Chile publishes wholesale power market reform proposal

Chilean grid coordinator CEN published a report that recommends the creation of a new wholesale power market based on bids for electricity, capacity and complementary services.

The 585-page document was produced by consultancy ECCO International and presented to energy minister Diego Pardow.

It falls under the framework of CEN’s roadmap for an accelerated energy transition, which establishes a series of enabling conditions on the journey of preparation for a system that can operate with 100% renewables during some blocks of hours by 2030.

"We hope that this work, which has been shared with much of the electric industry through various meetings, will contribute to a long-term discussion aimed at enhancing the wholesale electricity market. This includes maintaining current elements that work well, while adding others to address the challenges of the energy transition," CEN chairman Juan Carlos Olmedo said in a statement.

Chile’s grid has growing low-carbon capacity, today standing at around 23GW.

CEN advisory board member Blanca Palumbo said during a presentation event earlier this year: “It’s crucial to recognize that this change is not just in response to the growing participation of renewable energy and batteries in our system but also to the need to promote competition via the entrance of new agents, as in the case of the demand side.

“We firmly believe a change like this will bring a series of benefits, including optimization of programming of generation units with fixed costs.”

Shmuel Oren, an academic at University of California, Berkeley, and an ECCO project member, underlined the need for change.

“The thing that drove us throughout our journey is the fact that the cost-based approach that served Chile very well for many years is not sustainable in an environment where 80% or 60% of the resources don’t have a well-defined cost, like batteries and solar and wind,” Oren said. “That’s the kind of the driver: this is not sustainable, and you need to move to a system where people can reflect an opportunity cost, which is going to play a very major role.”

Preliminary findings had been presented last year.

The document can be downloaded from the box at the top right of the page