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ADELAT launches its paper “Regulatory Challenges and Improvements of Electricity Distribution to enable the Latin American Energy Transition”

The Association of Latin American Electricity Distributors is pleased to announce the publication of its policy paper carried out collaboratively by expert consultants and professionals from ADELAT associates.

The objective is to promote the new role of the Distribution System Operators (“DSOs”) as a key actor in the regional energy transition, promoting the evolution of regulatory frameworks, moving from a cost optimization approach to one that maximizes the social benefits of investments.

This work is the result of a series of debates held during 2022 in which more than 100 specialists mainly from Chile, Brazil, Colombia, Peru and Argentina participated, whose main achievement was the sharing of challenges and good practices, the principles and guidelines regulations necessaries to advance decisively and with a comprehensive vision in the energy transition.

“It is critical for the success of the energy transition to begin the process of modernizing electricity distribution now, in order to allow the development of distributed generation, electromobility, the electrification of buildings and companies. In addition, new players and business models will come hand in hand with this energy transformation”, said the executive director, Ignacio Santelices.

For his part, the president of the Association, David Felipe Acosta Correa, pointed out that “this is an essential document to understand where the energy transition is headed and the key role played by electricity distribution.” “We hope, with this contribution, to start a serious and urgent debate in which regulators, academia, industry and society participate, to start the transformation process of the electricity distributor to become a DSO as soon as possible,” he concluded.

The paper exposes the main challenges for distributors in Latin America:

Improve service quality and resilience.

Transform the network as a digital, universal, neutral platform that enables new models of operation and services, distributed resources and deepening of electrification.

Promote the economic efficiency of the electrical system, coupling supply and demand.

From ADELAT it is proposed, in regulatory terms, to establish:

  1. Incentives for continuous improvement in service quality and incentives for the resilience of distribution systems.
  2. Remuneration of the real costs associated with the asset base of the distribution service.
  3. Timely and adequate remuneration of investments, consistent with the needs and priorities of the energy transition.

This publication highlights the need to modernize distribution networks within the framework of the energy transition, for which unprecedented investments in networks and technology will be required. In this way, it values ​​the contribution of the distribution sector and works as an input to understand that an evolution is required in the regulatory vision of the countries of the region. The modernization of distribution must begin now, without having to wait for major regulatory reforms, favoring investment and technological innovation in accordance with the requirements of a successful energy transition.