Spotlight: Key priorities for Chile's budding power storage segment

The road to implement Chile's energy storage law will start with an overhaul of key regulation, according to an energy ministry authority.

Areas that could see change include those covering the coordination of system operation, integration of small generation assets (PMGDs in Chile) and distributed generation payment schemes.

A key point of contention will be whether storage assets can draw power from the grid to charge their batteries when an associated generator, such as a wind farm, is not generating enough power, Ricardo Gálvez, head of market regulation at the energy ministry, told an ATA Insights webinar on Tuesday.

"This could reduce the operational capacity of those batteries and could become a problem in terms of the economic assessment [of the projects]. Therefore, this needs to be changed quickly," Gálvez said.

The official servant expects the current spot-market disparity between daytime and night-time injection prices to quickly attract storage investments once the rules are in place, as a solar generator could immediately increase its revenues if it can store cheap daytime energy and inject expensive power at night.

"From the point of view of spot market prices, we have very low marginal costs in the day and high in the afternoon and night. We have a spread of prices that is easily wider than US$100 every day, and so there's a relevant opportunity there," Galvez said.

Another area where storage is expected to play a key role is in the wholesale market, where storage and storage-equipped renewable plants can help arbitrate prices, provide ancillary services and participate in the capacity market, expanding their economic possibilities and helping stabilize the power grid.

Claudio Seebach, head of generation trade group Generadoras de Chile, told BNamericas last week that storage was the key to alleviating the Chilean power grid's increasingly strained transmission system and avoiding the curtailment of wind and solar in high-congestion areas.

During a different webinar on Wednesday, Chile's grid coordinator CEN said it was charting a path towards openly tendering the grid's voltage regulation services, which will need storage to play a role in the fully decarbonized grid Chile is aiming for.

"We need to prepare the electric power grid for an operation with 100% renewable supply by the year 2030," said Ernesto Huber, CEN's executive director. Tendering out these kinds of services is expected to improve the grid's stability and robustness, he added, and help CEN manage the grid's increasing complexity.