Chile is home to a massive 10.3 million tons of lithium reserves, most of which is found in the Atacama Desert in the northern part of the country. With some of the highest solar irradiation levels on Earth, this region also boasts the perfect conditions for generating solar power. Developments in the photovoltaic market, alongside implementation of more efficient energy storage systems, are positioning Chile as a regional leader in this field. So what does the future hold for battery energy storage systems (BESS) in Chile, and what obstacles lie in their way?
Chile has set itself some very ambitious goals in terms of renewables and carbon neutrality. In late 2017, presidential candidate (and current head of state) Sebastián Piñera pledged in his campaign to power the national grid with 100% clean energy. In June of this year, and this time from the presidential palace La Moneda, he promised to make Chile the first carbon-neutral developing country. The ability to keep that promise depends strongly on clean energy.
Both the public and private sector have invested heavily in renewables – so much so that by December 2018, clean power accounted for 18% of the country’s energy mix – just two percentage points short of the 20% target set for 2025. Much of Chile’s renewable energy potential lies in solar PV and wind power, both of which are known for their intermittency. The situation inevitably calls for more efficient storage systems.
Realizing this, Chile has started to implement – and has become a regional leader in – lithium-ion battery energy storage systems, in an effort to manage its energy reserves more efficiently now that renewable energy sources are on the rise. Engie Chile currently has a project underway in the town of Arica, while AES Gener has a further three projects in operation in Antofagasta.
High levels of photovoltaic solar and wind power mean that the system faces greater variability and uncertainty. This makes frequency regulation, balancing generation and demand minute-by-minute under normal operating conditions, much more difficult.
“In a context such as this, implementing storage systems based on lithium batteries could help to mitigate the instability and unpredictability inherent to these resources, ensuring a smooth transition from the current national system to one defined by high levels of non-conventional renewables,” explains Claudia Rahmann, an academic working for the Department of Electrical Engineering at the University of Chile’s Faculty of Physical Sciences and Mathematics.
The northern part of Chile is rich in two natural resources that are crucial for developing clean energy: lithium and sunshine. Situated 2,305 meters above sea level, the Atacama salt flats cover an area of nearly 3,000 km², making them the third largest on the planet after Uyuni in Bolivia (10,582 km²) and Salinas Grandes in Argentina (6,000 km²). This area in the middle of the Atacama Desert also accounts for 25% of the world’s lithium reserves. In fact, Chile is home to 50% of the globe’s lithium reserves. It is one of the top two exporters of lithium worldwide, second only to Australia in terms of annual exports.
The metal has been used to make batteries since the 1990s, but it was not until the turn of the millennium that it began to be used in the energy sector.
“The lithium-ion battery … was developed based on the use of lithium salt as an electrolyte, which produces the amount of ions needed to create an electrochemical reaction between the cathode and the anode, thanks to which energy is obtained,” explains José Miguel Arriaza, head of the Energy Engineering and Environmental Sustainability department at the University of San Sebastián in Santiago.
The first BESS projects implemented in Chile use domestically produced lithium, which boosts the country’s position as a metal producer. “Most of Chile’s Li-ion BESS potential is linked to its renewable resources. Plus, the country also has good trading prospects as a producer of lithium, the primary component used in these systems. This enables us to not only make the most of these alternatives as users, but also to form part of the storage value chain,” points out Juan Carlos Jobet, Chile’s energy minister.
Pioneers in Latin America
Until recently, pumped hydro was the country’s most widespread method of storing energy. But with the use of inherently more variable renewables came the need to install more reliable storage systems. Faced with this scenario, AES Gener decided to develop the first BESS projects in Chile and the entire Latin American region. Today, this energy generation company has installed three storage systems in the region of Antofagasta with a capacity of 52 MW/13 MWh. Two are sited next to the Cochrane and Angamos power plants (20 MW each), while the third is at the Andes substation (12 MW).
The systems installed by AES Gener were manufactured with Chilean lithium and are able to respond instantly to unexpected outages in the power plants to which they are connected, providing energy for 15 to 20 minutes. This technology has come to replace what is known as the power plant’s “spinning reserve,” maintained by working below maximum output so as to have backup capacity with which to stabilize the entire system when necessary.
Another advantage of lithium-ion storage systems is their ability to optimize use of the power produced by the plant, which lowers marginal costs. In terms of cost benefits, battery technology is becoming more and more effective thanks to a number of innovations that reduce the capital outlay that is required.
“Having these banks allows the National Power Coordinator to use the batteries as a primary response to contingencies, on the basis that the batteries are able to absorb energy from the grid to help stabilize the system. They also require less thermal unit output to cover the primary reserve defined in the safety study. At peak [demand] time, this also means higher maximum output for the National Power Coordinator if the facilities are equipped with these batteries,” says Javier Giorgio, chief operating officer at AES Gener.
The company is now working on one of its most ambitious projects in this field: the virtual dam. “The virtual dam solution involves installing a series of batteries connected via smart inverters to the Alfalfal hydroelectric substation, which is located in the Cajón del Maipo canyon. Among other advantages, this allows us to regulate frequency or voltage, store energy produced by the hydroelectric plant and deliver it to the system when it’s needed most. The virtual dam will have the capacity to output 10 MW for five hours,” adds Giorgio, while noting that the system can be replicated in solar and wind power facilities, where they already have projects in the pipeline.
Adding to these three plants run by AES Gener is a fourth facility that was developed by Engie in Arica. It is a pilot project that consists of an NEC container with the capacity to store 2 MWh. According to the company: “It’s a first step in assessing the capabilities this technology has to offer, which we expect to grow exponentially in the next few years due to the key role it’ll play in renewable energy project implementation.”
The future of BESS in Chile
The prospects for BESS in Chile are undoubtedly promising. In fact, during the Decarbonization Roundtable hosted by the Ministry of Energy, the National Power Coordinator outlined a series of future scenarios for the system, all involving a decrease in carbon-based production over the coming years. These analyses revealed how efficient it could be to replace conventional thermal generation systems with renewable sources such as solar and wind power. Since this would require storage solutions, it was estimated that 3,000 MW of storage will be developed during the next 20 years.
However, one of the major challenges in expanding this system is improving regulation. As explained by Jobet, Chile’s energy minister, “the future development of this technology depends primarily on which alternatives prove to be most efficient in supplying the system’s requirements. This can only be achieved by providing the sector with the right financial signals and a suitable regulatory framework to ensure that all alternatives get the chance to be developed.”
To reach Chile’s goal, developing and managing storage systems will be paramount. In this context, battery energy storage systems offer the best option in a country where lithium is plentiful. Given the right incentives, the nation could become a regional leader in renewable energy use and a worldwide producer of “white gold” storage technology.