Energy in Chile Regulatory Changes Analysis

Potential Regulatory Changes

The Chilean energy value chain, while characterized by a stable liberalized market structure, is subject to ongoing regulatory evolution driven by the rapid energy transition, the integration of new technologies, and the need to address existing bottlenecks. Several potential and recent regulatory changes in 2024 and 2025 are set to significantly impact the generation, transmission, and distribution segments.

A key area of regulatory activity is the normalization of electricity tariffs for regulated customers and the accompanying subsidy mechanisms. Following a period of price stabilization, Law No. 21,667, enacted in April 2024, initiated a gradual process to normalize these tariffs, allowing the pass-through of current energy price levels to regulated consumers. This has resulted in significant tariff increases in 2024 and further increases are expected in early 2025. To mitigate the impact on vulnerable households, the law also introduced a transitory subsidy. Regulatory efforts in H1 2025 are expected to conclude the tariff subsidy bill, potentially defining its funding mechanisms.

Regulation concerning energy storage systems (BESS) is rapidly developing to support their increasing deployment as a crucial element for integrating intermittent renewables. The General Electric Services Act was amended in 2022 to include energy storage systems. Supreme Decree No. 70, approved in June 2024, modified the Capacity Transfer Regulation to incorporate energy storage systems into the capacity transfer market, establishing transitory rules for capacity recognition for a decade from July 2024. Further regulatory updates are anticipated, particularly regarding the remuneration of ancillary services provided by storage systems, which is a key revenue stream for these assets. Clarity on revenue streams and predictability for arbitrage opportunities were expected by early 2024. Proposed procedural changes are also being considered to ease the environmental permitting process for certain battery storage projects with limited transmission links. Modifications to the Regulation on Coordination and Operation of the National Electric System (DS 125) are expected to define specific criteria for the coordination and operation of energy storage systems.

Significant regulatory focus is placed on transmission regulation and planning to address the critical bottleneck of network congestion. The Energy Transition Law (Law No. 21721), promulgated in December 2024, is a major legislative development aimed at accelerating transmission development. This law introduces new mechanisms to foster investments in the transmission network, including the possibility for private entities (such as PMGDs, energy storage systems, and utility-scale generators) to promote expansion works. It also incorporates a mechanism to decree urgent and necessary transmission works outside the standard planning process to expedite critical projects. The Coordinator Eléctrico Nacional (CEN) is actively involved in transmission planning, with the 2024 Transmission Expansion Plan having been approved and the 2025 planning process underway.

The Regulation on Coordination and Operation of the National Electric System (DS 125) is undergoing a significant modification process led by the Ministry of Energy. A public consultation on proposed changes launched in April 2024 and continued into 2025. The objective is to adapt the regulation to the evolving system, enabling the safe and efficient operation with a higher penetration of renewables and new technologies like energy storage and generation-consumption systems. Proposed modifications cover areas such as real-time dispatch management, modernization of economic dispatch, and price formation. This reform aims to promote flexible solutions and modernize the operational coordination of the grid.

While a comprehensive overhaul may not occur in the immediate future, there is a strong consensus on the need for distribution network modernization and reform. This is driven by the increasing electrification of demand, the integration of distributed energy resources, and the evolving role of distribution companies towards Distribution System Operators (DSOs). A technical working group has been formed to develop a reform proposal. Regulatory developments in this area are expected to focus on grid modernization, including real-time monitoring and energy flow management, and potentially introducing mechanisms to increase competition in regulated segments and facilitate the entry of new players and distributed resources. Procedures related to safety, service quality, and cybersecurity in distribution are part of the CNE's 2025 Normative Plan.

Regarding NetBilling and Distributed Generation (PMGD/PMG), regulatory adjustments are being made to facilitate their integration and operation. Changes introduced in February 2024 consider net billing facilities over 100 kW in the connection process for PMGDs. The CNE's 2025 Annual Normative Plan includes specific procedures for the connection and operation of PMGDs. Discussions are also taking place regarding the potential expansion of the netbilling framework to include non-regulated clients, which could significantly impact the distributed generation landscape for commercial and industrial customers. Furthermore, the proposed financing mechanisms for the temporary electricity subsidy could potentially impact the stabilized price regime currently benefiting many PMGDs.

A notable change impacting the commercial relationships in the generation and distribution segments is the lowering of the free customer threshold. The Ministry of Energy reduced the capacity threshold for customers to opt for the non-regulated market from 500 kW to 300 kW. This change allows a larger pool of medium-sized customers to negotiate bilateral PPAs directly with generators, shifting a portion of demand from the regulated market to the free market.

An important pending regulatory development, particularly for energy storage projects, is the finalization of rules for remuneration of ancillary services provided by storage. This is expected to provide a clearer revenue stream beyond energy injection and capacity payments, further incentivizing investment in storage for grid support functions and helping to address the challenge of integrating intermittent renewables.

The CNE's 2025 Annual Normative Plan, approved in December 2024, outlines the specific regulatory procedures that the commission intends to develop throughout the year. These procedures cover various technical and economic aspects of the electricity sector, including safety and service quality, cybersecurity, and matters related to distributed generation, indicating a focused regulatory agenda for the near future.

Finally, as part of the modifications to the Coordination and Operation Regulation (DS 125), the regulation of generation-consumption systems is being addressed. This involves defining operational methodologies for facilities that both generate and consume electricity, which is increasingly relevant with the rise of self-consumption and distributed resources.

These regulatory changes collectively aim to modernize Chile's electricity sector, facilitate the integration of renewable energies and new technologies like storage, address critical infrastructure bottlenecks, and adapt market mechanisms to the evolving energy landscape, while also managing the social impact of tariff adjustments.

Table of Potential Impact of Regulatory Changes

Regulatory Change / Focus Area	Value Chain Stage(s) Primarily Impacted	Potential Impact on Players	Potential Impact on Commercial Relationships	Potential Impact on Bottlenecks & Challenges
Tariff Normalization & Subsidies (Law 21,667)	Distribution, Customers, Generation	Distribution: Improved financial health by covering accumulated costs. Customers: Higher electricity bills for regulated users (mitigated by subsidy for vulnerable). Generators: Pass-through of contracted energy costs via tariffs.	Affects financial flows between Distributors and Regulated Customers. Subsidy introduces a new financial flow from government/specific sources to customers/distributors.	Exacerbates affordability challenges in the short term. Addresses the financial burden of legacy contracts by allowing cost recovery.
Energy Storage Regulation (DS 70, Law 21.505, DS 125 mods, etc.)	Generation, Transmission, System Operation	Generators/Storage Owners: New revenue streams (capacity, ancillary services), improved project economics, ability to participate in capacity market. Transmission/CEN: Enhanced grid stability and flexibility.	Creates new commercial opportunities and agreements for storage services (capacity, ancillary services) with the system operator and potentially other market participants.	Directly addresses the integration of intermittent renewables by providing flexibility and grid support. Helps mitigate transmission congestion by enabling energy time-shifting.
Transmission Regulation & Planning (Energy Transition Law, Plans)	Transmission, Generation, System Cost	Transmission Companies: Incentives and mechanisms for accelerated network expansion. Generators: Improved ability to connect new projects and dispatch renewable energy.	Influences regulated transmission tolls (peajes) paid by generators, distributors, and free customers. Creates new opportunities for private investment in transmission assets.	Directly addresses the critical bottleneck of transmission congestion, enabling full utilization of renewable resources and reducing curtailment.
Coordination and Operation Rules (DS 125 Modifications)	System Operation, Generation, Transmission	CEN: Modernized tools and procedures for grid management. Generators/Storage Owners: Potential changes in dispatch rules and market settlement affecting revenues.	Impacts the real-time operational and financial interactions between market agents and the CEN. May alter spot market dynamics and ancillary service requirements.	Improves the technical integration of intermittent renewables and storage. Enhances grid stability and efficiency in a complex system. Relates to regulatory adaptation.
Distribution Network Modernization & Reform	Distribution, Customers, Generation (Dist.)	Distribution Companies: Requires significant investment, potential shift to DSO role, new service opportunities (smart grid, data). Customers: Improved service quality, potential for new energy services.	May introduce new regulated charges for grid modernization and new commercial relationships related to distributed resources and demand-side management services.	Addresses the need to modernize aging distribution infrastructure. Facilitates the integration of distributed generation and demand-side resources, supporting the energy transition. Relates to regulatory adaptation.
NetBilling & Distributed Generation (PMGD/PMG Regulation)	Generation (Distributed), Distribution, Customers	PMGD/PMG Owners: Clarity on connection procedures, potential changes in revenue (stabilized price). Distribution Companies: Need to manage bidirectional power flows and integrate more distributed resources.	Affects the commercial terms for energy injected into the distribution grid by PMGDs and potentially net-billed customers. Influences the relationship between distributed generators and distributors.	Supports the growth of decentralized generation. Requires adaptation of distribution network operation and regulation. Potential impact on the financial viability of PMGDs depending on subsidy funding decisions.
Lowering of Free Customer Threshold (300kW)	Customers, Generation, Distribution	Free Customers: Increased options for energy procurement. Generators: Larger pool of potential direct PPA counterparties. Distribution Companies: Reduced regulated demand in their concession areas.	Shifts commercial relationships for impacted customers from regulated supply contracts with distributors to bilateral PPAs directly with generators.	Changes the dynamics of the regulated vs. free market balance. Impacts the volume and structure of future regulated supply tenders.
Ancillary Services Remuneration for Storage	Generation, System Operation	Storage Owners: Provides a new, potentially significant revenue stream, improving project viability.	Creates new commercial agreements for the provision of grid stability and ancillary services by energy storage assets.	Directly incentivizes the deployment of storage systems that provide critical services for integrating intermittent renewables and maintaining grid stability.
CNE 2025 Annual Normative Plan	All Segments	Indicates areas of future regulatory focus, providing some foresight for market participants.	Influences the future regulatory landscape that will govern commercial interactions, technical requirements, and market operations across the value chain.	Addresses the need for ongoing regulatory adaptation to keep pace with technological advancements and market evolution. Provides a roadmap for addressing various technical and economic challenges.
Regulation of Generation-Consumption Systems (DS 125 Mods)	Generation, Distribution, Customers	Owners of Gen-Consumption Facilities: Clearer rules for operation and interaction with the grid.	Defines the commercial and operational relationship between owners of such facilities, distribution companies, and potentially the system operator.	Facilitates the integration of hybrid generation and consumption models (e.g., solar + storage at customer sites), supporting decentralized energy systems. Relates to regulatory adaptation and distribution modernization.

References

• Energy Laws and Regulations 2025 | Chile - Global Legal Insights. https://www.globallegalinsights.com/practice-areas/energy-laws-and-regulations/chile
• Chile advances regulation to support ambitious storage goals. https://www.spglobal.com/commodityinsights/platts-insights/electric-power/specials/latam-energy-storage/chile-energy-storage-regulation
• Chile slotting missing pieces into energy storage regulatory jigsaw - BNamericas. https://www.bnamericas.com/en/features/chile-slotting-missing-pieces-into-energy-storage-regulatory-jigsaw
• Chile trims base component projection for 2025 regulated supply auction - BNamericas. https://www.bnamericas.com/en/news/chile-trims-base-component-projection-for-2025-regulated-supply-auction
• El gobierno de Chile publicó la Ley de Transición Energética: ¿Cómo repercute en el sector? - Energía Estratégica. https://energiaestrategica.com/el-gobierno-de-chile-publico-la-ley-de-transicion-energetica-como-repercute-en-el-sector/
• Snapshot: The 3 energy storage regulation tweaks pending in Chile - BNamericas. https://www.bnamericas.com/en/features/snapshot-the-3-energy-storage-regulation-tweaks-pending-in-chile
• Development of Rooftop Solar under Netbilling in Chile: Analysis of Main Barriers from Project Developers' Perspectives - MDPI. https://www.mdpi.com/2071-1050/14/24/16979
• Chile - Policies & action | Climate Action Tracker. https://climateactiontracker.org/countries/chile/policies-action/
• Chile: Approval of Significant Changes in Recognition and Compensation of Energy Storage Systems and Hybrid Plants | Garrigues. https://www.garrigues.com/en_US/insights/chile-approval-significant-changes-recognition-and-compensation-energy-storage-systems-and-hybrid-plants
• Roadmap for an Accelerated Energy Transition. https://www.coordinadorelectrico.cl/wp-content/uploads/2021/10/Roadmap-for-an-Accelerated-Energy-Transition.pdf
• Chile: 2024 Article IV Consultation-Press Release; and Staff Report in: IMF Staff Country Reports Volume 2025 Issue 037 (2025). https://www.imf.org/en/Publications/CR/Issues/2025/02/05/Chile-2024-Article-IV-Consultation-Press-Release-and-Staff-Report-458666
• Opportunities and challenges for distributed energy resources in Chile. https://www.ey.com/en_gl/government-infrastructure/opportunities-and-challenges-for-distributed-energy-resources-in-chile
• Chile Country Platform | Playbook of Solutions - The World Economic Forum. https://initiatives.weforum.org/chile-country-platform/playbook-of-solutions
• CNE emite Resolución que aprueba Plan Normativo Anual 2025 - Comisión Nacional de Energía. https://www.cne.cl/cne/noticias/cne-emite-resolucion-que-aprueba-plan-normativo-anual-2025/
• Snapshot: Distribution reform waiting in the wings in Chile - BNamericas. https://www.bnamericas.com/en/features/snapshot-distribution-reform-waiting-in-the-wings-in-chile
• Reglamento de Coordinación y Operación: Ministerio de Energía propone 4 ejes para su perfeccionamiento | Electrominería - Electromineria. https://www.electromineria.cl/noticias/reglamento-de-coordinacion-y-operacion-ministerio-de-energia-propone-4-ejes-para-su-perfeccionamiento/
• Prospection in Energy Digitalization in Chile. https://core.ac.uk/download/pdf/435402910.pdf
• Boletín Regulatorio 2012024 - GPM AG. https://gpm-ag.com/wp-content/uploads/2024/12/Boletin-Regulatorio-2012024.pdf
• Follow-Up Peer Review on Energy Efficiency in Chile. https://iea.blob.core.windows.net/assets/uploads/f6968ef1-924c-4a15-a180-e85d18331686/Follow-UpPeerReviewonEnergyEfficiencyinChile.pdf
• Chile's Energy Transition: Focus on accelerating transmission development - REGlobal. https://reglobal.com/chiles-energy-transition-focus-on-accelerating-transmission-development/
• New opportunities and the future of the Chilean electric system - InvestChile Blog. https://blog.investchile.gob.cl/el-futuro-del-sistema-electrico-chileno-y-sus-nuevas-oportunidades
• IMF Executive Board Concludes 2024 Article IV Consultation with Chile. https://www.imf.org/en/News/Articles/2025/02/05/pr2544-chile-executive-board-concludes-2024-article-iv-consultation
• Corporate Presentation – March 2025 - Enel Chile. https://www.enelchile.cl/content/dam/enel-cl/investor-relations/presentations/2025/13_03_2025_Enel_Chile_CMD_Presentation_Final_V10.pdf
• Summary MP Report June 2024 - Banco Central de Chile. https://www.bcentral.cl/contenido/-/detalle/informe-de-politica-monetaria-junio-2024
• The National Electricity Coordinator presents progress in the transformation of the electrical system and measures following the February blackout - BNamericas. https://www.bnamericas.com/en/news/the-national-electricity-coordinator-presents-progress-in-the-transformation-of-the-electrical-system-and-measures-following-the-february-blackout
• MODIFICACIONES AL REGLAMENTO DE COORDINACIÓN Y OPERACIÓN DEL SISTEMA ELÉCTRICO NACIONAL | Ministerio de Energía. https://energia.gob.cl/noticias/2025/abril/modificaciones-al-reglamento-de-coordinacion-y-operacion-del-sistema-electrico-nacional
• Reglamento de Coordinación y Operación del Sistema Eléctrico Nacional. https://energia.gob.cl/participa/procesos-participativos/normativas-y-regulacion/reglamento-de-coordinacion-y-operacion-del-sistema-electrico-nacional
• Expand netbilling framework to nonregulated clients, Chile solar player urges - BNamericas. https://www.bnamericas.com/en/news/expand-netbilling-framework-to-nonregulated-clients-chile-solar-player-urges
• Energy | Invest Chile. https://investchile.gob.cl/wp-content/uploads/2022/09/Energy_July-2022.pdf
• Oil & Gas Laws and Regulations Chile 2025 - ICLG.com. https://iclg.com/practice-areas/oil-and-gas-laws-and-regulations/chile
• Ley Chile - Resolución 151 EXENTA 02-ABR-2025 MINISTERIO DE ENERGÍA, COMISIÓN NACIONAL DE ENERGÍA. https://www.bcn.cl/leychile/navegar?idNorma=1209245
• 10 trends transforming Chile's energy market by 2025 - Sherlock Communications. https://www.sherlockcomms.com/en/trends-transforming-chiles-energy-market-2025/
• Actualizaciones en Materia Energética en Latinoamérica: septiembre y octubre 2024. | Insights | Greenberg Traurig LLP. https://www.gtlaw.com/en/insights/2024/11/latam-energy-updates-september-october-2024
• Chile acelerará la descarbonización y transición energética con apoyo del BID. https://www.iadb.org/es/noticias/chile-acelerara-la-descarbonizacion-y-transicion-energetica-con-apoyo-del-bid
• Transparencia - Coordinador Eléctrico Nacional. https://www.coordinadorelectrico.cl/transparencia/marco-normativo/
• Resolución 150 EXENTA, ENERGÍA (2025) - Santiago - Ley Chile. https://www.bcn.cl/leychile/navegar?idNorma=1209244
• Ley Chile - Resolución 40 EXENTA 29-ENE-2025 MINISTERIO DE ENERGÍA, COMISIÓN NACIONAL DE ENERGÍA - Biblioteca del Congreso Nacional - BCN. https://www.bcn.cl/leychile/navegar?idNorma=1207443
• Decreto 125 APRUEBA REGLAMENTO DE LA COORDINACIÓN Y OPERACIÓN DEL SISTEMA ELÉCTRICO NACIONAL. https://www.bcn.cl/leychile/navegar?idNorma=1139132
• Chile acelerará su transición energética justa, limpia y sostenible con apoyo del BID. https://www.iadb.org/es/noticias/chile-acelerara-su-transicion-energetica-justa-limpia-y-sostenible-con-apoyo-del-bid