Can LatAm avoid the renewable energy curve ball?

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Tuesday, February 13, 2018

Latin American nations need to overhaul outdated energy sector regulations if electricity storage is to flourish, according to a new BNamericas Intelligence Series report.

The report says Chile is the regional leader in the segment but also listed Argentina, Mexico, Brazil and Colombia as promising markets.

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However, governments must do more to ensure lithium-ion batteries and pumped hydropower storage systems allow intermittent energy sources to maximize their potential, it warns.

"If one considers that in the next five years, a significant reduction in the development costs of energy storage systems (up to 49% for certain technologies) will occur, it becomes necessary to formulate an appropriate regulatory design for the optimal development of these technologies," the report says, citing Chilean energy consultancy Systep.

Also read: Latin America's top power storage projects

The report adds that Chile has yet to decide whether to classify storage as generation, transmission, or a new category of asset, and that regulators must establish viable pricing models for ancillary services to guarantee project financing.

"Ancillary services remain the biggest question mark in Chile's power sector from the perspective of banks," it says. "Lenders still don't know how these services will be defined or who will pay for them over the coming years."

The report maintains that investments in energy storage will help power grids avoid the so-called "duck curve," which shows the timing imbalance between solar power production and peak electricity demand.

"As renewable generation grows, it will be essential to have grid-tied storage systems that can store the surplus in energy production and deliver it later when resources are no longer available," the report quotes Acesol director Camilo Belmar Quezada as saying.