Price decoupling fueling changes in Chile's nonregulated power market


Ripple effects are being felt in the Chilean nonregulated electricity market from price decoupling and other factors.

One general effect observed is a change in power-purchase agreements (PPAs), BNamericas was told.

Contracts are becoming increasingly sophisticated as generators seek to minimize financial risk in a market where injection prices are pushed to zero during solar hours.

“What we’re seeing at market level is suppliers offering, for example, contracts with day rates and night rates,” said Pablo Demarco Bull, commercial manager at Plataforma Energía, Chile’s biggest, and first, energy trading platform.

“This is significant. For a supplier, a solar power generator, for example, it’s not recommendable to have much exposure during hours when there’s no sun.”

Such contracts would be suitable for businesses that can tweak operations so that most power is consumed during solar hours.

A combination of factors including rising fossil fuel costs, lack of flexibility and grid congestion has increased decoupling risk – or unfavorable price mismatches at injection and withdrawal nodes – and the gap between daylight and non-daylight hour spot prices.

Generators with PPAs in the regulated space have been impacted by decoupling, with at least two officially reporting payment stress

“This spot price volatility has caused electricity vendors to revise their portfolios, with greater conservatism, resulting in reduced willingness to contract electricity at a fixed price,” Demarco said.

He urged all nonregulated market offtakers with contracts in place to begin the renewal process at least a year before they expire, to avoid the risk of ending up paying spot, rather than fixed, prices for their electricity.

Also operating in Peru, Santiago-headquartered Plataforma Energía was founded in 2016 to bring together energy suppliers and users along with other ecosystem players such as consultants.

Among other services, the independent platform hosts real-time electricity supply auctions, designs tenders and energy derivatives auctions, offers a thermal energy trading solution, and operates as a platform for renewable energy certificate trading. Annually, more than 2,000MWh of electricity is traded via the platform in Chile. 


The number of clients in Chile’s nonregulated market has grown apace since 2017-18, driven by lower spot and end-user prices chiefly resulting, in turn, from a strong influx of solar and wind plants.

Spot prices underwent a drastic change mid-2021, climbing on account of a change in price forecasts amid dropping hydropower dam levels and rising fuel prices for thermoelectric plants.

A transmission and energy storage buildout should help improve system integration and ease the incorporation of new renewables capacity, in turn driving down decoupling costs and reducing market risk. A key transmission project is the north-south Kimal-Lo Aguirre HVDC line, expected to enter service around 2030 and help dispatch more renewable energy from the north to demand hubs in the country’s central zone.

Prices nevertheless remain favorable in the unregulated space, with the bulk of negotiations concerning contract renewals.

In terms of regulated market prices, these have been stabilized via a fund established in 2019 in response to the social crisis of that year. A second stabilization fund has been announced.

However, in a recent forecast, Plataforma Energía estimated that adjustments for the likes of inflation and forex fluctuation could result in a rise in end-user bills of about 20%. Under a fund mechanism, large consumers incur a surcharge to subsidize prices applied to smaller users.


In Chile, clients connected to capacity of over 500kW but less than 5MW can choose to be regulated or nonregulated users. Users connected to more than 5MW must operate in the nonregulated space.

Contracts are typically for four years.

Chile’s association of power traders, Acen, is calling on the government to lower the 500kW threshold, to allow a bigger chunk of SMEs to purchase power in the unregulated market.

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