NEW REGULATIONS TO DISTRIBUTED GENERATION SYSTEMS FOR SELF-SUPPLY (SGDA) OF NON-REGULATED CONSUMERS

On November 19, 2024, the Electricity Regulation and Control Agency (“ARCONEL”) issued Resolution No. ARCONEL-020/2024 (the “Resolution”), through which it approved Regulation No. ARCONEL-10/24 (the “Regulation”). This new regulatory framework governs distributed generation systems for self-supply (SGDA) of non-regulated consumers and has been in effect since its issuance.

Below is a summary of the Regulation:

1. Non-Regulated Consumers. A non-regulated consumer is an entity classified as a Large Consumer or a Self-consumer (shareholder) of a self-generator.
2. SGDA. An SGDA consists of equipment that generates electricity for the self-supply of a Non-Regulated Consumer.
3. Resource. The SGDA must use a non-conventional renewable energy resource (e.g., small-scale hydro, solar, wind, biomass, or biogas).
4. Nominal Power. The SGDA’s nominal power is capped at the maximum power demand recorded within the internal networks of the Non-Regulated Consumer. This nominal power will be determined based on the feasibility report issued by the competent distribution company.
5. Ownership. The SGDA may be owned by the Non-Regulated Consumer or by a third party.
6. Services. The Non-Regulated Consumer can engage third-party services for installation, operation, maintenance, dismantling, and other SGDA-related activities.
7. Prohibition. The commercialization of electricity generated by the SGDA is prohibited.
8. Protection and control. The SGDA must include protection and control equipment to prevent the electricity generated by the SGDA from being injected into the distribution grid.
9. Connection. The SGDA must be directly connected to the internal network of the Non-Regulated Consumer. This requirement applies to all SGDA modalities, including if the SGDA is located on a property different from that of the Non-Regulated Consumer.
10. Modalities. a. The SGDA supplies a Non-Regulated Consumer. b. The SGDA supplies multiple demands or loads associated with a Non-Regulated Consumer. c. The SGDA supplies multiple Non-Regulated Consumers, provided they belong to the same entity.
11. Bilateral Contracts. The operation of the SGDA requires updating the Bilateral Contracts of the Non-Regulated Consumer associated with it, ensuring that these contracts cover the demand not supplied by the SGDA.
12. Permits. To build and operate a SGDA, it is necessary to obtain: (i) a Feasibility Certificate from a competent public distribution company; and (ii) an Authorization Certificate from ARCONEL.
13. Term. The Authorization Certificate specifies the SGDA’s operation term, which depends on the lifespan of the technology used, as shown in the table below. The term starts when the SGDA begins operating.

14. Isolated SGDA. Non-Regulated Consumers with an SGDA isolated from the distribution grid are not subject to compliance with the Regulation. However, for statistical purposes, they must report the location, nominal capacity, and generation technology of the SGDA to ARCONEL.

The Regulation repeals Regulation No. ARCERNNR-006/23, which established the previous framework for SGDA of Non-Regulated Consumers.

Non-Regulated Consumers who began the process of obtaining permits under Regulation No. ARCERNNR-006/23 prior to November 19, 2024, may either continue under that regulation or initiate a new process under the new Regulation.

Carlos Torres, Asociado Senior en CorralRosales
ctorres@corralrosales.com
+593 2 2567676

Mario Fernández, Asociado en CorralRosales
mfernandez@corralrosales.com
+593 2 2544144