Chile power solutions CEO talks distribution reform, energy efficiency, opportunities

Chile has made great advances in renewable energy in recent years, with installed capacity growth driven primarily by utility-scale wind and solar parks. 

Distributed generation assets – particularly in the form of residential and commercial installations – are poised to play a bigger role as Chile works to achieve net-zero emissions in 2050, with cost savings and emission reduction the chief drivers. There are hurdles though, including a power grid that needs to be modernized to help support the ingress and operation of myriad new distributed assets. 

To find out more, BNamericas speaks with David Rau, CEO of Chilean solar power solutions company Flux Solar, which offers energy generation, storage and management solutions for homes, as well as for companies and industries. Flux is part of local group Copec.

Rau also serves as VP of Chile’s solar power association, Acesol, an industry ecosystem of more than 150 companies from across the value chain.

BNamericas: Increased electrification of the Chilean economy is seen as a way to lower emissions and, in turn, reduce exposure to hydrocarbons price volatility. What are some of the low-hanging fruit? That is, what sectors or processes, are currently the easiest or most feasible to electrify?

Rau: Electrifying transportation is one of the most feasible and impactful areas. The adoption of electric vehicles (EVs), including buses, taxis, and private cars, is rapidly increasing due to technological advancements and decreasing costs. Public transportation fleets can transition to electric buses, significantly reducing emissions and operational costs.

Residential heating is another sector ripe for electrification. Traditional gas and oil heating systems can be replaced with electric heat pumps, which are more energy-efficient and environmentally friendly. This shift can lead to significant reductions in household emissions and lower energy bills.

In the industrial sector, processes such as heating, drying and smelting can be transitioned to electric alternatives, reducing both emissions and dependency on volatile fuel prices. Additionally, many diesel-powered operations can be replaced by solar + storage solutions, resulting in much lower emissions and lower energy prices.

Electrification is key on our way to lower emissions. Demand for electricity is projected to grow significantly and be more challenging in terms of the daily profile. Solar, together with storage solutions, is a key enabler for a sustainable electrification process.

BNamericas: What are some of the practical or infrastructure obstacles?

Rau: One of the primary obstacles is the current state of the electrical grid, which needs significant upgrades to handle the increased demand from widespread electrification. This includes enhancing the grid's capacity, reliability and flexibility. Distributed generation can provide significant impacts in these matters by incorporating storage solutions at a distribution level combined with higher control standards and a regulation that correctly incentivizes these projects and their benefits. 

Another challenge is the availability and distribution of charging infrastructure for EVs. For electric vehicles to become a viable option for more people, a comprehensive and accessible network of charging stations is essential, especially considering heavy-duty transportation. This requires coordinated efforts between the government, private sector and utility companies.

There is also the issue of initial capital costs. Although the long-term savings from electrification can be substantial, the upfront investment required for new electric infrastructure, vehicles and equipment can be a barrier for many consumers and businesses. Flux always focuses on integrated solutions for its clients by providing technology solutions combined with a financial solution, such as the ESCO [energy service company] model.

BNamericas: Is there any consensus on how to address these issues? For example, there's a lot of talk locally about the need for distribution reform.

Rau: There's a consensus that distribution reform is critical to support increased electrification. This includes modernizing the grid with smart technologies that allow real-time monitoring and management of energy flow, improving efficiency and reducing downtime.

Investment in public-private partnerships is seen as a key strategy. These partnerships can facilitate the deployment of EV charging infrastructure, leveraging both public funding and private innovation. Technologies such as V2G, demand control and so on, might soon be a reality in Chile.

Regulatory frameworks need to be updated to encourage investment in grid improvements and distributed energy resources. Incentives such as tax breaks and low-interest loans can help offset the initial costs of electrification projects for businesses and consumers. The main focus should be on eliminating still-existing barriers and providing security for long-term investment. 

BNamericas: Could Chile’s energy efficiency legislation be considered a driver for current or future investment in electrification?

Rau: Indeed, Chile’s energy efficiency legislation plays a role in driving investment in electrification. The legislation sets targets for reducing energy consumption and mandates energy efficiency measures across various sectors. This creates a favorable environment for electrification by promoting the adoption of more efficient technologies and systems.

For example, the law encourages the use of electric heat pumps for residential and commercial heating, which are more efficient than traditional heating methods. It also supports the integration of renewable energy sources, such as solar, into the grid, which complements electrification efforts by providing clean power and flexibility.

Furthermore, the legislation includes provisions for energy audits and performance standards, which can help identify areas where electrification can yield significant energy savings. This, in turn, drives demand for electrification solutions and supports the business case for investing in new technologies.

BNamericas: Turning to the area of distributed generation, where Flux Solar operates. Battery prices have tumbled. Is that increasing interest in incorporating such systems into net-billing or PMGD projects?

Rau: Yes, the decline in battery prices and the need for more flexibility has significantly increased interest in incorporating storage systems into auto generation and distributed generation projects. Lower battery costs make it more economically viable for consumers and businesses to invest in storage solutions, which can enhance the value of their solar installations or, as a standalone, provide services such as arbitrage to the grid.

With battery storage, customers can store excess solar energy generated during the day and use it during peak demand times or when solar generation is low. This not only maximizes the use of their solar systems, but also provides greater energy independence and stability.

For PMGD projects, integrating battery storage helps smooth out the intermittency of solar power, ensuring a more reliable and consistent supply of electricity to the grid. This can improve the overall efficiency and profitability of these projects, making them more attractive to investors.

BNamericas: We understand that this may be commercially sensitive, but can you indicate which segments could present the strongest business opportunities for Flux Solar over the next few years, and why?

Rau: The residential sector presents a strong strategic opportunity for Flux Solar, particularly with the growing interest in home solar systems combined with battery storage. As more homeowners seek to reduce their energy bills and carbon footprint, we expect demand for integrated solar and storage solutions to increase. Residential projects do not only represent a commercial opportunity, but they are deeply connected with our purpose as a company, as Flux considers itself the energy partner for families and business. 

The commercial and industrial sectors also offer significant potential because the need for technological solutions that provide emission reductions and savings is growing fast. Businesses are increasingly looking to reduce operational costs and enhance sustainability. Solar energy, coupled with storage, can provide substantial cost savings and energy security for commercial and industrial facilities. What's more, we're able to provide integrated solutions to our clients combining charging infrastructure, storage and solar solutions in one.

In the industrial sector, particularly in mining and manufacturing, there's a substantial opportunity to electrify processes and equipment. This not only reduces emissions but also improves operational efficiency and reduces exposure to fuel price volatility.

Flux Copec is uniquely positioned to capitalize on these opportunities. Our comprehensive ecosystem of solutions, including solar energy, storage, e-mobility and energy efficiency, allows us to provide tailored and integrated services to meet the diverse needs of our clients. Our commitment to best client experience and operational excellence ensures that we deliver reliable, high-quality solutions that support Chile’s sustainable development goals.

By leveraging our expertise and innovative technologies, we're prepared to lead the transition to a more electrified and sustainable economy, providing significant value to our customers and contributing to the country's environmental and economic objectives.