Future of Electricity Distribution
December 5, 2023
The Crucial Role of Electrical Distribution in the Energy Transition
Electrical distribution plays a key role in the transition to a more sustainable and renewable-based energy system. Distribution networks are responsible for delivering electricity from generation plants to end users. In this new context, infrastructure must adapt to electrification demands and the increasing share of clean energy production.
This shift requires:
- Efficient integration of distributed energy resources
- Development of flexible and resilient distribution networks
- Improved service quality
- A more active and empowered end user
A New Energy Model Requires Regulatory Reforms
To implement this model, a series of structural modifications are necessary, including a long-awaited reform of the regulatory framework for electrical distribution.
In this article, three industry experts and one academic leader share their perspectives on Chile’s challenges in this area.
Distributed Generation and Storage
According to Daniel Olivares, Director of the Energy Transition Center (CENTRA) at Universidad Adolfo Ibáñez (UAI), electrical distribution must undergo the deepest transformations within the energy transition.
“It must evolve into a multilateral energy transaction platform, enabling new market models that encourage the efficient development of distributed energy resources—such as residential solar generation and distributed storage—while providing price signals for efficient consumption over time,” explains Olivares.
He adds that only through this market transformation can Chile move toward a more renewable and resilient energy supply system while minimizing the territorial impact of large-scale electricity production and transmission projects.
Similarly, Juan Meriches, Executive Director of Empresas Eléctricas, emphasizes that electrical distribution is the link between the energy transition and people’s daily lives.
“Through greater electrification of energy consumption, such as heating and electric transportation, distribution networks will facilitate the mass development of distributed generation and energy storage at the residential level,” says Meriches.
Chile’s Energy Goals for 2050
- Increase electrification from 24% to 75% in the final energy consumption matrix
- Install 8,000 MW of distributed generation
- Achieve 18% of Chile’s carbon neutrality commitment through electromobility
- Reduce power outages from 12 hours to 4 hours per year by 2035
Bidirectional Energy Consumption and Smart Grids
Victor Tavera, CEO of Enel Distribución, highlights the need for modern, flexible, and resilient distribution networks to support:
- Increased demand
- Bidirectional energy flows (consumers also generating energy)
- Higher service quality expectations
However, Tavera warns that Chile is not yet prepared for these challenges at the distribution level:
“Without regulatory changes, it will be difficult to enable the necessary network upgrades for the energy transition. A comprehensive sector reform is essential.”
Meriches agrees, stating that Chile’s distribution regulation is 40 years old and has never undergone a structural update.
“The outdated regulatory framework is not only a barrier to meeting future energy demands, but also prevents adequate service quality for current consumers,” he explains.
The Need for a Distribution Reform: Industry and Academic Perspectives
According to Daniel Olivares (CENTRA-UAI), electrical distribution reform must balance three core principles:
- Sustainability
- Energy security
- Economic efficiency
He proposes three key pillars for the reform:
1. Efficient Integration of Distributed Energy Resources
- Regulatory updates must enable small-scale solar generation and storage
- Smart grids should optimize power distribution based on real-time demand
2. Innovation Incentives for Energy Companies
- Distribution utilities should be rewarded for investing in emerging technologies
- Reliability and resilience must be prioritized in grid planning
3. Adjusting Distribution Tariffs to Reduce Investment Risks
- Utilities should have financial stability amid structural changes
- Tariff models should reflect investment risks in new infrastructure
From an industry standpoint, Victor Tavera (Enel Distribución) argues that reform must address three key challenges:
- Increasing service quality standards
- Strengthening grid resilience against extreme weather events
- Developing infrastructure for electrification and carbon neutrality
A Vision for Chile’s Energy Future
Juan Meriches (Empresas Eléctricas) outlines three key areas that distribution reform should prioritize:
1. Building Robust, Resilient Networks
- Implement incentive-based regulations that encourage network upgrades
- Strengthen the government’s role in long-term infrastructure planning
2. Expanding Access to Distributed Energy Solutions
- Introduce new pricing and tariff models for local solar and energy storage
- Support urban adaptation to distributed generation, electromobility, and smart grids
3. Empowering Consumers with Smart Pricing
- Move away from flat-rate electricity pricing
- Implement dynamic tariffs that reflect energy demand and supply
Reforming Electrical Distribution for a Consumer-Centered Model
From Grupo Saesa, Alondra Leal, Corporate Affairs Manager, emphasizes the need for a comprehensive discussion on Chile’s future electricity sector:
“The current law is outdated and must be revised to prioritize consumer experience. For example, we need to rethink the ‘model company’ requirements, which are out of touch with the reality of distribution companies.”
Key Takeaways
- Chile’s distribution sector must undergo deep transformations to support the energy transition
- Regulatory reform is essential for integrating distributed generation, storage, and bidirectional energy flows
- Consumers should play an active role through smart tariffs and self-generation options
- A long-term investment strategy is necessary to ensure grid reliability and efficiency
Chile has an unparalleled opportunity to lead the renewable energy revolution, but to achieve this, the electrical distribution framework must evolve to meet future energy demands.
Read the full article in Revista EI.