Chile's 2,835 GWh Tender Opens to Renewables and Storage: P90 Methodology, One-Cycle Dispatch Rule, and What It Means for BESS

Chile's National Energy Commission (CNE) has approved the final terms of the 2026/01 Supply Tender, a two-block procurement totalling 2,835 GWh per year of firm energy and capacity to serve regulated distribution-company customers. For the first time at this scale, the tender explicitly recognizes energy storage systems — including standalone battery energy storage (BESS) and hybrid renewable-plus-storage configurations — as eligible assets for backing supply commitments, according to the official tender documents published by the CNE and reported by pv magazine.

Tender Structure: Two Blocks, Four Zones, 2,835 GWh/yr

The 2026/01 tender is divided into two supply blocks, each with zone-specific annual energy allocations across Chile's four geographic regions within the National Electric System (SEN):

Block 1 allocates 1,575 GWh per year, with the central zone receiving the largest share at 1,000 GWh (63.5% of the block), followed by the southern zone at 297 GWh, the far-southern zone at 132 GWh, and the northern zone at 146 GWh. Block 2, totalling 1,260 GWh per year, follows a similar distribution pattern: 799 GWh central, 237 GWh southern, 117 GWh northern, and 107 GWh far-southern.

The zone structure reflects the geographic footprint of Chile's regulated distribution companies. The central zone — covering Santiago, Valparaíso, and the metropolitan region — accounts for the bulk of demand, consistent with patterns observed in Chile's long-term energy planning documents from the CNE. The far-southern zone (Magallanes, Aysén) is the smallest allocation, reflecting lower population density and limited interconnection capacity with the central grid.

What the Tender Says About Battery Storage

The 2026/01 tender documents mark a significant policy milestone for battery storage in Chile. Storage systems are explicitly listed as eligible assets for backing supply commitments — a provision absent from previous CNE supply tenders. Bidders may nominate existing or planned storage facilities, provided they are connected to the SEN and have sufficient annual injection capacity to cover the contracted volume.

However, the CNE has imposed a conservative methodological constraint: for storage systems, projected energy injections "cannot be based on optimized economic dispatch." Instead, the tender requires bidders to assume one daily charge-discharge cycle. This means that a 200 MW / 1,300 MWh BESS with 90% round-trip efficiency would be credited with a maximum annual injection of:

1,300 MWh x 0.90 RTE x 365 days = 427,050 MWh per year (427 GWh/yr)

This is a deliberately conservative assumption. In real operation, a BESS can often dispatch multiple partial cycles per day — value-stacking frequency regulation, operating reserves, and energy arbitrage. But the tender's contracting methodology values storage purely as seasonal firming capacity, not as a multi-service asset. The one-cycle rule effectively limits the revenue that storage can earn from the tender contract, while leaving merchant-market upside (additional cycles) unconstrained.

For hybrid projects combining renewable generation with storage, the rules require separately reporting energy produced by the generation facility and energy supplied from the storage system. This dual-reporting requirement will be critical for developers seeking to optimize project returns across both the regulated contract and merchant-market revenues.

P90 Methodology: Why the One-Cycle Rule Matters

For non-conventional renewable energy (NCRE) projects — including solar PV and wind — the tender mandates that available energy be calculated using a P90 probability-of-exceedance scenario. This means the declared energy must have a 90% probability of being met or exceeded in any given year, factoring in interannual solar resource variability, weather patterns, and plant availability.

P90 is a well-established methodology in project finance for renewable energy, but its application in a supply tender creates specific incentives:

• Conservative solar yields: In Chile's Atacama desert, where the global horizontal irradiance (GHI) exceeds 2,500 kWh/m²/year, the P90-to-P50 ratio for solar PV is typically 88-92%, meaning the P90 value is roughly 10% below the P50 expected annual generation. This compensation for resource risk reduces the contractable volume compared to a P50 approach.
• Wind resource variability: Chilean wind projects, particularly in Magallanes and the southern zone, face higher interannual variability. The P90/P50 ratio for wind is typically 80-85% — meaning a larger haircut on declared capacity relative to expected generation.
• Storage as a firming tool: The one-cycle rule for storage interacts directly with the P90 requirement. A hybrid solar-plus-storage project can use its BESS to firm up the P90 solar output, potentially allowing a higher declared capacity than solar alone would support. However, the storage injection itself is capped by the one-cycle methodology, limiting the extent to which it can compensate for solar variability.

The practical implication is that hybrid bidders need to optimize the declared capacity split between solar generation and storage injection, given the P90 constraint on solar and the one-cycle constraint on storage. This is a linear optimization problem that requires 8,760-hour hourly simulation — not a simplified spreadsheet calculation — to solve correctly.

Natural Gas Remains Eligible — The Competitive Landscape

The tender does not require awarded energy to come exclusively from renewable sources and does not set technology-specific quotas. However, it excludes bids backed by coal, petcoke, diesel, or No. 6 fuel oil. Natural gas remains eligible, creating a direct competitive dynamic between gas-fired generation, renewable projects, and battery storage in the bidding process.

Chile's natural gas generation fleet, concentrated in the central zone near Santiago, benefits from existing interconnection, established permitting, and mature project finance structures. However, gas prices in Chile are among the highest in Latin America because the country imports approximately 80% of its natural gas supply, primarily as LNG from the United States, Qatar, and Trinidad and Tobago, according to the Chilean Ministry of Energy.

At current LNG spot prices — approximately $8-9/MMBtu at Chile's Mejillones and Quintero terminals — the marginal cost of gas-fired generation is roughly $55-65/MWh, depending on plant efficiency. Solar PV with P90-compliant yields in the central zone, by contrast, can offer contract prices in the range of $25-35/MWh, while hybrid solar-plus-storage bids may land at $40-55/MWh depending on storage duration and battery cost assumptions.

The battery cost landscape has shifted dramatically. According to BloombergNEF's 2026 Battery Price Survey, lithium-iron-phosphate (LFP) battery pack prices have fallen below $45/kWh in 2026, down from $55/kWh in 2025 and over $100/kWh in 2022. At these prices, the cost of adding storage to a solar project in Chile is modest relative to the PPA premium it can command.

Bid Timeline and Project Requirements

The CNE has established a clear schedule for the tender process:

• Bid submission deadline: December 4, 2026
• Financial proposals and reserve price opening: January 5, 2027
• Contract award: January 13, 2027

For bids supported by new projects, winning suppliers must provide evidence of financial close, construction start orders, and project development progress. If delays threaten commercial operation, suppliers must secure temporary backup from another existing generation facility or storage system. The rules also require awarded suppliers to comply with obligations under Chile's General Electricity Services Law related to electricity generation from non-conventional renewable energy sources.

Tender participants must provide detailed technical data as part of bid evaluation: technology type, net capacity, capacity factor, expected annual generation, and whether the facility is operational or planned. For hybrid projects, the separate reporting of generation and storage injection means developers need well-validated simulation data — not rough estimates — to credibly bid.

Chile's Energy Transition: From 15 GW Solar to 2.8 GWh Tender

The 2026/01 tender sits within a broader context of accelerating renewable deployment in Chile. According to IRENA's Renewable Capacity Statistics 2026, Chile had over 15 GW of installed solar PV capacity by end-2025, along with roughly 3 GW of wind capacity. Solar generation regularly exceeds 50% of instantaneous demand during daytime hours, creating both opportunities and challenges for grid operators.

The Chilean government has set a target of 80% renewable electricity by 2030, up from approximately 63% in 2025. Large-scale BESS deployment is widely recognized as the enabling technology for this transition, and the 2026 tender's explicit inclusion of storage — even with conservative methodological assumptions — signals policy recognition of batteries as grid infrastructure rather than experimental technology.

This follows the commissioning of ContourGlobal's Víctor Jara plant in May 2026, a 231 MW solar + 200 MW / 1.3 GWh BESS hybrid facility in Chile's Tarapacá Region — Latin America's longest-duration operational utility-scale BESS at 6.5 hours. As covered in our previous analysis, the Víctor Jara project runs on a 15-year nighttime PPA with Copec EMOAC, demonstrating that solar-plus-storage can compete with conventional generation on a shaped-product basis in Chile.

The 2026/01 tender extends this logic from a single project to a market-wide procurement mechanism. Rather than a single bilateral PPA, this is a competitive, zone-allocated tender that will set benchmark prices for renewable-plus-storage contracts across Chile's regulated market.

Modeling Tender Bids in Energy Optima

For developers preparing bids for the 2026/01 tender, the combination of P90-yield calculations, one-cycle storage constraints, and zone-specific allocations creates a multidimensional optimization problem. Energy Optima's platform addresses these requirements directly:

• P90 solar yield simulation: The PV system designer with multi-array support and 10-category loss modeling (soiling, temperature, mismatch, inverter clipping, ohmic losses, etc.) can calculate P50 and P90 yields using PVGIS TMY or NSRDB weather data. The loss waterfall analysis provides transparent breakdown of each loss category, which is essential for the bid evaluation process where participants must detail technology parameters and expected generation.
• BESS sizing under the one-cycle rule: The LP-optimized capacity sizing module can model the trade-off between storage duration and contractable volume, factoring in the one-cycle-per-day constraint and the separate injection reporting requirement for hybrid projects.
• Hybrid dispatch optimization: The EMS dispatch simulator with RULE_BASED, ECONOMIC_DISPATCH, and MILP_HYBRID strategies models how the BESS operates under both the tender contract obligations and merchant-market upside opportunities.
• Financial projections under P90: The financial modeling module produces 25-year NPV, IRR, LCOE, and cumulative cashflow projections that incorporate both the regulated tender revenue stream and merchant-market revenues, enabling developers to optimize their bid price and capacity allocation across zones.
• Battery degradation and augmentation: The degradation modeling engine, using 3D SOH/RTE interpolation from 16,068 real manufacturer datapoints across 112+ battery models, ensures that the 25-year PPA obligations are met even as the battery calendar- and cycle-ages. The augmentation module schedules replacement cells at SOH milestones to maintain contracted injection capacity.

For developers bidding into the central zone — where 1,799 GWh/yr of allocation is at stake — the competitive advantage will go to teams that can demonstrate bankable, simulation-backed P90 yields and credible storage dispatch profiles. A simplified spreadsheet bid is at risk of being either too aggressive (understating P90 haircuts) or too conservative (overpricing relative to competitors using rigorous simulation).

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