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Chile is on track to become the largest energy storage market in the Americas. The position is currently held by the United States, which expects to deploy another 10 GW of energy storage by the end of 2023, but Chile’s ambitious energy storage ambitions and massive lithium supply have given the South American country a pathway to becoming number one in the near future.
Across the world, a race to build out energy storage infrastructure is unfolding. The sector is poised for explosive growth on a global scale as clean energy deployment ramps up ahead of major decarbonization milestones. According to figures from the International Energy Agency (IEA), global wind and solar energy capacity additions are set to shatter previous records by the end of 2023, with an expected 440 gigawatts to be added by the end of the year. This massive influx of variable energy supplies will require huge increases in energy storage capacity.
Because solar and wind power are not baseload power sources – their supply waxes and wanes according to variables like the weather and the time of year – batteries are necessary to store surplus energy produced at peak production hours, which will then be fed back into the grid during peak demand hours. A strong energy storage sector will prove to be the backbone of the renewable energy revolution, as a flexible, mass-scale energy storage industry is essential to keeping the lights on and the grid functioning properly as renewable energy takes a majority role in the global energy mix.
While the energy storage sector is still in its infancy, it’s set to be an incredibly lucrative industry thanks to its central role in the green energy transition. Law firm Morgan Lewis recently referred to clean energy storage as “the technology that will cash the checks written by the renewable energy industry,” and went on to say that “the global energy storage market will continue its rapid growth, with an estimated 387 gigawatts (GW) of new energy storage capacity expected to be added by 2030—a 15-fold increase in global energy storage capacity compared to the end of 2021.”
Most of the batteries used for energy storage today are lithium-ion batteries, which gives lithium-rich South America a major edge in the energy storage market. “The continent has vast amounts of lithium, and unlike the United States, it already has established manufacturing capacity, expertise, and an experienced industry to support the scaling up and scaling out of lithium production in the near term,” Oilprice reported earlier this year.
Chile, which is one corner of the “lithium triangle” that also includes Argentina and Bolivia, has recently set some extremely ambitious targets to scale up its renewable energy deployment as well as its energy storage sector. “Chile’s parliament passed legislation in October 2022 to incentivize energy storage and electric mobility development, PV Magazine recently reported. “Furthermore, the government has set an ambitious target of achieving 70% of total energy consumption from renewable sources by 2030.”
Chile’s energy storage incentives have already borne fruit. At present, there are 85 energy storage projects in various stages of development nationwide, with a total capacity of 6.4 GW. Just this summer, $2 billion was allocated for large-scale storage auctions, and twelve projects with a combined capacity of approximately 1.3 GW are slated to become operational by the end of 2023. This will be augmented by an additional 1 GW annually of planned installations from 2024 to 2026.
The development is part of an increasing political and economic trend in South America: while lithium triangle countries have been producing and exporting lithium for years, they are increasingly reluctant to sell it as a primary material to more developed and industrial economies such as the U.S. and China, preferring to build up their own supply chains. “Adding value is central for us,” Argentina Mining Undersecretary Fernanda Avila recently told Bloomberg. “We know the industry today is growing and there’s a lot of pressure and price volatility. But it’s about making the most of this window of opportunity, not just by shipping out lithium carbonate.”
