. In July 2024, the corporate took issues a step additional when the brand new PV plant, the 205 MW levels one, two, and three of the PFV Las Salinas web site went into business operation together with 112 MW Sierra Gorda This is the corporate’s wind farm. The web site is now the most important hybrid venture within the nation, in line with Enel.