IEEE Power & Energy Magazine - September/October 2017 - 80

Large water storage capacity and the surplus of
generation capacity greatly influenced the operating conditions
and regulation of the Brazilian power system.
will be increasingly important with the higher penetration
of renewables.
Unlocking the delivery of an optimal portfolio of storage technologies, however, will require significant changes
in the future regulatory and incentive frameworks. Currently, hydropower plants and further storage technologies
have been undervalued in the light of renewables and the
need for advanced flexibility services. For example, in countries like Chile, the absence of an appropriate environmental and land-use planning framework, among other reasons,
has impeded the development of new hydropower plants
(although they can clearly play a crucial role in meeting the
target for renewables and in the provision of flexibility). This
is exacerbated by the absence of a proper electricity market
design. In Brazil and Chile, for instance, there are no markets for providing generation reserves services. Moreover,
energy prices in Brazil are averaged across several hours,
which clearly reduces incentives to provide intraday balancing services. It is important to mention that policy makers
and regulatory authorities (at least in Brazil and Chile) are
aware of these problems and have already started fundamental reviews of various matters, including market design (in
particular, remuneration for ancillary services), transmission
expansion planning (including forward long-term planning
and innovative smart grid technologies and control), and
land-use planning for both hydropower and transmission
infrastructure. Interestingly, the vast majority of the review
processes in Chile have been undertaken in a participative
manner, with a wide-ranging set of representatives from the
electricity sectors (generation, networks, and consumers),
authorities (policy makers and regulators), and further sectors relevant to energy (transport, environment, and so forth).
In this context, there may be room for both mandated and
market-based decisions to capitalize opportunities in various
storage technologies. On the one hand, energy and advanced
capacity and ancillary services markets with both short-term
price signals and long-term contracts could support efficient,
market-based investment decisions from market participants.
On the other hand, a planning authority (regulator or system
operator) could proactively identify and mandate (or, at least,
ease) new investments in storage technologies (similar to what
happens with transmission plans) to unlock the deployment of
storage technologies that cannot be encouraged through marginal price signals. This combined mandated and market-based
approach can also eliminate the need to create a large set of
ancillary services (which may present reduced participation and
competition levels), limiting the escalation of transaction costs.

Acknowledgments
Dr. Moreno gratefully acknowledges discussions with Juan Carlos Araneda, Marcelo Olivares, and Jonathan Monsalve and the
Ameba. Cloud team for facilitating the software used for the
graphics in this article. The financial support of Conicyt-Chile is
also acknowledged (through grants Fondecyt 1141082, Fondecyt/Iniciacion/11130612, Newton-Picarte/MR/N026721/1,
Fondef/ID15I10592, SERC Fondap/15110019, and the Complex Engineering Systems Institute (CONICYT-PIA-FB0816,
ICM P-05-004-F). The ideas and concepts set out in this article
are those of the authors and do not necessarily reflect the official opinion of the Energy Research Company (EPE), Brazil.

For Further Reading
GIZ and Ministerio de Energía de Chile (2014). Energías
renovables en Chile-El potencial eólico, solar e hidroeléctrico
de Arica a Chiloé [Online]. Available: http://www.minenergia.cl/
archivos_bajar/Estudios/Potencial_ER_en_Chile_AC.pdf
CDEC-SING (2016). Flexibilidad y sistemas de almacenamiento en el sistema eléctrico nacional en el año 2021
[Online]. Available: http://cdec2.cdec-sing.cl/pls/portal/cdec
.pck_web_coord_elec.sp_pagina?p_id=5111&p_id_public_
web=849&p_periodo=#
R. Ferreira and L. Barroso (2016). Smart grids in Latin
America: Current state of development and future perspectives, IEEE Smart Grid webinar [Online]. Available: http://
smartgrid.ieee.org/smart-grids-in-latin-america-currentstate-of-development-and-future-perspectives
R. Moreno, R. Moreira, and G. Strbac, "A MILP model
for optimising multi-service portfolios of distributed energy
storage," Appl. Energy, vol. 137, pp. 554-566, Jan. 2015.
H. Rudnick, R. Palma-Behnke, A. Rudnick, and C. Benavides, "Restless waters: Fossil fuel emissions conditioning a
reduction in hydroelectric resources in Chile," IEEE Power
Energy Mag., vol. 12, no. 5, pp. 50-60, Sept./Oct. 2014.

Biographies
Rodrigo Moreno is with the University of Chile, Santiago,
and Imperial College, London, United Kingdom.
Rafael Ferreira is with the Energy Research Company
(EPE), Rio de Janeiro, Brazil.
Luiz Barroso is with the Energy Research Company
(EPE), Rio de Janeiro, Brazil.
Hugh Rudnick is with Pontificia Universidad Católica de
Chile, Santiago.
Eduardo Pereira is with Ameba.Cloud, Santiago, Chile.
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