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Author (up) Munoz, FD.; Suazo-Martinez, C.; Pereira, E.; Moreno, R.
Title Electricity market design for low-carbon and flexible systems: Room for improvement in Chile Type
Year 2021 Publication Energy Policy Abbreviated Journal Energy Policy
Volume 148 Issue B Pages 111997
Keywords Market design; Electricity; Flexibility; Decarbonization
Abstract Chile was the first country that privatized all generation, transmission, and distribution services, and introduced competition in the generation segment. Nearly four decades after its creation, many features of the original electricity market design remain unchanged. In this paper, we provide a brief history of the Chilean electricity market and explain its main limitations going forward. Some of these include the use of a cost-based mechanism for spot transactions based on a merit-order curve, low temporal granularity of spot prices, missing forward markets to settle deviations from day-ahead commitments, inefficient pricing of greenhouse gas emissions due to administrative rules, and a capacity mechanism that does not reflect a clear resource adequacy target. Many of these limitations are also present in other electricity markets in Latin America that, when privatized, mirrored many features of the electricity market design in Chile. Failing to address these limitations will provide distorted incentives for the efficient entry and operation of resources that could impart flexibility to the system, increasing the cost of decarbonizing the power sector.
Corporate Author Thesis
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Language Summary Language Original Title
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Series Volume Series Issue Edition
ISSN 0301-4215 ISBN Medium
Area Expedition Conference
Notes WOS:000600550600023 Approved
Call Number UAI @ alexi.delcanto @ WOS:000600550600023 Serial 1284
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