During the last 10 years, there have been significant investments in wind and solar power in Chile. The country currently generates more than 70% of its power through renewable sources and aims to achieve over 90% renewable penetration by 2030. However, the huge amount of electricity generated especially through photovoltaic (PV) power has led to high levels of curtailment, i.e. large amount could not be fed into the grid. Hence, Battery Energy Storage Systems (BESS) have emerged as a potential solution to catalyse further and efficient renewable power integration, charging when there is excess renewable power available during daytime, and discharging to replace costly and carbon-emitting fossil fuel generation during peak demand in the night. This mitigation activity consists in the development of standalone grid-connected BESS projects that generate greenhouse gas emission reductions in the power grid.

The potential for BESS projects to produce emission reductions that are additional to the country’s NDC targets and plans has been recognised by the Government of Chile by including BESS technology as part of a list of prioritised activities to be promoted using Article 6 mechanisms. These activities are based on monitoring methodologies that guarantee high standards and integrity. Moreover, they do decisively contribute to Chile’s low-carbon transition in the energy sector.

CI Growth Markets Fund II, an investment fund managed by Copenhagen Infrastructure Partners, will develop, construct, and operate 2 BESS projects in the north of Chile: Arena BESS and Patache BESS. These projects will utilise modern Lithium-ion battery module technology with advanced inverter technology to efficiently utilise curtailed solar power to displace night-time thermal generation in the power system.

These projects will constitute some of the first standalone BESS projects in Chile. Lithium-ion BESS costs have dropped in recent years, but the technology yet faces implementation barriers, such as high CAPEX, technological risks related to the long-term performance of large batteries, a shortage of human capital, and operational uncertainty in a centrally dispatched power market such as Chile’s.

Revenues from ITMOs provide an additional, alternative income source to BESS projects and will help bridge the financial gap and overcome associated risks, ensuring the projects remain financially viable in the long-term, thus facilitating the investment decisions.

Enabling investment in BESS projects will unlock a variety of co-benefits. Reducing renewable power curtailment by displacing thermal generation will reduce local air pollutants, such as particulate matter. Promoting BESS projects will foster the growth of a service industry around the technology, including new value creation and jobs. BESS assets also contribute to the power grid they connect to through increased stability, reliability, and the potential to reduce new transmission capacity needs, thus reducing costs.

The activity contributes to several Sustainable Development Goals, including SDG 7 (Affordable and Clean Energy), SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation and Infrastructure), SDG 13 (Climate Action) and SDG 17 (Partnerships for the Goals).