The power of change: Smart meters in Chile's energy transition

Over recent years, discussion surrounding the energy transition in Chile has largely centered on the power generation sector, as well as storage and transmission investments.

Nevertheless, distribution is now moving into the spotlight too, given its critical role in Chile’s decarbonization efforts.

Consensus exists on the need for reform of the distribution sector to help support and accompany higher penetration of electric vehicles and distributed generation and storage assets, for example.

Measures that open the door to more players, for instance, would support the capacity of the demand-side to bolster grid flexibility and, in turn, obtain benefits from providing this service.   

Adoption of smart meters and time-of-use electricity rate plans are seen as critical pieces missing from the jigsaw puzzle.

To find out more, BNamericas conducted an email interview with Larissa Cunha, knowledge management director at regional distributor association Adelat.

The association has published a policy paper focused on regulations, a document that states that tackling distribution challenges will “require an investment plan without precedent.”

Read the Adelat policy paper

BNamericas: For Adelat, in the context of the energy transition in Chile, how important is the widescale deployment of smart meters and the adoption of time-of-use customer rate plans?

Cunha: We understand that distribution activity initially played a role focused on the expansion of the network and the integration of new consumption units into the system, and today we face the challenge of continuing to provide this type of service amid a requirement to address growing electrification and the incorporation of distributed energy resources.

In this way, the modernization of infrastructure is necessary to enable the energy transition, demonstrating that modernizing infrastructure implies rethinking the activity of electricity distributors. This modernization includes the implementation of smart meters but goes further with network detection, the development of storage systems, the robustness of telecommunications networks and the implementation of advanced control and monitoring technologies.

Technology maturation combined with more individualized knowledge of consumers and their region will allow for network usage optimization, thus expanding the range of services that can be offered by distributors, changing the relationship that exists today with the consumer, who will access real-time information about their consumption, financial management and new rate regime possibilities.

To encourage consumers to have a tighter embrace of electrification, it is necessary to move forward with the appropriate signs for a mindful and safe use of more electricity. The adoption of dynamic rates combined with the incorporation of Advanced Metering Infrastructure (AMI) results in economic efficiency for the entire electrical system, coupling supply and demand.

BNamericas: What conditions would be needed to be in place and is this an area within Adelat's strategy/plans?

Cunha: Technological advancement changes not only equipment but, consequently, our consumption behavior, too. The smartphone and smart TV allowed us connection and access in addition to the personalized service offered by the operators. The evolution of equipment is decisive for more active management of the network user. Thus, efficiently incorporating the AMI means transmitting efficient price signals to users, increasing the quality of service and incorporating new solutions and business models.

There are still certain limitations to widescale adoption, such as the willingness of the consumer to have one installed, the establishment of standards and minimum operational functions of the equipment and especially the regulatory improvements necessary to eliminate the barriers that make these projects unfeasible, from an economic-financial perspective.

To overcome such limitations, regulatory frameworks must be modified to encourage users to internalize the benefits of migration to smart metering systems, finally making AMIs an inherent part of distribution systems. Incentives are an integral part of the desired technological advance, so that the project is economically viable for the distributor, allowing long-term investments in infrastructure and benefiting society with the provision of services and the development of strategic assets for the country or region.

It is essential that investment needs are correctly allocated over time, so that their recognition and remuneration are sufficient to guarantee the modernization of networks and affect customers only at a level compatible with their income and needs. 

Therefore, the modernization of networks implies a corresponding modernization of regulatory frameworks to provide predictability and guarantees to distributors regarding the remuneration of investments and to transmit efficient price signals to consumers.

At Adelat we aim to nurture discussion around the energy transition and all of the challenges it represents for distributors. To achieve this, we're working together with our partners present in six countries in the region in order to generate actions that allow the creation of a modern, flexible and resilient electrical network. Our 2023 work plan called “Abriendo Espacios” is focused on the construction of specialized knowledge, the formation of a network of multilateral and institutional alliances, and an increase in representativeness by inserting itself into the public agenda. The topic of smart metering and time-of-use rate plans is relevant for Adelat, so it appears linked to one of the three challenges named by us in the paper titled “Desafíos y Perfeccionamientos Regulatorios de la Distribución Eléctrica para la Transición Energética Latinoamericana”.