The Future of Energy Storage in Latin America

The future of energy storage in Latin America


BNamericas speaks to Claudia Becerril, Wartsila’s business development manager for energy storage and optimization, about the future of the regional energy storage segment. 


Becerril will be a speaker at the Energy Storage Latin America virtual summit, to be held from June 23 to 25.


BNamericas: Which are the most attractive Latin American and Caribbean countries – in your view – for energy storage investments and why?


Becerril: For energy storage in the Caribbean and Latin America, rather than focusing in specific countries we look at different remote locations where batteries can help replace spinning reserve requirements or allow for integration of renewables, helping to prevent curtailments. In the region, major developments for large-scale energy storage – battery energy storage systems [BESS] larger than 5MW – are happening in plants not connected to the grid. 


For example, in entire islands where fuel price is high or industrial customers who are investing in renewables to reduce the LCOE [levelized cost of energy] on their own grid systems. We make this possible with our proprietary power plant controller GEMS and its unique economic dispatch algorithm, user-friendly interface and cybersecurity standards.


BNamericas: What is Wartsila’s vision for energy storage in Latin America and the Caribbean over the next 10 years? Could you share any forecasts with us regarding the value of projects in your regional portfolio, or how many GWh could be stored in the region by 2030?


Becerril: We can’t share specific information on pipeline at this point. But maybe my previous answer gives some hint of how we see good potential in island grid systems to start adding or continue expanding BESS in order to optimize dispatch and reduce tariffs. For grid-tied systems, the opportunities will depend on a combination of factors, for example levels of penetration of renewables, policy development for BESS and cost reduction of BESS. In Colombia, Resolution 098 in 2019 will help investors to start considering BESS for transmission and distribution deferral, for example. 


BNamericas: What are some of the most important storage projects in Wartsila’s current Latin American and Caribbean portfolio?


Becerril: The 6MW/6MWh system on the island of Bonaire for Contour Global installed in 2019 and the 10MW/26.5MWh system to be deployed in Honduras this year.


BNamericas: Does Wartsila plan to install solar capacity at hydropower reservoirs in Latin America and the Caribbean? And which storage technologies would be used?


Becerril: We have these capabilities with our hydro+BESS GEMS solution that has been successfully operating in the US. However, the incentives aren’t yet in place in Latin America within grid-tied systems. As regulation evolves and battery prices decline, we see opportunities coming to provide ancillary services with BESS+hydro projects.


BNamericas: Which other types of hybrid plants could we see in the future in Latin America and the Caribbean? For example, do you see a future for hydro-wind, thermo-solar or solar-geothermal projects?


Becerril: In the short term we see hybrid plants being BESS with solar or wind within island grids. In the long term, there will be opportunities for PV+ESS within grid-tied systems.


BNamericas: Are the costs of storage technology coming down? Can developers of energy projects, or generators, be guaranteed of a return on their investment if they install a storage component?


Becerril: Yes, prices continue coming down, mainly driven by reduced battery pack costs and some economies of scale achieved in larger projects. In Latin America, we’re seeing some requests for proposals with PPAs, meaning that developers and independent power producers can look at investing and obtaining returns on investments based on predicted revenue streams. 


Wartsila provides turnkey solutions – engineering, equipment-supply, construction and services over the life of the project – and offers guaranteed performance agreements for energy storage projects which allows customers to understand the costs structures to calculate and model their returns.


BNamericas: What are the major challenges for energy storage growth in Latin America and the Caribbean?


Becerril: The lack of compensation for ancillary services provided by energy storage.