South America is the continent most dependent on renewable energy, but it is a market that has been difficult for the energy storage industry to penetrate – most South American countries have no storage regulations and offer few incentives, but Chile is leading the way
Given that South America is the continent most dependent on renewable energy, it has proved to be a surprisingly tough market for the energy storage industry to penetrate. Recent data published by Rystad Energy showed that more than three-quarters (76 per cent) of South America’s power generation comes from renewables (see chart below) – this is much higher than Europe, for example (51 per cent), while being twice as big as renewables’ contribution in China (38 per cent). It also dwarfs renewables’ share of power generation in North America (31 per cent).
Yet, despite South America’s heavy reliance on renewable energy, the continent has, generally speaking, done little to foster the development of an energy storage industry. On the whole countries in South America have no energy storage regulations and offer precious few incentives for the industry. A report published by Americas Market Intelligence last year concluded that, of the countries in South America, while a number were offering “some incentives” for battery energy storage systems, Chile stood alone as the only country where a “storage regulation or decree exists” (see chart below).
Source: americasmi.com
It’s true that Chile has certainly been the South American jewel in the crown when it comes to energy storage. In 2016, the existence of energy storage systems and hybrid energy systems was recognised in the law. Then in 2022, a law was introduced that explicitly incorporated energy storage systems, including stand-alone, into the capacity market.
The early development of a legal framework for storage in Chile has fostered the development of a thriving energy storage industry in the country. Indeed, according to some projections, Chile could have the fifth biggest energy storage market in the world by 2027, with a total of 41GWh installed, meaning it will be trailing only China (projected to have 721.2GWh installed by 2027), USA (244.6GWh installed), Australia (102.9GWh) and Great Britain (56.3GWh).
Recent activity of note in Chile included a wholly owned subsidiary of Glenfarne Asset Company, a developer and owner-operator of energy and infrastructure assets, entering into an agreement to acquire 321MW / 1.61GWh of battery assets – as well as 588MW of solar – in Chile from Metlen Energy & Metals. Meanwhile, in October last year, Copenhagen Infrastructure Partners, through its Growth Markets Fund II (CI GMF II) took a final investment decision on the 220 MW / 1,100 MWh Project Arena battery energy storage system (BESS) in the Antofagasta Region of northern Chile. A CIP statement said: “The Arena BESS facility is strategically located in a region with world-class solar resource and adjacent to existing transmission infrastructure and energy-intensive industrial clusters.”
The reference made to “world-class solar resource” indicates why Chile has been able to develop a thriving energy storage market. Put simply, solar has the highest “PV potential” of all the countries in South America (see chart below).
Source: Reuters
Unsurprisingly, with such substantial solar resource, Chile has worked hard to capitalise on it and, in 2023, it had the most operating solar capacity of any country in South America (see chart below, which also includes the North American country of Mexico, classed as a ‘Latin American’ nation).
Source: globalenergymonitor.org
Consequently, there have been considerable incentives to deploy energy storage in Chile as a way of making best use of the solar energy the country produces. Therefore it comes as no surprise that the country is home to the largest battery storage project in the world, the Oasis de Atacama, which is being built in phases and, when complete will have 11GWh of battery storage capacity. Oasis de Atacama is being developed by Grenergy, which has secured nearly $1 billion in financing for the project from BNP Paribas, Natixis Corporate & Investment Banking, Société Générale, The Bank of Nova Scotia, and SMBC.
Elsewhere, while Brazil is, by far, the largest South American economy in terms of GDP, it is far behind Chile in terms of installed energy storage capacity, and most of that which has been installed is behind-the-meter. Research has shown that Brazil reached 685MWh of energy storage capacity last year, 70 per cent of which is not connected to the grid. However, the market is expected to grow quickly in the coming years – 269MWh of storage was added in 2024 alone, an increase of almost a third (29 per cent) on the previous year. The data from Brazilian consultancy Greener also showed that demand for BESS components increased by a massive 89 per cent in 2024 (in comparison to the previous year) with most of the resulting systems expected to come online this year. It has been forecast that the Brazilian BESS market could be worth $3.79 billion by 2030.
Meanwhile, Argentina has launched a 500MW battery energy storage system (BESS) tender under the AlmaGBA programme. The $500 million initiative is aimed at enhancing grid reliability in the metropolitan area of Buenos Aires (AMBA). The tender, overseen by CAMMESA — Argentina’s Wholesale Electricity Market Administration Company — invites bids from developers for battery systems that can deliver at least four hours of continuous discharge. CAMMESA has established a two-tier compensation structure, under which developers will receive a fixed payment of $10 per megawatt-hour of energy delivered, while capacity will be compensated at a maximum rate of $15,000 per megawatt per month.
In Colombia, another of South America’s biggest economies, a new regulatory framework has been proposed with the aim of promoting the wider use of battery storage – partly through financial guarantees – for energy arbitrage and frequency response.
Most South American countries are only at the very starting point of their journey towards having renewable energy sector that makes best use of energy storage to maximise efficiency. However, the Chilean energy storage market provides an extremely useful roadmap for nations in the region that want to make better use of such technology.
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