The Chilean government has introduced a significant change in the remunation scheme for PV plants operating under the so-called Pequeños Medios de Generación Distribuida (PMGD) scheme, which supports solar and other renewable energy plants with capacities of up to 9 MW and provides access to stabilized feed-in tariffs.
The new provisions define how revenues from these projects, particularly those incorporating energy storage, are settled. According to an analysis by Norwegian consulting firm DNV, amendments to Supreme Decree 88 formally incorporate the MEP Balance (Saldo MEP), an economic settlement mechanism associated with the Price Stabilization Framework.
Previously, PMGD plants were compensated based on either the stabilized price or the marginal cost. Under the new framework, price stabilization remains in place, but revenue calculations are now based on a reference energy price adjusted by the MEP Balance. DNV emphasizes that this change represents more than a simple pricing update; it fundamentally alters how project revenues are realized and managed.
The MEP Balance is designed to capture the difference between energy valuation under the stabilization mechanism and actual system costs. It is calculated monthly as the balance between interval-valued energy and marginal cost, taking into account both energy injections and withdrawals associated with storage systems. DNV notes that the calculation is performed using the system’s actual settlement granularity, which is currently based on 15-minute intervals.
According to DNV, the mechanism introduces a new source of future financial exposure for project owners. The MEP Balance is paid monthly on a pro-rata basis according to system withdrawals and must subsequently be reimbursed by each PMGD plant operator—also on a pro-rata basis—over the following year. These reimbursements are indexed for inflation, while Chilean grid operator Coordinador Eléctrico Nacional is responsible for overseeing compliance and administering the settlement process.
The reform also changes how PMGD plant operators interact with the power system. Following amendments to Supreme Decree 125, Coordinador Eléctrico Nacional may apply pro-rata reductions based on economic criteria, including curtailment, and may limit injections due to either temporary or structural transmission congestion. In addition, they are now required to submit forecasts for both generation injections and storage operations.
With respect to storage, DNV highlights that battery charging withdrawals are included in the MEP Balance calculation. However, it warns that storage assets compete with demand for withdrawal priority, creating an additional layer of operational and financial risk for hybrid and battery-equipped projects. These risks are particularly relevant in a market where grid congestion and curtailment increasingly influence renewable energy revenues.
DNV’s central conclusion is that, once the time-value effects of cash flows are excluded, the resulting remuneration profile closely resembles exposure to the spot market. As a result, the principal risks shift from price stabilization itself to the timing of collections and reimbursements, grid interaction, and the potential reduction of energy injections.
For PMGD developers, the new framework requires modeling not only the stabilized price but also settlement balances, reimbursement schedules, inflation adjustments, storage operations, and congestion-related risks. In practice, project bankability will increasingly depend on the ability to forecast operational performance and quantify the financial implications of the new settlement regime.
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