Energy storage is a class of technologies that is diverse, complex, and rapidly evolving. Policymakers in Latin America and the Caribbean (LAC) will need to acquire a strong grasp of the technical characteristics and benefits of these technologies, the services they can provide, and the most relevant regional and power market applications for each technology, according to a new report authored by experts from the Inter-American Dialogue and the Inter-American Development Bank.

Energy storage can bring many benefits to electricity systems, including enhanced grid reliability, efficiency, and flexibility. It will also be a key enabler of mass decarbonization and climate change mitigation, facilitating the expansion of variable renewable energy (VRE) sources such as wind and solar while ensuring grid security. However, energy storage deployment in LAC is still nascent. This publication describes the main energy storage technologies being used internationally and the status of these technologies in LAC. The publication also identifies promising applications of energy storage technologies in different LAC markets and provides recommendations on policies to facilitate uptake in the region. 

Our research identified 150 energy storage projects in 36 countries and territories in LAC, the majority lithium-ion batteries, with the greatest number of projects in Chile.

Key findings

• Regulations must be designed to compensate energy storage installations for improving grid performance and facilitating greater VRE penetration and its associated social and environmental benefits.
• To capitalize on the full value of storage, regulators could mandate that storage be considered in power sector planning processes using a standardized, least-cost methodology that accounts for the value of services and innovative applications such as storage as transmission. Government-led storage auctions are also a good way to promote uptake.
• Pilot projects and partnerships between government, public utilities, and industry could help prove the viability of grid-scale projects, which so far have been limited, and inform regulations.
• Pairing energy storage with mini-grids appears to be the most technically and economically viable applications of these technologies in LAC today. Most projects in LAC have less than one megawatt of capacity and are deployed in mini-grids. However, even in some interconnected grid systems, particularly in Caribbean islands, lithium-ion batteries are in many cases more competitive than conventional fuels when paired with wind and solar generation.
• Pumped hydroelectric energy storage, despite its limited current use in the region, also holds significant potential for large-scale grid systems due to the vast hydroelectric infrastructure that already exists in many countries and the fact that it is a mature and cost-effective technology.

Read coverage of this report in BNamericas and Hydro Review.