Chile will deploy 5 GW of battery storage capacity by 2030

Chile is accelerating its decarbonization strategy according to “Chile power markets long-term outlook H1 2025” report by Wood Mackenzie. However, rapid renewable growth has created curtailment and pricing challenges. Battery storage and the 3 GW Kimal-Lo Aguirre transmission line will address these issues in the early 2030s, substantially reducing curtailment and relieving Alto Jahuel hub congestion from 2032 onwards. 

“Using advanced modeling across 50 power zones, the report projects that by 2035, Chile is experiencing oversupply as renewable capacity additions accelerate far beyond modest demand growth," said Marina Azevedo, Senior research analyst at Wood Mackenzie. "This will require substantial battery storage deployment”. 

Battery storage to become profitable 

According to the report, Chile will be the first South American country to hit competitive battery storage pricing within the next decade. The combined integration of renewables and battery storage will contribute to settle power prices and decrease economic risks for renewable generators.   

Storage systems will also offer lucrative arbitrage opportunities, averaging US$79/MWh until 2030. However, the steady rhythm will decrease in the long term as capacity increases. Price volatility will stabilize by the last decade of the forecast due to better supply-demand management and enhanced system flexibility. 

Natural gas transitions to flexible backup role 

Natural gas will transition from baseload to peak-demand generation, with gas peaking generation as flexible backup technology. The retirement of coal-fired plants will drive the need for gas generation capacity. Developers are actively converting existing units to run on natural gas or biomass as alternative fuels. Natural gas will replace coal as the primary winter backup technology, with this trend accelerating after 2030 as solar capacity expands.  

“Chile's power transformation represents more than just decarbonization—it's a fundamental reshaping of how energy systems can operate in a renewable-dominant future. Its experience will serve as a critical reference point for the continent's broader energy transition” concluded Azevedo.