Net-Metering / Billing in Chile
General Context
The last years of continuous, strong economic growth in Chile were linked with a significant increase in energy demand. Thus, the demand for electricity roughly doubled every 10 years. Up to date the electricity production in Chile is mainly based on fossil fuels (especially coal and gas). At the same time Chile (as a member of the OECD) pursues ambitious Greenhouse gas emission reduction objectives and aims to reach these goals, among others, through the development of renewable energies. With its extraordinary geography, the over 6000 km extended country in many regions offers optimal conditions for the use of solar energy. The north of Chile is one of the areas with the highest annual irradiation worldwide. Even in Santiago further in the south the radiated energy per year is still about twice as high as in southern Germany. Overall, despite the geographically-related regional differences, the country offers very good meteorological conditions for the installation of photovoltaic systems.
Development of the Law
With the adoption of the Law 20.571 for Net-Metering/Billing in February 2012 the course for the integration of electricity from distributed renewable generation was set. However, the law could not become effective before 23rd October 2014 due to the lack of implementing regulations and technical standards. The “Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH” supported the working group of the Chilean Ministry of Energy and the regulator (CNR) in developing the necessary implementing regulations and technical standards. The "Norma Técnica" is based on the German standard VDE-AR-N 4105, and considers the German experience with feeding electricity into low and medium voltage grids.
Key Facts of the Law
The aim of the law is to provide electricity customers with the right to generate and consume their own electricity and to feed exceeding electricity into the grid. The law only applies for tariff-regulated customers whose connection power is below 2 MW. The following is a summary of the most important details of the law:
Size and Type of Plants
- The installed capacity of the distributed generation unit may not exceed 100 kW.
- The electricity must be generated based on renewable energy sources or in efficient co-generation plants.
- Among renewable energies sources are, for example: solar energy, hydropower, wind energy, biomass, etc. The combined heat and power plant must produce electricity and heat in a single conversion process with an overall efficiency above 75 %.
Potential Costumers
- Costumers that are subject to price regulation ("clientes regulados"), such as households and small businesses or industries
- Condominiums, buildings and commercial or industrial facilities whose connected capacity is less than 2,000 kW and that are subject to regulated prices.
Grid Connection
- The law requires the grid operator, depending on technical possibilities, to accept the electricity of their customers and to pay for it.
- For the installation and connection of a plant the implementation regulations and technical standards required by the law need to be applied.
- If grid expansion measures are needed for the connection of a plant, the corresponding costs have to be carried by the customer who aims to install the system.
Remuneration
- For residential customers and small businesses (power input <10kW) the Net-Billing-Model applies: customers pay a basic energy tariff BT-1A which includes a price component for the use of the grid. Currently, this gross energy tariff is about 94 CLP / kWh (about 13.8 €cents / kWh). For the compensation of the feed-in of electricity only the price for the share of energy is being considered, which currently is about 54 CLP / kWh (about 8 €cents / kWh).
- For commercial and industrial customers (power input 10kW- 2 MW) the Net-Metering model applies: These customers pay a separate capacity and energy price. Therefore the remuneration for electricity injected to the grid is equal to the exact energy price of currently 54 CLP / kWh (about 8 €cents / kWh).
- The law provides a mechanism that does not involve direct payment for the electricity injected to the grid. The injected electricity shall be deducted from the monthly electricity bill. If a balance in favor of the customer remains, this surplus will be deducted on the next invoice, adjusted according to the consumer price index. The balances that cannot be withdrawn from the corresponding invoices within the time specified in the contract must be paid by the grid operator
Duration
- If no adjustments to the grid are required, the connection procedure is expected to take 4 to 8 months. The duration depends in particular on the duration of the installation and the time required for the exchange of information between customers and grid operators.
Processes and Installation
- The application process for the grid connection can be carried out by the end customer himself. Nevertheless the consultancy of a professional for the design, planning and production simulation e.g. of a photovoltaic plant is recommended. This expert should also be qualified in the area of all corresponding regulations and requirements and should guarantee the correct implementation of the project.
- The installation of the system must be executed by an electrician, who is licensed by the according supervisory authority (Superintendencia de electricidad y Combustibles (SEC)).
- The electrician must also submit a commissioning statement to SEC.
Technical Requirements and Regulation
- The implementation rule of the law 20.571 contained within presidential decree No. 71, from June 4th 2014 defines the required measures, technical specifications and safety standards that the plant has to fulfill for the safety of persons and goods as well as for the continuity of electricity supply.
- In addition to the implementation rule the following instruments need to be taken into account
- Technical rules and guidelines for the installation, connection and operation of power generation facilities in the low voltage range.
- Procedures for the commissioning of renewable energy power plants e.g. photovoltaic systems.
- Guidelines for the approval of products that are used within the power generation plants.
Summary & Future Projects
With the described regulatory framework, the Chilean Government has created the foundation for the development of a market for distributed generation. Over the next four years, in addition to providing the legal basis, the Chilean Energy Ministry "Ministerio de Energía" invest about 13 Mio USD (about 12 Mio €) in the construction of 250 to 350 photovoltaic systems on roofs of public buildings. During the implementation of the project the Ministry will be advised by GIZ. The investment program aims to stimulate the market for small photovoltaic systems, to disseminate information about the possibility of installing photovoltaic systems for self-supply, to optimize the existing standards and procedures, and last but not least to reduce electricity costs for the corresponding institutions.
Further Information
For more information in Spanish go to:
- http://www.minenergia.cl/ley20571/
- http://www.4echile.cl/energia-solar-para-el-autoconsumo/
- http://cifes.gob.cl/
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