Aurora Energy Research analysis shows solar PMGDs currently earn approximately two-thirds more under existing pricing schemes when compared to assets in the wholesale market.
SANTIAGO (AURORA ENERGY RESEARCH)—Aurora Energy Research has released in-depth analysis of the PMGD (Pequeños Medios de Generación Distribuida) stabilized pricing mechanism in Chile, revealing that, although it better reflects energy market dynamics than its predecessor, it continues driving higher-than-market prices, disproportionately benefiting solar PMGDs. Installed capacity has now reached 3 GW in 2024, with 82% being solar projects, according to Aurora.
Originally, the PMGD pricing scheme was designed to incentivize the deployment of small-scale plants—primarily mini-hydro and thermal plants located near demand centers. However, since 2014, solar plants have increasingly benefited from the stabilized pricing scheme, ensuring steady revenues even when hourly market prices approach zero.
Regulatory changes appear inevitable, Aurora assesses, as the current price stabilization regime is financially unsustainable. The global energy market analytics provider has explored alternative pricing scenarios, all designed to better align PMGD pricing with real market conditions.
Findings suggest solar PMGDs currently earn between 60% and 70% more than the wholesale market under existing pricing schemes, compared to those in the wholesale market. Following up on the current Chilean market discussions on the change of the pricing scheme, Aurora’s proposed approach better aligns revenues with wholesale market prices while maintaining a 9% premium over it, striking a balance between preserving the stabilized price legacy but improving market competitiveness.
Laura Picardo Costales, Advisory Senior Associate at Aurora Energy Research, says:
“PMGDs have been a success story in Chile’s energy transition, helping decentralize power generation. However, the pricing mechanism that supported them is now misaligned with market realities. The financial incentives for solar PMGDs remain artificially high, leading to market inefficiencies and rising system costs.
“The main challenge is how to modify regulation and keep balance across different stakeholders: policymakers, national power operators, utilities, and PMGD investors.”
The authors of the study will present detailed findings during the upcoming public webinar “Charting the Future: Chile’s PMGD Stabilized Price Outlook,” scheduled for March 18th 11:00 AM–12:00 PM SMT. Register here to attend the webinar.
– ENDS –
MEDIA CONTACT
Zina Fragkiadaki, EMEA Press Officer
zinovia.fragkiadaki@auroraer.com
ABOUT AURORA ENERGY RESEARCH
Established in 2013, Aurora Energy Research is a leading global provider of power market forecasting and analytics for critical investment and financing decisions. Headquartered in Oxford, we operate out of 16 offices worldwide covering Europe, North & South America, Asia, and Australia. Our comprehensive services include market outlook packages for energy industry participants, advisory support, and innovative software solutions. We foster diversity with a team of 900 experts with backgrounds in energy, finance, and consulting, offering unparalleled expertise across power, renewables, storage, hydrogen, carbon, and fossil commodities. Our mission is to ease the global energy transition through widely trusted quantitative analysis and high-quality decision support.
