IEEE Power & Energy Magazine - September/October 2017 - 74

and reserve services, with associated yearly gross revenues
of US$1 million and US$0.5 million, respectively (the former refers to the revenue for buying energy during low-cost
hours and selling when energy prices are higher; the latter
refers to the revenue for allowing a conventional generator
to increase its power outputs because it does not need to
hold reserve capacity).
This situation is illustrated in Figure 5, where we have
estimated that the overall value of this storage plant is equal
to US$2.5 million. It is important to mention that under current practice in Chile-where battery plants are installed for
the provision of reserve only (ignoring further applications
of storage plants)-the expected value of the same storage
asset would be approximately US$1.1 million per year (in
contrast to the US$2.5 million calculated above), demonstrating that locating a battery to cooptimize its different services can significantly increase its revenue.
The Chilean power system currently includes 52 MW of
installed capacity in battery storage plants, deployed entirely
by market participants to provide reserve services (an idea
pioneered by the AES Corporation)-even though the Chilean power sector does not feature a reserve market. The main
idea is that new battery plants can replace the idle reserve
capacity booked in conventional generators, which were
forced to provide the service without appropriate remuneration. Thus, with a battery storage plant in place, a conventional generator can maximize its output while the reserve

plants: the lag between the investment decision and the commissioning time. Lag time provides opportunities for investment coordination, especially in the face of future uncertainty
and transmission congestion. In this context, an optimal portfolio of storage plants will balance present and future investment decisions in such a way that strategic (or, using stochastic
programming terminology, "here-and-now") investments in
current traditional infrastructure (such as hydropower plants
and transmission lines) are complemented later on through
"wait-and-see" investments in battery storage plants that can be
rapidly delivered, thus efficiently adapting the overall investment plan to the unfolding future.
Additionally, battery storage plants can be easily transported to a different location depending on system flexibility needs, increasing the cost-efficiency of the previously
discussed adaptive approach. In Chile, for instance, there is
currently a significant amount of renewables curtailment
in the area of Diego de Almagro (see the location in Figure 1) due to delays in the delivery of the main network
infrastructure; these can be mitigated by the installation of
battery storage plants (which, after the main network infrastructure is finally delivered, may be moved to a different
location to maximize their value). We have estimated that
a 20-MW/80-MWh battery in that area will reduce curtailments by about 2%, increasing the yearly gross revenue
of renewable generation by US$1 million (from US$13 to
14 million). Moreover, the battery can provide further energy

Without Battery

Diego de Almagro
1,238 GWh
(88%)

165 GWh
(12%)

Main
System

1,238 GWh
(88%)

Renewables Gross Revenue: US$13 Million/yr

(a)

With Battery

Battery
Energy Market Gross Revenue: US$1.0 Million/yr
Reserve Gross Revenue: US$0.5 Million/yr

139 GWh
(10%)

1,263 GWh
(90%)
Main
System

1,263 GWh
(90%)

Renewables Gross Revenue: US$14 Million/Year (US$1 Million/Year increase)
Value of Storage Plant: US$2.5 Million/yr

(b)

figure 5. The situation (a) without an energy storage plant and (b) with an energy storage plant that provides multiple services.
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