Peru is moving from pilot level battery deployment toward a regulatory framework that could determine how battery energy storage systems participate in the country’s electricity market, as the energy regulator prepares a technical study on integrating BESS into transmission and generation regulation.
Osinergmin has opened a tender for a 300 day consultancy to assess the incorporation of battery storage into the regulation of generation and transmission activities within Peru’s National Interconnected Electric System, known as SEIN. The assignment includes a diagnostic of BESS development in Peru and the preparation of technical and regulatory proposals.
The tender is a sign that Peru’s challenge is shifting from determining whether batteries can operate on the system to establishing how they should be valued, dispatched and compensated. That distinction is becoming increasingly important as the country seeks to integrate more variable renewable generation while maintaining frequency control and system reliability.
The tender documents identify September 23, 2026, as the deadline for bids under procurement code CP CON-SM-5-2026-OSINERGMIN-1. The consultancy is expected to examine both technical and regulatory requirements, potentially providing the basis for rules governing a technology that currently sits between conventional generation, grid infrastructure and ancillary services.
The Osinergmin initiative follows a broader regulatory process led by the Ministry of Energy and Mines.
In April, the ministry published a draft decree establishing regulations for ancillary services and proposing changes to the Electricity Concessions Law regulations, the Wholesale Electricity Market regulations and the rules governing COES, the country’s electricity system and market operator.
The proposal is intended to modernize the framework for ancillary services and expand participation by technologies capable of providing flexibility. The ministry specifically identified energy storage systems among the technologies that could participate in these services.
The regulatory process was still underway in July. MINEM said on July 11 that the ancillary services regulation remained under processing, while a July 6 meeting with generation companies identified the regulation of the ancillary services market as one of the measures being advanced to strengthen electricity security and accommodate new technologies.
That timing matters for BESS developers. Without a clearly defined framework for the services batteries can provide and how those services are remunerated, investment decisions face uncertainty even where the underlying technology is commercially mature.
Peru has already begun adapting its power system rules to accommodate batteries in frequency regulation.
COES documentation includes BESS projects designed to provide primary frequency regulation, including a battery storage system associated with Kallpa’s thermal generation facilities.
Osinergmin’s own regulatory documents also show that BESS was already being considered in the modeling of thermal generation units providing primary frequency regulation. A 2025 Osinergmin resolution refers specifically to the modeling of thermal generation units providing primary frequency regulation through BESS.
This provides an important indication of where batteries are likely to establish their initial market value.
Unlike conventional generation, batteries can change their power output extremely quickly. That makes them particularly suitable for frequency regulation, where the system must continuously balance generation and demand.
The regulatory question is therefore not whether BESS can technically provide the service. It is how the market should recognize the value of that response and allocate the associated costs.
The new Osinergmin study is expected to examine that broader question across generation and transmission rather than treating BESS exclusively as a generation asset.
The Regulatory Gap Is Becoming More Important as Renewables Expand
Peru’s electricity system has historically relied heavily on hydropower and natural gas, but solar and wind capacity have been expanding.
IRENA’s long term modeling for Peru projected additional solar and wind development through 2032, with solar effective capacity rising from 397 MW in 2025 to 697 MW in 2030 and wind capacity increasing from 838 MW to 1,338 MW over the same period in its modeled scenario.
The actual pace and composition of deployment will depend on project economics, grid capacity and market conditions, but the direction of travel increases the importance of flexible resources.
Variable renewable generation changes the operational profile of the electricity system. Solar output falls rapidly toward the evening while demand may remain elevated, and wind generation can vary across shorter time periods. Hydropower provides significant flexibility, but its ability to balance the system depends on reservoir conditions, dispatch priorities and transmission constraints.
Batteries can address some of these requirements, particularly short duration balancing and frequency control.
But their contribution depends on how they are integrated into the market. A battery that is technically capable of providing multiple services may be economically restricted if regulations classify it as a conventional generator or prevent it from stacking revenues across energy and ancillary service markets.
Peru’s Challenge Is to Define What a Battery Actually Is
One of the central regulatory issues is classification.
A battery consumes electricity when charging and supplies electricity when discharging. Treating it solely as generation does not capture its role as a flexible system resource, while treating it solely as demand can obscure the services it provides when discharging.
The distinction becomes particularly important for transmission regulation.
A strategically located battery can potentially defer or reduce the need for some network investments by supplying power locally during periods of constraint. It can also provide voltage or frequency support depending on its configuration and market rules.
That does not mean batteries should automatically replace transmission investment. The economics depend on the location, duration of the storage asset, network constraints and the frequency with which the battery can be dispatched.
The Osinergmin consultancy’s focus on both transmission and generation regulation is therefore significant. It suggests that Peru is assessing BESS as part of the wider architecture of the power system rather than simply as another generation technology.
Peru’s regulatory work is also unfolding against a rapidly developing storage market in neighboring Chile.
At a July MINEM forum on lithium, BESS and electromobility, Chilean energy specialist Marco Mancilla said Chile had approximately 4 GW of battery storage capacity and attributed the country’s rapid deployment partly to regulations recognizing multiple battery services, including energy arbitrage, capacity, ancillary services and system stability.
The comparison is relevant because Peru and Chile share interconnected regional energy characteristics, significant renewable resources and strong mining sectors.
But Chile’s experience also illustrates why storage deployment cannot be reduced to battery costs.
The technology becomes investable when developers can identify multiple revenue streams and when the regulatory system provides enough certainty to finance assets over their operating lives.
As Mancilla noted at the MINEM forum, declining technology costs alone are insufficient if market rules do not allow storage assets to operate profitably.
Peru’s emerging framework will therefore be judged partly by whether it creates a comparable investment environment without transferring excessive costs to electricity consumers.
For Peru, one of the most important questions will be whether a BESS can participate simultaneously in several markets.
A battery could potentially earn revenue from energy arbitrage, primary frequency regulation, secondary frequency regulation and other ancillary services. In some configurations, it could also provide capacity or network support.
The ability to combine these services matters because batteries have high capital costs relative to the amount of energy they can store. A two hour battery, for example, may spend much of its operating life providing fast response rather than simply buying electricity at low prices and selling it at high prices.
If regulation forces the asset into a single revenue stream, the utilization and financial return can be materially lower than if it is permitted to provide several services subject to technical constraints.
The forthcoming regulatory proposals will therefore need to address not only eligibility but also dispatch priority, measurement, settlement, performance requirements and cost allocation.
Those details can determine whether BESS becomes a significant investment category or remains limited to a small number of projects developed by generators seeking specific operational benefits.
Grid Location Could Become as Important as Battery Size
Peru’s transmission network presents another issue. A battery’s system value is not determined solely by its megawatt or megawatt hour rating. Location can be equally important.
A BESS connected at a constrained node can provide a different service from an identical battery connected in an unconstrained area. The first could reduce congestion or support local reliability, while the second might primarily provide energy arbitrage or frequency regulation.
This creates a challenge for regulators attempting to establish standardized compensation mechanisms.
A technology neutral market may allow batteries to compete with other flexibility resources, but it must also recognize the locational and temporal value of services. Otherwise, the market could encourage storage in locations where batteries are profitable but where their system value is limited.
The Osinergmin study’s mandate to examine BESS in both transmission and generation regulation could help address this issue by considering storage as part of network planning as well as electricity supply.
The regulatory process does not yet amount to a fully established BESS market in Peru.
MINEM’s April proposal remains a draft, and the ministry said in July that the ancillary services regulation was still progressing through its approval process.
That means developers face a transitional environment. Technical procedures are beginning to accommodate batteries, while the broader market framework is still being defined.
For investors, this creates both opportunity and risk.
The opportunity is that early projects could establish technical and commercial models before the market becomes crowded. The risk is that projects developed under an evolving regulatory framework may face changes in eligibility, compensation or cost allocation.
The Osinergmin consultancy is consequently more than a technical exercise. Its recommendations could influence how Peru defines the economic role of storage for years to come.
Peru’s approach is increasingly following a sequence seen in other emerging storage markets.
First, batteries demonstrate their technical capability through individual projects. Next, system operators incorporate them into operating procedures, particularly for frequency regulation. Regulators then have to determine how storage is classified, dispatched and compensated. Finally, investment depends on whether those rules create sufficient and durable revenue opportunities.
Peru appears to be moving through the middle stages of that process. COES has already considered BESS in frequency regulation, Osinergmin has incorporated storage into regulatory and operational modeling, and MINEM has proposed a broader ancillary services framework that explicitly accommodates storage.
The next step is to establish the economic architecture around those capabilities.
That will determine whether batteries in Peru remain primarily tools attached to individual generation projects or develop into independent grid assets capable of competing across energy, ancillary service and network markets.
