Within the framework of the launch of the paper “Regulatory Challenges and Improvements of Electricity Distribution to enable the Latin American Energy Transition”, Ignacio Santelices participated in the radio program “Copyright” to expand the most outstanding points of a key piece of energy development in the region.

Santelices highlighted how the region is deeply working to increase supply capacity using renewable energy and focused on the importance of electrifying consumption.

“In our countries, 20% of the energy consumed is electricity and 80% is from fossil fuels. If we want to start with our energy matrix, we have to electrify consumption”, highlighted Santelices.

The executive director assured that the transition will happen, one way or another, due to the efficiency of electrical technologies and their low cost. He stressed out that “preparing” for when this happens is a fundamental point, with the advent of new technologies that demand so much more from supplies than they currently do.

“We are going to move forward until we gradually have the air conditioning in our homes or companies electrically, electric vehicles are going to enter with force and many industrial uses are also going to be electrified, but unfortunately our cities are not yet ready for that”, he concluded.

With financing such as an essential point, the paper proposes a series of regulatory recommendations to generate the conditions that materialize the necessary investments for the project. It also points out what changes are necessary in the current distribution and seeks to achieve a fair energy transition that enables large-scale development, with the inclusion of new technologies.

The Association of Latin American Electricity Distributors and the Latin American Energy Organization formalized through a Memorandum of Understanding Mutual Collaboration to start initiatives that understand the challenges faced by the countries of the region for their energy transformation.

The objective is to focus on new technologies and best management and sustainability practices, understanding the place of the distribution segment in order to be prepared for these changes and, consequently, plan the required investments. It is essential to highlight the need to implement regulatory improvements and understand the nuances of each territory and its inhabitants.

The executive director of ADELAT, Ignacio Santelices Ruiz, and the director of Strategy and Institutional Relations, Aniella Descalzi, signed this agreement with the executive secretary of OLADE, Andrés Rebolledo Smitmans.

“OLADE is the main regional actor in energy issues and we know that this alliance will allow us to accelerate the modernization of electricity distribution to have a successful energy transition in Latam,” Santelices said.

For his part, the Executive Secretary of OLADE, Andrés Rebolledo Smitmans, stated that “this agreement between OLADE and ADELAT represents another milestone in our mission to promote regional energy integration and energy sustainability for Latin America and the Caribbean. We consider dialogue with the private sector essential to be able to promote the best energy policies“.

For ADELAT it is a great satisfaction to establish this type of ties and thus help build the reality of energy transformation in the region. The goal is to benefit all citizens from the deep modernization of electricity distributors.

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.