Chilean Electric Transmission Regulation: From a Merchant Approach to Central Planning

Fernando Fuentes and Pablo Serra
Additional contact information
Fernando Fuentes: Departamento de Economía, Facultad de Administración y Economía, Universidad Diego Portales, Santiago 8581169, Chile

Energies, 2022, vol. 15, issue 12, 1-15

Abstract: From the 1980s onwards, many jurisdictions reformed their electricity sectors to create energy markets. To this end, they unbundled transmission from generation, raising the issue of whether and how to regulate transmission. This paper contributes to this literature by analyzing the 40-year Chilean experience. To do so, it describes the initial transmission regulation, the changes introduced, the causes that triggered them, and their results regarding grid access and expansion and their impact on the energy market. The Chilean Electricity Act, issued in 1982, established open access to transmission facilities but left access and expansion conditions unregulated. This situation caused generators’ grid access problems, harming energy market competition. In 2004, lawmakers amended the Act to require the regulator to develop annual expansion plans and regulate transmission remuneration and financing. Following these changes, transmission expanded adequately for about a decade. However, since 2016, renewable energy curtailments have been significant due to congestion on some transmission lines due to construction delays. The increasing empowerment of civil society in the decision-making processes of new investments is relevant in explaining the delays. The main lesson is that citizen consensus-building is crucial for grid expansion.

Keywords: electric transmission; merchant approach; central planning; project auction; cost allocation; renewable energy; congestion (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/1996-1073/15/12/4336/pdf (application/pdf)
https://www.mdpi.com/1996-1073/15/12/4336/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:15:y:2022:i:12:p:4336-:d:838202

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().