An optimization-based analysis of decarbonization pathways and flexibility requirements in the Chilean electric power system

Achieving global carbon neutrality within the first half of this century is required to limit the increase of global average temperature to 1.5 degrees C, and thus to mitigate the effects of the ongoing climate crisis. Due to this, several countries have laid out decarbonization plans for the next few decades. In particular, a decarbonization schedule has been recently announced for the Chilean electric power system, which aims to entirely phase out coal generation by 2040. This implies a major change on the operational features and flexibility requirements of such system since coal still occupies a very large energy share of about 40%. This paper presents an assessment of various decarbonization pathways for the Chilean power system based on a generation and transmission expansion planning model specially enhanced to capture key flexibility aspects. This model employs the concept of representative days, an approximation of the unit commitment problem, a thorough modelling of the hydro network, and also thermal-based and battery-based energy storage. The results show that more strict decarbonization goals remain in a similar cost range as compared to the base case scenario, and for such scenarios the balance between variable and flexible attributes, including ramping, storage, and transmission capacity, becomes critical in earlier stages of the planning horizon. Based on this, a policy recommendation from this paper is that appropriate operational methods and market structures must be implemented to harness all the benefits of renewable and flexible energy in a reliable, sustainable and efficient way.