Chile is expected to reach approximately 10 GW of operational battery capacity during the first half of 2028 , with an average operating time of 4.4 hours. This volume will change the daily operation of the National Electric System (SEN) and necessitates updating the criteria the Coordinator uses to decide when to charge, reserve, or discharge these assets.
“When all these projects are operational, approximately 20% of the system's demand will be managed through storage systems. That is the order of magnitude it will have in the daily operation of the system,” stated Felipe Gallardo , Director of Studies at the Chilean Renewable Energy and Storage Association (ACERA), during a meeting organized by the association.
The country already has more than 2 GW in operation, nearly 3 GW in testing, and around 5 GW under construction . The portfolio includes more than 120 projects , with approximately 80% of the capacity located in the northern region. This area is home to solar generation, transmission congestion, and a significant portion of renewable energy curtailments.
ACERA projects that between 2026 and 2028, approximately 2,800 MW will be added annually , exceeding the average rate recorded over the last decade, which is 1,817 MW/year to date. This also means that the rate of new installations reduces the available margin for adjusting the National Interconnected System (SEN) procedures.
“Furthermore, the numbers show that last year we cut by about 6 TWh, meaning that about 20% of the available generation capacity cannot be integrated into the system,” Gallardo said.
“What do these figures tell us? That the energy transition process is entering a much more mature stage and also shows that it is not enough to continue integrating more renewable energies, but that we have to provide the system with flexibility, with the capacity to manage all this available supply within the hour,” he added.
In response to this expansion, ACERA commissioned the consulting firm Vinken to develop a phased proposal that incorporates a regulated opportunity cost, voluntary declarations from agents, and greater automation of dispatch.
The study structures the alternatives according to four variables: dispatch model, market structure, person responsible for calculating the opportunity cost, and level of automation .
The sequence starts at E0, which represents the current scheme without a sufficient intertemporal signal. It then considers E1, with a regulated opportunity cost; E3, with simple cost declarations or bids; E2, with centralized economic dispatch; E4, with bids; and E5, with a real-time market and security optimization.
The immediate recommendation is to combine E1 and E3 in a two-level system .
E1 would act as a regulated floor. The National Electric Coordinator would calculate a public, traceable, and auditable reference for any battery that does not declare its own value.
While scenario E3 would function as a voluntary option, agents with better information about their assets could declare their opportunity cost within a range bounded by the E1 floor and a regulated ceiling.
The solution seeks to address two gaps. Centralized calculation provides a common operational reference , while voluntary reporting incorporates specific information that the Coordinator does not necessarily possess.
Vinken clarifies that E1 is a transitional stage. It does not, by itself, reproduce the intertemporal optimum, but it "introduces transparency" and allows abandoning a scheme where stored energy may be undervalued.
The study also separates energy arbitrage from ancillary services, where power and MWh committed for frequency control or other reserves would be treated as a hard constraint .
The economic signal would only apply to residual capacity. In this way, an arbitrage opportunity could not compromise the reserves allocated to system security.
The changes to DS125 and the economic impact of the proposal
The implementation of E1 and E3 requires modifications to the Coordination and Operation Regulations, contained in Supreme Decree 125, and the Technical Standard for Coordination and Operation .
In DS125, Vinken proposes to expand the definition of opportunity cost to make it explicit that it can be calculated by the Coordinator or declared voluntarily by the agent.
It also proposes enabling simple offers, establishing the frequency of recalculation, moving towards automatic instructions, and recognizing that battery-powered assets can affect marginal cost when they are marginal.
The regulations should also include compensation for uncovered costs when an installation is carried out outside the economic order.
In the Technical Standard, the National Energy Commission would have to publish the C1 + C2 + C3 methodology, recognize the opportunity cost as a component of the variable cost and define the update frequency.
Another requirement is real-time telemetry of the charge status of all batteries connected to the National Electric System (SEN). Without this information, the Coordinator cannot properly assess the available energy or reconstruct operational decisions.
The marginal cost calculation rule would also have to be adapted for cases where a battery is marginal at its injection bar.
Simulations show that the proposal could reduce the operating surcharge from approximately 7% under the current rule to a range of between 3.7% and 5.2% compared to the theoretical optimum.
The additional cost for demand, estimated between 32% and 41% in the current model, could drop to 18% or even 8% with the full signal.
The main effect would be to prevent batteries from running out before critical hours and forcing the activation of backup thermal power plants with costs exceeding $250 per MWh .
With C1 + C2 + C3, the analyzed units capture between 79% and 98% of the ideal arbitrage with perfect forecasting , compared to observed values of between 48% and 81%.
Intraday updates also improve response to forecast errors. The calculation can be adjusted if solar generation, consumption, or marginal costs differ from the previous day's projections.
The study emphasizes that the goal is not to maximize the profitability of batteries , but to optimize the operation of the National Electric System (SEN), reduce costs, take advantage of renewable generation, and strengthen security of supply.
Even with more efficient dispatch, massive growth will bring other challenges. The influx of capacity will compress the spread between daytime and nighttime prices and progressively reduce the arbitrage margin.
Complementary services will not absorb the entire supply either. Their requirements are limited and they could quickly become saturated given the projected volume.
For that reason, the move towards 10 GW will subsequently require new market products, sufficiency mechanisms, offers and economic dispatch tools with security restrictions .
Chile already has projects, operational experience, and investment signals. The immediate challenge is for regulations and procedures to correctly recognize the intertemporal value of energy before installed capacity multiplies its impact on the system.