2.1. Electric systems
In the national electricity industry, private companies are involved in the generation, transmission and distribution sectors. In generation, as in most systems at the international level, the Chilean electricity sector has a high level of market concentration. That is, few companies have a significant participation and leadership in the generation sector. However, the latest legal changes have been especially relevant to mitigate this reality. The regulatory changes, described throughout this book and that can be found chronologically ordered in Annex 1, are allowing to break down a series of barriers to entry into the generation sector, especially for non-conventional renewable generation. With this, new companies are able to enter the market and form part of the national electric system, expanding supply, increasing competition and reducing supply prices.
An electric system consists of the whole set of power plants, transmission lines, electrical sub-stations and distribution lines, all of them interconnected, enabling the generation, transmission and distribution of electricity. In Chile, these interconnected systems are classified according to their size. Therefore, an interconnected system will be classified as National Electrical System if it has an installed capacity of generation of 200 MW or more. Medium-sized systems have an installed capacity of over 1.5 MW and less than 200 MW and small ones have an installed capacity of 1.5 MW or less. The main Chilean electric systems are the following: The National Electric System (SEN), the Aysén Electric System and the Magallanes Electric System. These systems are briefly described below:
- The National Electric System (SEN): it is the national system that supplies the north and center of the country, from Arica in the north to Quellón in the south. This system was formed by the interconnection of two systems as of November 2017, the North Grande Interconnected System (SING) and the Central Interconnected System (SIC). The SEN constitutes 99.31% of the total installed capacity of the country.
- Aysén Electric System (SEA): in practice it corresponds to five medium sub-systems located in the southern zone of the country: Palena, Hornopirén, Carrera, Cochamó and Aysén. Its joint capacity represents 0.26% of Chile’s installed capacity.
- Magallanes Electric System (SEM): Consists of four medium-size systems: Punta Arenas, Puerto Natales, Porvenir and Puerto Williams, that supply the cities with the same names. It is located in the southernmost extreme of Chile. Its joint installed capacity represents 0.43% of Chile’s installed capacity.
Although the focus of this book is on the SEN, previously described, it is worth mentioning that in the smaller scale systems, such as the medium systems of Aysén and Magallanes, the tariff structure is based on the determination of average costs per segment (generation, transmission, distribution) and supply is mainly through a regulated monopoly, so the opportunities for NCRE projects are fundamentally different from those presented in this book.