Chilean govt submits bills to speed up energy transition

The Chilean government has submitted three energy sector bills to congress as part of a push to speed up the transition to a cleaner economy.

One of them is aimed at overhauling Chile’s commitments to the participation of renewable generation in the power matrix, which have become obsolete as the country’s growth surpassed expectations.

Another bill seeks to encourage the adoption of green hydrogen in the energy mix by allowing it to be transported via natural gas pipelines, and a last one sets new rules and incentives for the adoption of electric vehicles and energy storage solutions.

The proposals came from the energy and finance ministries as the outgoing administration sends pending legislative initiatives to congress. The government of President Sebastián Piñera ends its term in March next year.

They address key elements of the Andean nation’s energy transition plan as it strives to become carbon neutral by 2050.

Renewables

The first bill would update Chile’s law-mandated goal of having 25% non-conventional renewable generation by 2025, to 40% by 2030. An additional goal specifies that generation companies would be forced to sell at least 30% renewable energy in each of the system’s different time blocks, to avoid situations where renewable energy is used predominantly during the day.

The country’s long-term energy strategy, currently in the public consultation phase, has proposed that 80% of the local power matrix be supplied by renewables (including hydro) by 2030. This agreement, however, is not binding.

Another key goal of the bill is encouraging distributed generation through a series of incentives. These include allowing residential generators to obtain a discount in transmission rates (to recognize the fact that, as they generate power locally, they utilize the transmission system to a lesser degree than other users) and taking measures to speed up the connection process. The exact transmission discount rate would be set by new regulations to be published after the law’s promulgation.

Hydrogen

The bill creates an obligation for owners of natural gas distribution pipelines to transport a percentage of green hydrogen in their networks, starting in 2030. The exact percentage will be set by energy commission CNE every six years, and it will consider “projections of natural gas demand, costs and the degree of development of the green hydrogen market and the availability of the fuel.”

The bill says the measure is looking to pave the way for wider green hydrogen adoption in the Chilean economy by making local transport capacity and demand available to the future industry. 

It also states that any new facilities and machinery bought by natural gas pipeline distributors and their clients must be compatible with a 20% green hydrogen participation in the pipeline network. Involved parties must also update their existing facilities to comply and they cannot pass on the added cost to their customers. They will however be able to declare the added expenses when their profitability as public service providers is evaluated.

Electric transport and energy storage

This bill sets out to create a payment to energy storage systems that is not tied to a specific generation project for the energy they inject back into the grid, and for their available capacity to inject power during high-demand periods.

In terms of transportation, the bill proposes changes to the existing regulation in order to allow electric vehicles to play a role in the electric power market by working as energy storage systems while they are plugged in. Vehicle owners would get compensated when their batteries inject energy back into the grid as the system demands it.

It would also introduce new incentives to encourage the adoption of electric vehicles in the form of a temporary discount on a mandatory circulation permit.