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Annex 4.2 Valuing injections of generation surpluses to the grid

The energy and power injected into the network of projects under the Netbilling Law on the one hand and the PMGD on the other hand receive different valuations for the energy and power injected into the distribution network. The principles of valuation for both types of projects are described below.

Unlike several developed countries that seek to promote and encourage residential generation through the use of net metering, Chile seeks to establish tariffs that reflect the actual costs of supply to promote efficiency in the system. This is why the Netbilling scheme is used. In this scheme the injected energy is valued at the avoided cost of energy and losses by the distribution company. That is, the average cost that the distribution company fails to pay to buy less energy to large generators (results of regulated supply bids) plus the less losses avoided by the generation closest to consumption or the cost avoided. The energy measurement is performed for injection and withdrawals independently and are valued separately before the monetary balance is made. In fact, energy injection and energy prices are different for residential customers BT1, as this type of customer in its energy tariff finances both the energy it occupies and its power demand, which finances the infrastructure of the network that (mainly the distribution network). This type of project does not receive a payment to compensate its power.

Specifically, according to the S.D. N°57 of 2020, generation equipment may operate in any of the following modes:

  • Individual generation.
  • Individual generation with remote discounts.
  • Joint generation.

The value of the energy injected into the grid is deducted from the charges on the ballot. If the discounts exceed the charges, then the remainders are discounted on the following ballots. Remnants that have not been deducted from the ballots after a certain period defined by contract are liquidated and paid by the distribution company to the customer under the following conditions:

  1. That the remnants do not come from a Joint Generation Equipment;
  2. That the remnants do not come from an Individual Generation Equipment with Remote Discounts, except in the case of non-profit legal entities;
  3. That the Generation Equipment has been sized so that, under normal operating conditions and on an annual basis, its energy injections do not produce remnants that cannot be deducted from billings;
  4. That the remainders do not originate from increases in generation capacity that have not met the above condition.

For residential customers with connected power up to 20 kW or non-profit legal entities with connected power up to 50 kW, it will not be necessary to comply with the requirements of paragraphs 3 and 4.

PMGDs may choose to sell their energy to the system of instantaneous marginal cost (spot price) or a stabilized price regime that allows them to access the node price of the zone where they inject. The latter was modified by the S.D. N°88 of 2020, which calculates the stabilized price differently in six hourly blocks per day. This valorization regime option commonly provides very different economic results and must be communicated to the Coordinator, and must remain a minimum of 4 years in the chosen regime.

If you choose to value the injection at marginal cost, this will correspond to the calculated in the bar of the primary distribution substation that feeds it. Under this regime the PMGD is subjected to a high risk, since the marginal cost variability is high and depends on many factors (water use from dam, congestion and network loss levels, injection of renewable energies, among other aspects). In the case of choosing a stabilized price regime, the injected energy will be valued at the short-term energy node price in the different time intervals (6 blocks) of the trunk bars associated with the bar of the primary injection distribution substation. The short-term node price is calculated semi-annually by the National Energy Commission as an average of the marginal costs of the following 48 months (calculated by simulation of the electric system) and therefore has much lower variability than marginal costs and by both represent a lower risk for PMGD. The power injections are valued at the power node price, regardless of the chosen regime.