On September 25, 2024, the Electricity Regulation and Control Agency (“ARCONEL”) issued Regulation No. ARCONEL-005/24 (the “Regulation”), which establishes the new regulatory framework applicable to distributed generation systems for self-sufficiency (“SGDA”). The Regulation came into effect immediately upon issuance.
An SGDA refers to a system of equipment designed to generate electricity for self-supply by individuals or entities that hold supply contracts with an electricity distribution company (“Regulated Consumers”).
The key points of the Regulation are summarized below:
- Permits. Applications to install and operate an SGDA must be submitted to the electricity distribution company (the “Distributor”) in whose service area the Regulated Consumer is located.
- Resource. The SGDA must use a non-conventional renewable energy resource (e.g., small-scale hydropower, solar, wind, biomass, and biogas).
- Ownership. The SGDA may be owned by the Regulated Consumer or a third party. In the latter case, the lease agreement for the SGDA must be provided to the Distributor.
- Services. The Regulated Consumer can engage third-party services for installation, operation, maintenance, dismantling, and other SGDA-related activities.
- Connection. The SGDA may be connected in synchronization with the distribution network or to the internal networks of the Regulated Consumer.
- Nominal power. If the SGDA injects energy into the distribution network, its nominal power will be limited to the network’s capacity at the connection point approved by the Distributor. If it does not inject energy, its nominal power will be limited by both the maximum power demand registered by the Regulated Consumer and the approved connection capacity by the Distributor.
- Modes. The SGDA may supply one or several Regulated Consumers. The SGDA and the Regulated Consumer(s) may be located on the same or different properties.
- Storage. The SGDA may incorporate energy storage equipment.
- Term. The authorized operational term of an SGDA is determined by the useful life of the generation technology utilized, as outlined below:
| Technology | Useful life (years) |
| Photovoltaic | 25 |
| Wind | 25 |
| Biomass | 20 |
| Biogas | 20 |
| Hydraulic | 30 |
- Excess energy. If the SGDA produces excess energy, a credit will be generated in favor of the Regulated Consumer, which can be offset against its consumptions from the distribution network. This compensation does not apply to SGDAs that do not inject energy into the distribution network.
If the SGDA is not synchronized with the distribution network, it is exempt from the Regulation. However, the SGDA’s location, nominal power, and generation technology must still be reported to ARCONEL for statistical purposes.
Regulated Consumers who began the process of obtaining permits under Regulation No. ARCERNNR-001/2021 or Regulation No. ARCERNNR-008/23, prior to September 25, 2024, may either continue under those regulations or start a new process under the new Regulation.
We believe this new regulation will facilitate the installation of SGDAs by Regulated Consumers.
Carlos Torres, Senior Associate at CorralRosales
ctorres@corralrosales.com
+593 2 2544144
Mario Fernández, Associate at CorralRosales
mfernandez@corralrosales.com
+593 2 2544144