Impact Evaluation of Chile's Distributed Generation
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Date
2026
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Abstract
This thesis evaluates the systemic impacts of Distributed Generation (DG) on the Chilean electricity market, specifically focusing on Small Means of Distributed Generation (PMGD) solar plants located near consumption centers. Leveraging a structural cost-minimization dispatch model adapted from Gonzales, Ito and Reguant (2023), I simulate market outcomes under five counterfactual scenarios of DG penetration across periods of varying transmission capacity (2017-2019). The results demonstrate that PMGD acts as a potent demand contraction mechanism, reducing average spot prices by up to 4.4% in high-penetration scenarios and displacing significant thermal and natural gas generation, yielding estimated annual environmental savings of up to USD 47 million (2019 values) and generation savings of up to USD 117 million (2019 values). Crucially, I find that DG does not monotonically alleviate grid stress; rather, it reallocates congestion. While PMGD decompresses major north-south transmission arteries, it increases bottlenecks in specific central lines during periods of constrained transmission capacity. Furthermore, the analysis uncovers evidence of renewable cannibalization, where high PMGD levels displace utility-scale solar generation in the absence of robust market integration. These findings suggest that while DG offers clear decarbonization and cost-reduction benefits, it introduces complex redistributive effects on transmission flows and incumbent renewable generators.
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Tesis (Magíster en Economía)--Pontificia Universidad Católica de Chile, 2026.