Chilean power generator adds 0.5GW battery capacity to investment plan

A pillar of the 2024-26 investment plan of power generator Enel Chile involves ramping up battery storage deployment.

Work involves installing 0.7GW of batteries, up from 0.2GW under its previous plan, which covered the period 2023-25. Associated forecast capex stands at US$0.6bn.

“This technology will be a key element in the future system,” Enel Chile CEO Fabrizio Barderi said during an investor day event on Monday, when the strategy was unveiled. 

Enel is Chile’s biggest player by installed capacity.

Following a presentation, Barderi told BNamericas that the company was analyzing injection-duration options.

Enel has so far been adopting two-hour systems, geared to participation in the ancillary services market. Officials are now studying the feasibility of longer-duration units, more suited to the energy-shifting business.

“We are evaluating the different alternatives,” said Barderi, adding that officials were looking at the prices. “It could be reasonable to shift towards longer-duration systems.”

If the evaluation determined the two configurations were equal in terms of profit levels, the company would opt for the longer-duration option, he said.

Chile’s regulatory framework for storage systems incorporated into power generation parks is largely complete. Stakeholders are awaiting more rules of the game – expected next half – for standalone systems. 

This year Enel brought 106MW central zone wind park La Cabaña online, a plant that includes a 34MW battery storage component (construction phase). Also in the central zone, Enel launched 99MW solar park Manzano, which has a 67MW battery unit, also construction phase.

Another wind project, 120MW Rihue, has a 34MW storage system and is shovel ready, according to a 3Q23 investor presentation. This half the company started construction of 80MW solar PV-67MW battery storage plant Don Humberto.

In a context of growing renewables penetration and of transmission congestion, energy storage is seen as an attractive option to help support Chile’s ongoing decarbonization. Systems can provide grid stability services as well as store power in the day and inject it back into the grid when the sun goes down and spot prices are higher.  

Chile’s government proposes an energy storage auction, provisionally for 2GW of capacity. While consensus exists in the industry over the need for storage capacity, there is disagreement over the mechanism/ model. Chile's big players highlight that the private sector is already building and financing systems under its own initiative.

Enel investors were told the company strategy envisages carrying out power projects in partnership with third parties.  

ENEL CHILE GENERATION CAPEX, INSTALLED CAPACITY

Meanwhile, in terms of overall generation investment under the plan, Enel aims to add 1.3GW, comprising 0.3GW wind, 0.2GW solar PV, 0.7GW storage and 0.2GW hydropower. Enel has assigned US$1bn for renewables and US$0.6bn for battery storage. Enel has also earmarked US$0.3bn for its thermoelectric business line. 

This compares with additions of 1.1GW under the old plan – 0.3GW wind, 0.5GW solar, 0.2GW battery storage and 0.2GW hydropower – which involved development spending of US$1.1bn.  

By end-2026, Enel’s net installed capacity is forecast to stand at 9.9GW, comprising 37% hydropower, 35% non-conventional renewables (NCRE), 21% thermoelectric and 8% battery storage. 

At end-September, net installed capacity was 8.8GW, comprising 40% hydropower, 37% NCRE, and 24% thermoelectric. 

OVERALL CAPEX FOR 2024-26

For 2024-26, overall capex is US$2.3bn, up from US$1.7bn in the previous plan. In addition to generation work, Enel has allocated 0.3GW to the grid segment.

REGULATED POWER SUPPLY AUCTION

Despite plans to increase the share of its sales to the free market to 76% of its overall sales in 2026 from a forecast 61% in 2023, Enel aims to participate in national energy commission CNE’s regulated supply auction underway, 2023/01. Enel pointed out that any new projects awarded would come online from 2027, beyond the period considered in the 2024-26 strategy. 

“We will participate without an aggressive approach, but with an opportunistic approach,” Barderi told investors.

This month, CNE pushed back the auction bid deadline to April 2024, citing time needed for the panel of experts – an autonomous body tasked with resolving electricity sector disputes  – to consider discrepancies filed by a generator concerning the final auction report.  Bids were originally due next month.

The average price of electricity sold under regulated and free market power-purchase agreements is forecast to be US$65/MWh in 2026, down from an estimated US$75/MWh in 2023, an Enel presentation states. Average spot price is forecast to fall to US$47/MWh from US$86MWh.

Enel electricity sales are expected to register at 30.7TWh this year and 33.4TWh in 2026.