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Annex 4: Distributed generation

In the distribution network there are an important number of projects of distributed generation whose main vocation is the sale of energy through the distribution network (known as PMGD). However, there is also a growing development of distributed generation projects whose main vocation is self-supply, that is, projects that are developed in the premises of a client or consumer of the distribution network to partially or totally self-supply of electricity and eventually inject their surplus into the network. Self-supply projects can be grouped into three families, according to the type of regulation that applies to them:

  • Self-consumption projects without injection to grid
  • Self-consumption projects with injection to grid with commercial purposes
  • Self-consumption projects less than or equal to 300 kW with surplus injection to grid

These types of projects have been ordered according to a historical order of their regulation and therefore of the maturity and diffusion of the necessary steps for their processing..

In Chile the regulation tries to carry out an efficient transfer of system costs to distribution customers, which creates incentives for self-supply, since reducing consumption from the grid, replacing it with local generation, avoid payments to the distribution company.

This Annex first presents the three types of self-consumption projects mentioned above, but then focuses on the projects with possibility of injection into the network, i.e. projects associated with Netbilling Law and PMGD projects, for which the current state in terms of number of projects and installed capacity is shown, then describes how the injections are valued, then the procedure of connection to the distribution network and finally the available business models.

a) Self-consumption projects without injection 
Self-consumption projects without injection of surpluses have been very common for decades, since their use is mandatory as emergency systems in some buildings, hospitals and other facilities. The regulation of this segment contemplates systems of self-generation that are unable to inject energy to the network so they do not value surpluses (they do not have surpluses).

Decree 8/2020 approves the Safety Regulation for Electric Power Consumption Installations, which establishes the RIC N°9 regulatory technical specification: Self-Generation Systems. Said regulation establishes the safety requirements that facilities that have self-generation systems must meet that deliver the energy generated to the consumption facility simultaneously with that supplied by the distribution company and that do not inject this energy into the electrical distribution network.

The previous systems are well described in Standard 4 so the remainder of this Annex is intended for self-consumption projects with injection of surplus, which depending on the size of the generation system and its technology are subject to 2 different regulations: Netbilling or PMGD. It should be noted that this reference to the cogeneration term points to projects that are connected to the network and that supply the customer’s demand jointly with it, but that are unable to inject energy into the distribution network.

b) Self-consumption projects with injection to grid with commercial purposes
Projects of power generation less than or equal to 9 MW connected to the distribution network correspond to PMGD and are regulated by S.D. N°244 of 2006 and the Technical Standard for Connection and Operation at Medium Voltage (NTCO). This regulation applies to any source of energy (not just renewable) although some of the benefits are exclusive to renewable sources. S.D. N°88 of 2020, replacing the S.D. N°244 of 2006 and S.D. N°101 of 2015, defines the stages, procedures and deadlines to connect to the network as well as the value of injections. The standard that defines technical aspects is the NTCO ​​of PMGD in medium voltage installations. This regulatory framework is oriented to projects that, although they have the mean objective of self-supplying local demand for the property where they are installed, are also interested in entering the business of marketing of energy.

c) Self-consumption projects less than or equal to 300 kW with surplus injection to grid
Renewable or cogeneration projects of less than 300 kW, typically corresponding to a residential, commercial or industrial generation project, are regulated by Law 20.571 of 2012 (modified in 2018 with Law 21.118 of 2018) and its regulation S.D. N°57 of 2020, replacing the SD. N°71 of 2014. This Law empowers consumers who are under a regulated tariff scheme to inject their surplus energy into the grid and value it to reduce their electricity consumption account or eventually liquidate surpluses. The generation can come only from renewable energy or efficient cogeneration. The standard that defines technical aspects is the NTCO of equipment of generation in low voltage. This regulatory model provides simplifications and special conditions for self-consumption projects that do not have the marketing of energy in their turn, while they are able to inject their surpluses and are valued at the average distribution contracts, these surpluses are used to discount the customer’s billing and not to market energy to the network.