Chile’s Atacama Desert is becoming sweet spot for energy storage

The Atacama desert in northern Chile is emerging as a magnet for investment in energy storage that allows vast solar plants to extend supply after sundown.

The latest project comes from KKR-backed ContourGlobal, an independent power producer that on Wednesday inaugurated a nearly $500 million solar-and-storage facility designed to store daytime solar energy and supply electricity at night. The company bills the project as Latin America’s longest-duration utility-scale battery system. 

The new storage system is capable of delivering 200 megawatts of power for up to 6.5 hours, according to ContourGlobal. 

Batteries unlock solar and wind energy’s potential by soaking up excess green energy and then discharging it when the wind isn’t blowing or the sun isn’t shining. They also can help fortify grids by storing surplus electricity and releasing it when there isn’t enough.

“In Latin America, Chile is the place to be,” ContourGlobal’s South America General Manager James Lee Stancampiano said in an interview, citing the country’s attractive regulatory framework, growing electricity demand and pipeline of renewable energy and storage investments.

The new project is backed by a 15-year nighttime power purchase agreement with Copec EMOAC, the energy marketing and renewable power supply arm of Empresas Copec, one of Chile’s largest industrial conglomerates. 

Other companies with storage projects in Chile include AES Andes SA, Engie Energía Chile SA and Enel Green Power Chile, according to the grid operator, known as the Coordinador Eléctrico Nacional, or CEN. Atlas Renewable Energy, backed by BlackRock Inc.’s Global Infrastructure Partners, secured $510 million in financing last year to build its hybrid Estepa project, one of the country’s largest solar-plus-storage developments.

With abundant solar resources in the north, daytime generation often exceeds demand, resulting in routine supply curtailments. These are aggravated by transmission bottlenecks. To address this challenge, Chile is rapidly deploying battery energy storage systems, or BESS.

Located in the Tarapacá region, the new Victor Jara hybrid plant marks ContourGlobal’s second solar-and-storage investment in the country, following last year’s launch of another system in Quillagua in neighboring Antofagasta region.

Chile currently has 3,072 megawatts of BESS capacity operating or undergoing testing, with most projects concentrated in the desert, according to CEN. The operator projects the start-up of an additional 5,400 megawatts of storage capacity by December, reinforcing Chile’s position as one of the world’s fastest-growing storage markets. 

“What makes Chile particularly relevant for storage is the presence of a highly energy‑intensive industrial base, such as mining, which has driven demand for reliable, predictable and long‑term renewable power,” ContourGlobal Chief Executive Officer Antonio Cammisecra said in response to written questions. 

“Storage shifts renewables from being intermittent sources into programmable energy solutions. That transformation is essential if we want to reduce system costs, accelerate decarbonisation and ensure that renewables can truly replace conventional generation at scale,” he added.

ContourGlobal is evaluating additional renewable energy and storage investments in the South American country, including projects closer to the capital Santiago and wind developments in central and southern regions, Stancampiano said, adding that the company expects growing demand from data centers that will require large amounts of around-the-clock power.

(By Antonia Mufarech)