IT IS TIME TO CONTEMPLATE A DECENTRALIZED ARCHITECTURE THAT MAXIMIZES THE CAPABILITIES OF DISTRIBUTED RESOURCES AND MINIMIZES THE EXTERNALITIES OF LARGE-SCALE PROJECTS.

In the current energy transformation process, we face a paradigmatic challenge: to adapt our institutional structures and methodologies to a reality where sustainability objectives are a priority.

Historically, the energy sector, governed by economic efficiency and security of supply, operated under the assumption that these factors did not compromise ecosystem sustainability and long-term wellbeing. Today, we recognize that both are intrinsically linked to environmental sustainability.

The Framework Law on Climate Change (2022) in Chile marked a significant advance in this line, reinforcing the role of the Ministry of Environment as the coordinator of climate action and requiring the integration of climate change policies in all government portfolios. However, the energy sector still clings to tools that are obsolete for today’s challenges. For example, centralization in the management of the electricity sector (Long Term Energy Planning, transmission planning and a Coordinator with an almost exclusive focus on the wholesale market, among other aspects) has traditionally favored development based on large-scale generation projects and extensive transmission corridors, aligned with principles of efficiency and security, but without adequately considering long-term sustainability.

Today, when we recognize that spatial and temporal management of energy is becoming a scarce resource, the centralized perspective has manifested itself by linking spatial management almost solely to transmission, and temporal management to large-scale storage.

However, decentralized and potentially competitive alternatives exist, such as distributed generation and storage, demand-side management, V2G technologies, local energy markets, and long-term decentralized architecture. Yet our long-term planning models rarely adopt these options.

Conservative approach

Current models tend toward a centralized structure because of an underestimation of the negative externalities of mega infrastructure projects, a conservative approach to the capabilities of a distributed architecture, a significant legacy of centralized infrastructure, and discount rates that discourage strategic investments with long-term returns.

It is time to contemplate a decentralized architecture that maximizes the emerging capabilities of distributed energy resources and minimizes the negative externalities of large-scale projects. Current technological advances, such as microgrids, enable effective demand response and contribute significantly to the reliability and resilience of supply from distribution based on distributed generation and storage.

Integrating these advances into our energy management models could reveal viable alternatives that centralized planning currently ignores. The transition to a decentralized system is not only an appropriate technical response but also a way to promote a more sustainable way of life and lasting well-being.

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