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Building new strategies

2 Sep 2012
Chile currently faces the challenge to have sufficient and competitive energy resources to support its development – this country is predominantly an importer of energy resources and it has relied mostly on fossil fuels at high prices, which has resulted in elevated electricity prices.

Chile´s government has made a commitment to develop efficient energies that enable the country to have sustainable economic development while providing adequate safeguards in terms of health and environmental protection. For these effects, the “National Energy Strategy” is drafting public policies aimed to create an attractive environment to draw investments into the sector. The new regulatory framework should encourage and facilitate the entry of new stakeholders into the system, with the resulting diversification of participants, thereby progressing towards a more competitive and efficient electricity market.  

One example, among other measures, are the emission standards for thermoelectric plants set in 2011, which have raised the country to levels of requirements that are similar to those applied in the European Union. 

A main pillar of the national strategy is the need to incorporate renewable energy and non-conventional energies (“NCRE”) into the Chilean electricity matrix. While Chile shows significant potential in this matter and the corresponding market has significantly evolved in the recent years, there are no specific benefits currently granted by law. The use of NCRE presents economic and technical challenges that would be addressed by the new policy, specifically by a reform project called the “General Electric Services Act”, which provides for two main benefits in order to promote NCRE projects: 

a)  A payment exemption for the use of main transmission facilities for units that supply to the system less than 9 MW, and a partial exemption for those between 9 MW and 20 MW. 

b)  A requirement that shall be imposed on every electric company obtaining energy from the electricity systems with installed capacity greater than 200 MW to sell to distributors or final customers, that certain percentage of its sales within each calendar year, must come from NCRE, either their own or purchased. Between 2010 and 2014 the obligation to supply energy from NCRE generators is 5%, as of 2015 this percentage will increase gradually by 0.5% every year until a 10% is reached in 2024. Similarly, the government aims for traditional hydroelectricity to achieve 45% to 48% of the matrix share in the aforementioned period. The remaining share shall be obtained from thermoelectric sources. 

Other issues under consideration are: 

  • The strengthening, design and solidity of the transmission system – creating a new, more secure and robust scheme for the development of electricity networks, which will facilitate access for all investors. The government will play a key role in planning transmission systems, dimensioning networks and defining their territorial scope, creating utility corridors, and improving legislation governing concessions and easements. 
  • Improving procedures for granting electricity concessions 
  • Creation of utility corridors 
  • Under a new public electricity highway approach, some regulatory changes must be introduced: in trunk transmission, a review of the systems for assigning payment to facilities and of the objectives and structure of trunk transmission studies must be performed. In the field of additional transmission, definitions will be made for aspects such as the conditions for open access by third parties to transmission lines under this classification, the minimum asset valuation conditions for this open access, and the corresponding payment scheme. Finally, in sub-transmission, work will be done on improving the mechanisms for connection to these networks as well as the long-term security and development of these facilities. 
  • The improvement of existing regulations governing the connection of small generators, in order to facilitate the connection of their projects 
  • The implementation of the concept of intelligent networks as broadly as possible. ·         The expansion of distribution networks. 
  • Creation of independent operation centers 
  • Creating a more competitive market - separation of network activity from commercial activity in the distribution segment, standardization of contracts, new measures to introduce greater competition at the level of prices for end consumers, implementation of freedom to choose electricity suppliers, changes on the retail market and potential review of tariff calculation processes.  

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