On October 27, 2024, the Electricity Regulation and Control Agency (“ARCONEL”), issued Regulation No. 006/24, establishing the “Regulatory Framework for Participation in Distributed Generation by Companies Interested in Energy Generation Activities” (the “Regulation”).
Below are the most relevant points:
- Purpose
The Regulation defines the technical and commercial requirements for private sector companies and foreign state-owned enterprises to establish, operate, and manage new distributed generation plants (“CGD”) for selling energy to distribution and commercialization companies (“Distributors”).
Interested companies are responsible for identifying generation projects.
The maximum capacity and accumulated energy for projects under this Regulation will be governed by policies and guidelines issued by the Ministry of Energy and Mines (“MEM”) according to the country’s needs.
- CGD conditions
- Nominal capacity equal to or greater than 100 kW and up to ten 10 MW.
- Synchronous connection to an electricity transmission or distribution network.
- Use of a primary source of non-conventional renewable energy.
- Procedure
Companies wishing to install and operate a CGD must:
- Obtain a Preliminary Connection Feasibility Certificate from the Distributor, confirming the initial feasibility of connecting the CGD to its network.
- Obtain a Qualification Certificate from MEM, granting the applicant exclusive rights to meet the project’s requirements.
- Obtain a Definitive Connection Feasibility Certificate from the Distributor, confirming final connection feasibility.
- Obtain a Concession Contract from MEM, which is the enabling title for project development.
- Sign Regulated Contracts with Distributors for the sale of energy produced by the CGD.
- Levelized costs of the energy produced.
The levelized costs of energy (“CNE”) are rates at which energy produced by CGDs will be compensated, based on the technology used:
| Technology | CNE (¢USD/kWh) |
| Biomass | 11,864 |
| Wind | 8,488 |
| Hydroelectric | 7,589 |
| Solar Photovoltaic | 8,144 |
| Biogas | 12,360 |
| Geothermal | 11,140 |
CGDs with nominal power between 1 MW and 10 MW will receive preferential dispatch.
This Regulation does not apply to: (i) distributed generation projects in the Galápagos; (ii) self-generation plants; (iii) distributed generation systems for self-supply of regulated and unregulated consumers; (iv) emergency generator sets; and (v) generation plants that were constructed or in operation before October 27, 2024.
Carlos Torres, Senior Associate at CorralRosales
ctorres@corralrosales.com
+593 2 2567676
Mario Fernández, Associate at CorralRosales
mfernandez@corralrosales.com
+593 2 2544144