Chile To Deploy 5 GW Of Battery Storage Capacity By 2030 To Support Renewable Energy Integration

Chile is moving quickly to advance its clean energy transition, according to Wood Mackenzie’s “Chile Power Markets Long-Term Outlook H1 2025” report. While the rapid growth of renewable energy has been remarkable, it has also created challenges such as power curtailment and fluctuating electricity prices. To address these issues, two major developments are planned — the large-scale deployment of battery storage and the construction of the 3 GW Kimal–Lo Aguirre transmission line. These measures are expected to bring significant improvements in the early 2030s, with curtailment levels dropping and congestion at the Alto Jahuel hub easing from 2032 onwards.

The report notes that Chile is set to become the first country in South America to achieve competitive battery storage pricing within the next decade. The integration of renewable energy with battery storage will help stabilize electricity prices, lower financial risks for renewable energy producers, and improve the resilience of the power system. Storage facilities will also create attractive opportunities for energy arbitrage, with average returns projected at around US$79/MWh until 2030. However, as battery capacity expands over time, these returns are expected to decline. By the final decade of the forecast, improved supply-demand management and increased system flexibility are likely to keep price volatility under control.

Marina Azevedo, Senior research analyst at Wood Mackenzie, said in a statement, “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. This will require substantial battery storage deployment.” 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.”

In parallel, the role of natural gas in Chile’s energy mix will change. Instead of serving as a constant baseload power source, natural gas will increasingly be used to meet peak demand, acting as a flexible backup technology. The retirement of coal-fired plants will create a greater need for gas generation capacity. Many developers are already working to convert existing coal units to run on natural gas or biomass, providing a cleaner alternative. After 2030, as solar power capacity continues to grow, natural gas is expected to become the main source of winter backup generation, ensuring reliability while supporting the country’s decarbonization strategy.