Batteries driving decarbonisation in Chile

Chile, a long and narrow country stretching along the Pacific coast of South America, offers abundant solar resources in the north, vast hydropower potential in the south, and steady, consistent winds along its 4,000-kilometre coastline. During the initial phase of its energy transition, the country encountered structural constraints due to the rapid scaling-up of solar and wind power. Limited transmission throughout the country and limited demand have led to frequent zero power prices. At the same time, renewable energy remains weather-dependent and cannot guarantee around-the-clock supply. Although clean energy accounted for 70–80 per cent of electricity generation during the day in 2025, fossil fuels still dominate at night. Around 24 per cent of Chile’s CO₂ emissions are linked to electricity generation.

As solar, hydropower and wind alone cannot fully replace the always-available, dispatchable energy and grid services provided by thermal power plants, BESS are critical for supporting the mitigation of emissions to achieve Chile’s NDC. They enable energy arbitrage: batteries are charged during the day with low-cost, renewable electricity that would otherwise be curtailed due to grid congestion, and are discharged at night in line with the grid operator’s requirements. Gonzalo Díaz Pearcy explains that DAS BESS was designed to be ready with grid-forming capability, anticipating a possible future need of the grid to have this type of attribute in BESS. This means that it not only injects electricity, but can actively stabilise the grid through frequency and voltage control. With these extra capabilities, it is able to replace critical system services that were previously the exclusive domain of thermal power plants.

However, batteries and transformers, acting as an interface to match the inverter voltage in the battery with the grid voltage, remain highly capital-intensive. Many national players in Chile face high investment costs and are competing with international companies that benefit from stronger purchasing power and more favourable procurement costs. At the same time, large-scale battery storage remains a relatively new technology worldwide. It has not yet been proven capable of maintaining its high capacity over more than five to ten years, as long-term experience is still lacking.

Physical and operational risks also play a significant role. For instance, the harsh Atacama Desert conditions put stress on the batteries, and grid integration necessitates robust cooling and fire safety protocols. Lastly, regulatory uncertainties must be taken into account. Therefore, Colbún has decided to develop the project in accordance with A6.2, using the carbon revenues to ensure the activity’s financial viability and the essential institutional backing.

A key challenge for the developer team was to devise a tailor-made methodology for the BESS that considers Chile’s data access and availability and allows the most precision when calculating the achieved mitigation outcomes.

The newly developed displacement methodology uses plant-specific emission factors taken from the Ministry of Energy’s longterm energy planning. It identifies which thermal power plant would have dispatched the same megawatt-hours if the BESS had not discharged at that given time during the night. This establishes the counterfactual basis for calculating emission reductions. The methodology also had to incorporate the fact that the BESS is charged with clean energy during the day and directly replaces the electricity generated by coal or gas-fired power plants at night. The electricity dispatch is centrally coordinated by the grid operator, which determines, in real time, which power plants generate electricity to meet Chile’s total demand.

Chile does not make any distinction between "conditional" and "unconditional" regarding its national climate targets (NDCs), which initially posed a challenge. To address this, the Ministry of Energy and Ministry of Environment, in exchange with the project team and industrial actors, considered that BESS are essential and require carbon finance in the early adoption phase. The long-term planning shows that the phased retirement of coal power plants is the key element for achieving the NDC – provided that the system services currently supplied by those plants can be delivered by other means, i.e. BESS.

While the validation process already required extensive documentation and evidence to strengthen the methodological robustness, the authorisation phase proved the most challenging in meeting the authorising government’s requirements and ensuring the highest integrity, particularly as a frontrunner activity with a new methodology.

Colbún and Sherpas provided extensive data to demonstrate the mitigation activity’s financial additionality, as well as in-depth explanations of the ex-post emission calculations, to ensure that the actual mitigation outcomes were fully transparent, verifiable and understood. Finally, they showed that BESS technology is typically tested under controlled conditions, such as specific temperatures and radiation levels, but deploying it in the heart of the world’s highest-radiation desert presents entirely different challenges. The extreme environment of this location, with its varying oxygen levels, intense solar radiation and limited ventilation, places additional stress on the system and makes operational reliability far more challenging.

Throughout the authorisation process, the critical inputs provided by the FOEN and the Chilean Ministry of the Environment (MMA) were highly complementary, as both interviewees noted. While the FOEN focused on the technical and methodological robustness of the approach, the MMA concentrated on additionality in relation to the NDC, as well as on environmental and social safeguards. The MMA also requested more detailed explanations in the MADD on topics such as waste management, community engagement and environmental commitments. These technical revisions strengthened both the methodological integrity of the activity and political alignment under the Paris Agreement’s cooperative approach.

With the authorisation of the first BESS activity under A6.2, carbon financing for the DAS BESS technology has become a reality, offering a more sustainable alternative to traditional, significantly more polluting technologies. This positions the activity as a strategic enabler of Chile’s faster transition to renewable energy.