Turmoil in the Chilean electricity sector: A failed attempt at using advanced contracts for differences to support the energy transition?

Jesús Ansede Ferreiro and Enrique San-Martín González

Utilities Policy, 2025, vol. 93, issue C

Abstract: The Chilean electricity market is at a critical moment. Some renewable energy generators that signed regulated power purchase agreements with distribution companies are experiencing financial distress. Generators assume locational basis risk under these contracts, which can be considered advanced contracts for differences. As price decoupling appeared in the network, some generators filed for bankruptcy. The Chilean government is studying measures to weather the storm, and an expert panel has been set up to assess them. The European Union is betting on advanced contracts for differences, but the Chilean empirical evidence calls for caution when adjusting plain contracts for differences.

Keywords: Price decoupling; Regulated power purchase agreements; Contracts for differences (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:93:y:2025:i:c:s0957178724001760

DOI: 10.1016/j.jup.2024.101882

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