“There is a transversal recognition of the need to correct the power remuneration mechanism -which will allow the incorporation of more flexible, manageable renewable energy, such as geothermal energy, solar concentration and small and medium-scale hydroelectric power plants-, it is urgent move quickly to give the correct investment signals and to promote carbon neutrality in this matter, in order to ensure the common good of the system and move away from particular visions that only tend to make our market more expensive and distort, ultimately harming the final consumers.”
Since the last administration, the study of a reform to the power remuneration system began, within the framework of the “Flexibility Strategy for the National Electric System”, developing in a year a total of 16 sessions of in-depth technical discussion in in which the main trade associations, companies, universities and experts participated, and in which there was additionally a study by the Institute of Complex Engineering Systems of the U. de Chile. The underlying discussion arose given that the current allocation of sufficiency power that the different generators receive, especially those renewable generators with variable sources, receive income above the real contribution they make to the sufficiency of the system, since their variability does not It allows them to guarantee their share of power at any time, especially in those hours when the system is most restricted.
The new regulation recommended the application of a mechanism called ELCC, which, through a statistical and mathematical process, makes it possible to assign to each generator the real contribution of the sufficiency of each technology, which would result in a strong correction of the remuneration that today receive variable renewable energy. Likewise, the new regulation sought a mechanism to reduce the remuneration received by diesel sources.
The new proposed methodology is necessary and urgent to give adequate investment signals for future renewable generation plants that are flexible to the system, which are the ones that will allow cost-efficient replacement of the current fossil sources that operate in the system.
The government of President Boric chose to withdraw the power regulation submitted to the Comptroller’s Office, but, after carefully studying the work carried out, it has announced that it will reintroduce said regulation, opening only a short discussion regarding the regime of transitory application of the new standard.
Of course, in view of this important decision by Minister Pardow, which we believe is based on responsible continuity with respect to a public policy and the necessary transition towards a 100% renewable matrix, catastrophic voices have emerged that pressure to maintain the current power regime for the path of proposing a transitory term of more than 15 years, in circumstances that the originally agreed upon are 8 years of transition, which could cause a serious threat to an efficient and timely renewable energy transition, precisely because the incorporation would continue to be excessively stimulated from variable sources, which, given their volatility, make the operation of the system more expensive and generate a dependency on fossil sources when the renewable contribution disappears at night.
There is a transversal recognition of the need to correct the power remuneration mechanism -which will allow the incorporation of more flexible, manageable renewable energy, such as geothermal energy, solar concentration and small and medium-scale hydroelectric power plants-, it is urgent to move forward quickly to give the correct investment signals and to promote carbon neutrality in this matter, in order to ensure the common good of the system and move away from particular visions that only tend to make our market more expensive and distort, ultimately harming consumers finals.
* The authors are Rafael Loyola, executive director of the Association of Small and Medium Hydroelectric Power Plants; Cristián Sepúlveda, Executive Manager of the Solar Power Concentration Association and Carlos Jorquera, President of the Geothermal Council.