Chile has taken a key step toward regulating the growth of small-scale renewable energy projects and their integration with storage systems. Through Decree No. 1/2026, published in the Official Gazette, the Ministry of Energy amended Supreme Decree No. 88 of 2019, which regulates Small Distributed Generation Facilities (PMGD) and other small-scale generation facilities.
The regulatory update changes the scope of the regulation: it is no longer limited to generation means, but now regulates "small-scale generation and storage systems", under the category of MGPE.
In practice, this enables the incorporation of batteries in projects connected to the National Electric System with power surpluses less than or equal to 9 MW.
From the Chilean Solar Energy Association —ACESOL—, Marcela Puntí , Director of Corporate Affairs, summarized one of the main aspects of the decree: “It formally enables the incorporation of storage systems in this segment.”
The measure comes at a time of strong expansion of distributed generation in Chile. According to the latest report prepared by Independent Energy Generators (GIE) and Systep, PMGDs injected 706 GWh into the National Electric System during March 2026, representing a year-on-year growth of 14.4%.
PMGDs already account for almost 10% of Chilean electricity generation
The weight of small-scale projects within the Chilean electrical system ceased to be marginal.
The GIE and Systep report showed that the combined generation of PMGD and PMG reached 12.6% of the total system generation during March.
Of that total, 9.6% corresponded to PMGD and 3% to Small Generation Plants —PMG—.
Total net generation in the system reached 7,388 GWh in March, representing a 2.9% year-on-year increase. Within this context, small-scale distributed generation (PMGD) projects maintained double-digit growth compared to the same month in 2025, although they registered a slight monthly decrease of 1.4% compared to February.
Meanwhile, PMG reached 218 GWh during March, with a monthly increase of 19.7% and an increase of 100% compared to March 2025.
This data helps to understand the importance of the new regulation: the regime for projects up to 9 MW already represents a significant portion of the Chilean electricity matrix and, therefore, its price, connection and operation signals have a systemic impact.
Solar energy dominates the small-scale segment
Photovoltaic technology continues to be the main source of generation within the PMGD universe.
According to the report, solar PMGDs contributed 629.8 GWh in March, while solar PMGs generated 150.7 GWh.
Currently, the installed capacity of PMGD reaches 3,523 MW, while PMGs total 402 MW nationwide.
The regions with the largest contributions from PMGD generation were O'Higgins, Metropolitana, Maule, Valparaíso, Coquimbo, Ñuble, and Biobío. For PMG, the largest volumes came from Atacama and Maule.
This solar dominance explains part of the need to update the regulatory framework. The high concentration of photovoltaic generation at certain times of day puts pressure on the grid, generates congestion, and makes the incorporation of energy storage more relevant for displacing energy, improving injection profiles, and providing flexibility to the system.
What changes with the new decree
Decree No. 1/2026 formally incorporates energy storage systems into the small-scale regulations. This means that projects can combine generation and batteries, but under new rules for connection, operation, measurement, and coordination.
The regulations stipulate that owners or operators of MGPE (Metropolitan Power Generation Plants) synchronized to the system will have the right to sell the energy they evacuate at the instantaneous marginal cost or access the price stabilization mechanism. They will also have the right to sell their surplus power at the node price of power.
The major change is that the regulation governs not only energy injections but also withdrawals for charging and storage. In other words, it recognizes that a battery associated with a PMGD (Small Distributed Generation Project) can withdraw energy from the grid for charging and then inject it back into the grid, always under the technical and economic conditions defined by the regulation.
Requirements for incorporating storage
The incorporation of storage will not be automatic. The decree instructs that the technical regulations must establish requirements and conditions for PMGDs in operation, with a valid Connection Criteria Report (ICC) or with a Grid Connection Request (SCR) declared admissible, that wish to add batteries.
Among the aspects that will need to be defined are the studies that the projects will have to prepare, the conditions for accessing a simplified procedure where appropriate, and the minimum requirements for making withdrawals from the network intended for storage charging.
This means that existing PMGDs (Distributed Generation Projects) wishing to add batteries will need to review their connection and operating conditions. The distribution company will play a central role in assessing the impact on the grid and coordinating battery withdrawals for charging.
Measurement and monitoring: three flows that must be differentiated
One of the most relevant technical points of the decree is the requirement to clearly separate the different uses of energy.
The regulation instructs that measurement, monitoring and control systems must be established to differentiate: withdrawals intended for storage, consumption by the PMGD itself and withdrawals associated with end customers, where applicable.
This differentiation is key to avoiding double counting, organizing energy and power balances, and distinguishing between final consumption and energy used to charge batteries.
Furthermore, the decree establishes that the costs associated with the operation and monitoring of PMGDs will be borne by the latter, in accordance with current regulations.
Priority for end customers over battery charging
Storage is enabled, but with one important condition: the distributor must prioritize supply to end customers over withdrawals intended for the storage of PMGDs.
This aims to prevent battery operation from compromising the safety, quality, or continuity of the electricity supply. In other words, storage can draw energy from the grid, but not at the expense of supplying regulated users or end consumers.
The regulation also stipulates that the technical regulations will define specific mechanisms for the distributor to apply this priority in actual operations.
Projects with batteries will have greater connection requirements
The decree also modifies the treatment of projects with non-significant impact, a category that allows access to a more expedited connection process.
To qualify under this category, the PMGD must meet certain installed capacity and injection capacity requirements. Furthermore, the regulation adds a key condition: it must not withdraw water for storage.
This means that projects incorporating batteries with withdrawal from the grid will be subject to a more demanding evaluation, since their operation can generate additional impacts on the distribution network.
New pricing scheme: from the stabilized price to the PBE per time interval
The most significant change for the PMGD business model lies in remuneration.
The decree replaces the traditional stabilized price scheme with a mechanism based on the Basic Energy Price (PBE) per time interval. Under this scheme, injections from large-scale renewable energy producers (MGPE) covered by the stabilization mechanism will be valued according to differentiated prices for blocks or time intervals.
The logic is to provide economic signals more aligned with the real value of energy at any given time of day. In systems with high solar penetration, the energy injected at midday does not have the same value as the energy delivered during peak demand or periods of lower renewable availability.
For projects with energy storage, this signal is especially relevant, as batteries could allow energy to be shifted to times of higher systemic value.
How the MEP Balance will work
The decree introduces the MEP Balance as a monthly account determined by the National Electric Coordinator.
This balance is calculated from the difference between two valuations: on the one hand, the injections and withdrawals valued at the Basic Energy Price per time interval; on the other hand, those same operations valued at the corresponding marginal cost.
In the case of storage, the Coordinator must also incorporate the differences between the valuation of withdrawals for battery charging to the PBE per time interval and the respective marginal cost.
The MEP balance will be allocated proportionally to energy withdrawals from the electrical system. For its repayment, the accumulated annual balance will be divided into twelve installments, which will be included in the monthly balances of the following year, adjusted according to the variation in the Consumer Price Index.
Withdrawals for storage will not be treated as final consumption
Another relevant point is that energy withdrawals intended for the PMGD storage process will not be subject to the charges associated with end customers.
The distinction is important: the energy used to charge a battery will not be treated as traditional end consumption, but as part of the operating cycle of an asset that can reinject energy into the system.
This improves the viability of storage associated with PMGD and prevents batteries from facing charges that could distort their function within the electrical system.
Regime choice: marginal cost or stabilization mechanism
Owners or operators of MGPE will have to choose between two alternatives: sell their energy at the instantaneous marginal cost or take advantage of the price stabilization mechanism.
The option must be communicated to the Coordinator after the project has been declared under construction and at least one month prior to its commencement of operations. If the project owner does not communicate their choice, injections and withdrawals from the project will be valued at marginal cost during the minimum holding period.
The minimum period for each regime will be one year. To change regimes, the owner or operator must give at least six months' notice.
Transitional regime and pending definitions
The decree includes a transitional regime for projects that had already opted for the existing scheme. According to Puntí, this regime remains in effect until July 2034 for those who had already joined it.
Furthermore, the regulation instructs the Superintendency of Electricity and Fuels —SEC— to request, within a period of 90 days, a ruling from the Court for the Defense of Free Competition —TDLC— on the tariff regime applicable to certain activities related to the connection and operation of PMGD.
This means that, although the decree already sets a new regulatory direction, there will still be complementary definitions in technical standards, distributor procedures and regulatory pronouncements.
Utility-scale storage is also accelerating in Chile
Regulation for projects up to 9 MW is occurring in parallel with an accelerated expansion of large-scale storage in Chile.
According to data from the Chilean Renewable Energy and Storage Association (ACERA), as of May, BESS technology had 1,691 MW and 6,964 MWh in operation. This is in addition to 1,832 MW and 7,102 MWh in testing, and 6,385 MW and 29,018 MWh under construction.
The pipeline continues to grow: approved BESS projects reach 15,460 MW, while another 12,624 MW are in the qualification process.
Most of the capacity under development corresponds to hybrid solar photovoltaic configurations. According to ACERA, hybrid solar photovoltaic projects with BESS (Battery Energy Storage Systems) account for 1,190 MW and 5,173 MWh in operation, 1,084 MW and 4,190 MWh in testing, and 5,185 MW and 23,604 MWh under construction. In addition, they have 8,342 MW approved and 5,548 MW in the qualification process.
Stand-alone systems are also progressing, with 369 MW and 1,396 MWh in operation, 748 MW and 2,912 MWh undergoing testing, and 698 MW and 3,325 MWh under construction. In the future pipeline, stand-alone projects total 6,237 MW approved and 4,625 MW in the qualification process.
The market snapshot shows that storage is no longer an emerging technology in Chile, but an infrastructure in full expansion, both in autonomous projects and those associated with solar, wind and hydroelectric generation.
From PMGD to utility scale: the same regulatory signal
The data allows us to read the reform to DS 88 within a broader trend: Chile is regulating storage at different scales of the system.
On one hand, the utility-scale segment is advancing with thousands of MW in operation, testing, construction, and permitting. On the other hand, the new decree lowers the discussion to the level of renewable projects up to 9 MW, where solar PMGDs have a growing presence in national generation.
The connection between these two worlds is relevant. While large BESS systems aim to provide time-shifting, backup, congestion management, and other services to the system, PMGD systems with storage could fulfill similar functions in distribution networks, but under a more decentralized approach.
In that sense, the reform seeks to prevent the incorporation of batteries in small projects from occurring without clear rules on connection, removals, measurement, remuneration and coordination with distributors.
The other signal of the week: Chile returns to long-term PPPs
The DS 88 update was not the only relevant signal for the Chilean electric vehicle market during the week.
In parallel, the National Energy Commission —CNE— published the preliminary terms of the 2026/01 Supply Tender, through which it is expected to auction 2,835 GWh/year to supply the demand of regulated customers from 2029 and 2030.
The process marks the return of long-term contracts, lasting 15 years, after tender 2025/01 contemplated PPAs of only four years.
The call will be divided into two blocks: Block 1 contemplates 1,575 GWh/year with supply starting in January 2029 and valid until December 2043; while Block 2 considers 1,260 GWh/year from January 2030 until December 2044.
The tender also again includes segmentation by three time blocks and four regional zones. Zone 1 covers the north of the country; Zone 2 encompasses a large part of the central zone, including consumption by Enel and Chilquinta; Zone 3 corresponds to the south-central region; and Zone 4 includes the far south.
In terms of volume, most of the energy tendered will be concentrated in Zone 2. 1,000 GWh will be tendered for Block 1 in that zone, while 799 GWh will be required for Block 2. In contrast, Zone 1 is expected to require 146 GWh and 117 GWh, respectively.
The formal call for bids would be published on July 1. The submission and opening of technical and administrative bids is scheduled for December 4, 2026, while the opening of financial bids would take place on January 5, 2027, unless a second stage is required. The contract would be awarded on January 13, 2027.
BESS as a valid backup: the new link between tenders, PMGD and storage
The 2026/01 Supply Tender also reinforces the role that storage will begin to play in the Chilean electricity system.
According to the CNE, the process aims to cover unmet demand from previous tenders and ensure long-term supply for regulated customers. Projections included in the tender documents warn that, without new contracts, supply gaps could exceed 26,000 GWh by 2037.
One of the most important points is that the awarded projects must have backup for the committed supply, with energy sources or primary fuels other than coal, petcoke, diesel oil or fuel oil No. 6. Under that premise, BESS systems will be considered as valid backup assets.
In the case of hydroelectric plants, the terms and conditions will require consideration of expected generation under dry hydrology, using as a reference a year with hydrological statistics close to a 90% probability of exceedance. For non-conventional renewable energies, a scenario of a 90% probability of exceedance in expected energy production must also be considered.
Meanwhile, estimates of injections from battery systems should consider a single daily charge and discharge cycle.
This point directly connects to the reform of Decree 88. On the one hand, the decree outlines how renewable energy projects up to 9 MW can incorporate storage, withdraw energy to charge batteries, measure these flows, and receive compensation for their energy injections. On the other hand, the new tender recognizes Battery Energy Storage Systems (BESS) as assets capable of supporting long-term supply commitments.
Thus, Chile is advancing on two simultaneous fronts: it is regulating distributed storage associated with small projects and, at the same time, reopening space for long-term contracts where batteries can play a key role in firmness, time management and security of supply.
A new stage for PMGD in Chile
The reform to DS 88 marks a new stage for small-scale renewable projects in Chile.
On the one hand, it recognizes that PMGDs are already relevant players within national electricity generation, with more than 3.5 GW installed and a participation close to 10% of the monthly generation of the system.
On the other hand, it introduces rules so that storage can be integrated in a more orderly way, with more granular requirements for connection, measurement, monitoring, coordination with distributors and price signals.
At the same time, the new supply tender shows that the Chilean system again requires long-term contracts to cover regulated demand, with storage considered a valid backup asset.
And at the utility scale level, the portfolio surveyed confirms that Chile already has thousands of MW of batteries in operation, testing, construction and processing, which reinforces the strategic nature of storage within the local energy transition.
The challenge now lies in implementation. The regulation opens the door to new business models using batteries, but it also demands greater technical and regulatory sophistication for projects that, until now, had grown under a simpler generation and injection scheme.
In summary, Chile is beginning to redefine the role of PMGDs: from small-scale renewable projects primarily focused on injecting energy, to assets capable of providing flexibility, storage, and operational management within an increasingly renewable electricity system.