Chile’s energy market has been open for some level of competition for over 30 years. However, only now, with the emergence of distributed renewable generation and new smart technologies, has the means become available for new entrants to participate effectively.
First mover into this competitive retail market is the local new entrant Amigo Solar, which provides services behind the meter and is therefore operating outside of the regulated retail market of the private distribution companies.
Amigo Solar was conceived by parent company, the energy services company oEnergy, as a scalable and bankable B2C retail platform to deploy and operate behind the meter distributed energy resources. The initial focus is on the development of microgrids in which demand can be aggregated and electricity sold to participants at a discount to the regulated rates.
The company installs and operates rooftop solar PV, batteries, smart meters and a proprietary data logger and control unit to manage the energy use. This integrated solution, when deployed in a microgrid, is termed the Intelligent Solar Electricity Network (RESI – Red Eléctrica Solar Inteligente).
The focus is on buildings with multiple tenants or businesses, business parks, industrial facilities, shopping centres and other similar types of properties where the microgrid and aggregation potential is greater and more cost effective than with individual residential dwellings.
Yuri Sylvester, Managing Partner and Chief Business Development Officer of Amigo Solar, says: “In this way, we are able not only to offer lower electricity prices but also to capitalise the cost of the equipment.
“For example, in one building we are operating in, consumers were paying the standard distribution rate of 14c/kWh, but by aggregating the demand, we are able to access the B2B rate of 9c/kWh and by giving the consumers a discount they are able to start saving immediately. With the addition of solar, the unit cost can be reduced even further.”
In Chile, residential customers are up to 10kW and small and medium businesses from 10kW up to 5MW, while large users greater than 5MW are categorised as wholesale customers.
Businesses in the range 500kW to 5MW can choose whether to participate in the regulated retail and PPA market with residential customers or in the competitive PPA market with the wholesale customers.
Billing on microgrids
A key requirement for any energy company is its billing capability and Amigo Solar has recently deployed LogNet Billing’s MaxBill for billing and customer management.
Sylvester comments that the billing model “is based very much on how we want to relate to the customer and to be innovative.”
“We wanted to differentiate from the incumbent distribution companies and what sets us apart is that we are not bound to the standardised rates and by bundling the smart meter data we can come up with different schemes, such as standard rate plans, time of use, capacity charges, etc.”
He adds that more functionalities will be introduced as the market demands, and initially the preference is to “keep things simple.”
For example, there are detailed requirements on the content and format of bills for the regulated distributors. As an unregulated entity, Amigo Solar isn’t required to follow these but the company has decided “not to vary too much in order to provide customers with a format they are used to and not confuse them.”
He also notes an interesting challenge that emerged in implementing the billing system, which is that in Chile, two types of energy bills must be allowed for.
Invoices, which are normally sent to businesses itemise the taxes separately from the energy charges, and receipts, which are sent to final consumers have the taxes included in the charges. Further, the receipts must be submitted to the tax authorities for ‘stamping’ before distribution to customers.
With a move towards distribution market liberalisation under way following significant public discontent over the inability to benefit from dropping solar energy prices in the wholesale market, Sylvester expects that if the process goes through, Amigo Solar will be well placed to build on the foundations established to date.
In preparation, and beyond the billing capability provided by MaxBill, two functions have been retained in-house in order to provide “the flexibility to adapt to whatever market conditions emerge.”
One is the development of the customer web portal, which includes a full digital suite of self-help options for customers. The second is the development and deployment of an Internet of Things and smart metering network.
In terms of further developments, investigations are underway on how storage can contribute to optimising the microgrid in terms of the opportunity to support peak shaving.
There also are plans to introduce gas and water into the microgrid using the same aggregation model as electricity and potentially other services such as demand management.
“We want to be more than an electricity provider and believe our business model is changing the way that it is possible to compete in the regulated market in Chile,” Sylvester says.
“The market doesn’t have to be fully liberalised to allow innovation that can create value for both consumers and investors. The key enabler is technology and in our case, rooftop solar is bringing down the barriers."
He adds that with market liberalisation he anticipates growing interest from investors from Europe and elsewhere. “With the majority of metering points managed by just four distribution groups and the need for smart grid technology and to leverage it for services to consumers, we expect Chile could become the next niche for competitive retail electricity supply, where double-digit margins are widely untapped.”