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6.2. Marketing Alternatives

This option is when the NCRE generator participates only in the spot market for energy and capacity sales. It will participate in a closed market, restricted to generators only, and its electricity injections will be valued at marginal cost, while its capacity will be valued at the nodal price of capacity.

For energy sales, the Coordinator will conduct a monthly balance to quantify the electricity injected by the generator into the system, and will value it at hourly marginal cost calculated for the NCRE generator. The above-mentioned hourly marginal cost is calculated for the whole transmission/sub-transmission network. If the generator is operating in a distribution system, i.e. if it is a PMGD, the marginal cost of its injection will be valued according to D.S. N°244. In this case, S.D. N°244 states that injections by a PMGD are referenced to the nearest primary sub-station, that is, multiply by a factor, to reflect that it is beyond the National or Zonal Transmission System.

It is important to mention that those generation means with power below 9 MW (PMGD) can opt for a stabilized price regime. This means that instead of quantifying their injections at marginal cost, the Coordinator values them at a price that presents less variation, in this case the stabilized price corresponds to the node price of energy injections that represents the projection of marginal costs in a horizon of 4 years, adjusted by a band around the average market price (according to contracts reported by the generating companies to the CNE). It should be noted that the price of injection node does not necessarily coincide with the node price applied in consumption. Both prices must be published in the tariff decrees elaborated semiannually by the CNE. The stabilized regime, as well as sales at marginal cost, have a minimum holding time and correspond to 4 years. If it is desired to change regime, the Coordinator must be notified at least 12 months in advance.

Finally, in the case of power transfers (exchanges), these are done at the power node price. The power node prices are determined by the CNE every six months and only for the National Transmission System. If the NCRE generator is located in Zonal transmission networks or distribution, the determination of the applicable node price is made by applying multiplier factors to the node price of the nearest National System, which consider the effect of losses in the system. These multipliers are fixed in the node-pricing decree. A more detailed description of the calculation of energy balances and wholesale market operation is given in Annex 2.

It should be noted that in this market alternative, only the energy and power that the generation medium can produce is traded and there is no obligation to have a pre-established level of production.

In this case, the NCRE generator participation is not only composed of its sales to the spot market, but also has a contract with a free customer. The operation of the market, in this case, is similar to the previous one since its sales to the spot market will continue to be valued in the same way. However, when entering into a contract with a free customer, an obligation of a financial nature is established when determining a sale price for the energy supplied with the free customer.

Once the generator declares a contract, it is considered by the Coordinator and will be included in its monthly balance, which will be discounted the energy consumed by the free customer multiplied by the marginal cost calculated for consumption. Thus, in the event that the NCRE generator does not have sufficient energy to supply the consumption, it will also be supplied by other generators, which results in spot market transfers between generators. It is important to note that in any case the generator will have a fixed income corresponding to the sales price agreed with the free customer multiplied by the consumption of the latter.

Similar to the previous alternative, this alternative is composed of the participation in the spot market (previously described) and contract with regulated customers. In fact, this refers to the establishment of a contract with a distribution company, as a representative of regulated customers.

The supply contracts with distribution companies are fixed through public tenders in which an auction takes place, in which the distribution company presents different blocks of energy necessary for its supply of its regulated customers. The generators, in turn, present offers for the different blocks and are assigned to the best offer. The bidding process is led and carried out by the CNE, centralizing the needs of the various distribution companies.

A NCRE project can enter into a contract with a generation company that participates in the wholesale market (energy transfers and power in a long-term contract). In this modality, the NCRE generation company bilaterally negotiates energy and power sales prices and production characteristics with the generation company, and the latter incorporates these products into its marketing offer.

The regulatory framework allows the operation of electricity generation units of less than 9 MW in medium voltage networks in distribution systems. This type of generation is coordinated, and can establish contractual relationships directly with the distribution company. In turn, the distribution company remains responsible for the quality of supply and service of the system. In this scheme, usually applied to control consumption at peak times of the distribution company, the NCRE generation company bilaterally pays energy and power sales prices.