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Electricity in Chile: generation, transmission and distribution rules, concessions, free and regulated customers, supply tenders, the spot market, small distributed plants and net billing

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Last verified: 2026-10-26 · Status: Changing

Chile's power sector is open to private and foreign investors. Generation is a competitive business and needs no concession, except optionally for hydro plants. Transmission and distribution are regulated public services, and distributors need a concession for their zone. Customers up to 5,000 kW are price regulated. Those above 300 kW (the threshold was 500 kW before December 2024) may choose free prices for at least four years. Distributors buy for regulated customers only through public tenders run by the National Energy Commission at least five years ahead. Generators and storage owners sell into the system at the instantaneous marginal cost. Plants up to 9,000 kW have the right to connect to distribution networks. Regulated customers with up to 300 kW of their own renewable or storage capacity can inject surplus energy and receive a bill credit (net billing).

Values in this page are set in kilowatts, percentages and days, so no currency conversion is needed. Where the guide converts CLP elsewhere it uses the Central Bank rate of CLP 986.58 per US dollar for 23 October 2026 (Diario Oficial CVE 2891564).

Key facts

Connected capacity up to which supply is price regulated	5,000 kWDFL Nº 4 of 2006 art. 147, as of 2026-10-26 · in force
Connected capacity above which a customer may choose free prices	300 kWRes. Ex. Nº 58 of 2024, Ministerio de Energía, as of 2026-10-26 · in force
Minimum stay in the regulated or free regime after choosing	4 yearsDFL Nº 4 of 2006 art. 147 d), as of 2026-10-26 · in force
Maximum installed capacity per property for net billing	300 kWDFL Nº 4 of 2006 art. 149 bis, as of 2026-10-26 · in force
Surplus capacity up to which plants and storage have a right to connect to distribution networks	9,000 kWDFL Nº 4 of 2006 art. 149, as of 2026-10-26 · in force
Maximum share of national transmission investment value held by one company from another segment	8 %DFL Nº 4 of 2006 art. 7, as of 2026-10-26 · in force
Maximum joint share of national transmission held by generators, distributors and free customers	40 %DFL Nº 4 of 2006 art. 7, as of 2026-10-26 · in force
Minimum lead time of regulated supply tenders before supply starts	5 yearsDFL Nº 4 of 2006 art. 131, as of 2026-10-26 · in force

The rule

1. The General Electricity Services Law covers concessions for hydro power plants, substations and transmission lines, and concessions to build, operate and exploit public distribution service. These concessions are provisional (to study the project) or definitive, and a provisional concession is not a prerequisite for a definitive one. Hydro plants, substations and lines may also be built without a concession if the developer wishes; the concession mainly brings legal easements over private land and use of public property. Public electricity service is supply by a distribution concessionaire to end users in its zone, and transport over the national, zonal and generation hub transmission systems. Distributors may use their distribution facilities only for public service and street lighting.
Cost to do it: No concession fee to the State; costs are engineering, easement compensation and publication of the concession decree.DFL Nº 4 of 2006, Ministerio de Economía, Ley General de Servicios Eléctricos, Art. 2, art. 4 and art. 7, 2007-02-05 official text · verified 2026-10-26

2. The Minister of Energy decides on a definitive concession, with the authorisation of the National Directorate of Borders where border rules apply, within 15 days of receiving the report of the Superintendency of Electricity and Fuels (SEC). The SEC has 60 days for its report, counted from the end of the period to answer observations and objections, or from the end of the period to file them if none were filed. The decree, which approves the easement plans, must be published in the Diario Oficial within 15 days of being fully processed and on the Ministry's website within 15 days after that. Transmission line applicants may split the concession into sections at any time. For distribution, the decree sets the concession zone, which includes at least a 100 metre strip around all the company's existing lines.
Cost to do it: Publication of the decree in the Diario Oficial and easement compensation to landowners.DFL Nº 4 of 2006, Ley General de Servicios Eléctricos, Art. 29 and art. 30, 2007-02-05 official text · verified 2026-10-26

3. Companies that own or operate the national transmission system must be open or closed corporations (sociedades anónimas) subject to the reporting duties of Ley Nº 18.046 art. 2, and may not engage, directly or through related persons, in generation or distribution. Any company operating in another segment of the system, or any customer not subject to price regulation, may not hold more than 8 percent of the total investment value of the national transmission system. Generators, distributors and unregulated customers together may not hold more than 40 percent. Owners of facilities built before they were classed as national may keep them but must place them in transmission only companies within one year and cannot take part in expansions.
Cost to do it: Structuring cost of a separate transmission corporation.DFL Nº 4 of 2006, Ley General de Servicios Eléctricos, as amended by Ley Nº 20.936, Art. 7, 2016-07-20 official text · verified 2026-10-26

4. Price regulation applies to supply to end users with connected capacity of 5,000 kW or less in distribution concession zones or connected to the distributor's network, and to such users supplied from a generator's or transmitter's facilities. Supply may be contracted at free prices if service lasts under 12 months, needs special quality, or the customer's load moment exceeds 20 MW km. It may also be at free prices if connected capacity exceeds the threshold for choosing: these users may opt for regulated or free prices, staying at least four years in each regime and giving the distributor at least 12 months' notice of a change. The law set the threshold at 500 kW and lets the Ministry of Energy lower it after a report of the Competition Tribunal. Resolución Exenta Nº 58 of 2024 lowered it to 300 kW, and Resolución Exenta Nº 13 of 2025 removed the words 'per connection' and referred to the electricity rules on how connected capacity is measured. A user may not have more than one connection where its internal installations are interconnected.
Cost to do it: No fee to switch; the cost is the 12 month notice and four year lock in.DFL Nº 4 of 2006, Ley General de Servicios Eléctricos; Resolución Exenta Nº 58 of 2024 and Resolución Exenta Nº 13 of 2025, Ministerio de Energía, LGSE art. 147; Res. Ex. Nº 58 resolutions 1 to 3; Res. Ex. Nº 13 resolution 1, 2024-12-09 official text · verified 2026-10-26 · changed: Resolución Exenta Nº 58 of the Ministry of Energy, published on 9 December 2024, lowered the threshold for choosing free prices from 500 kW to 300 kW. Resolución Exenta Nº 13, published on 12 February 2025 together with Resolución Nº 10 that partly upheld appeals by large retailers and a telecom operator, removed the 'per connection' wording.

5. Distribution concessionaires must at all times have supply covering all their price regulated customers' consumption, through supply contracts that result from public tenders. The tenders may not include unregulated customers. The National Energy Commission designs, coordinates and directs the tenders so that distributors hold long term contracts at least five years before supply starts. Tenders must follow non discrimination and transparency, and bids are public through an electronic medium. Distributors must report demand projections to the Commission every six months.
Cost to do it: Bidding costs and guarantees set in each tender's bases.DFL Nº 4 of 2006, Ley General de Servicios Eléctricos, Art. 131, 2007-02-05 official text · verified 2026-10-26

6. Energy transfers between companies with generation, storage or other injecting facilities, arising from the Coordinator's dispatch, are valued at the instantaneous marginal cost calculated by the Coordinator, and capacity transfers at the node price of capacity. Every owner of generation or storage synchronised with the system has the right to sell its energy at the instantaneous marginal cost and its surplus capacity at the node price. Distribution concessionaires, and companies whose distribution lines use public property, must allow connection of generation or storage whose surplus capacity does not exceed 9,000 kW, subject to safety and quality rules. The plant owner pays for the additional works, net of savings elsewhere in the network. A regulation sets price stabilisation mechanisms for these small plants.
Cost to do it: Connection works in the distribution network, paid by the plant owner net of network savings.DFL Nº 4 of 2006, Ley General de Servicios Eléctricos, as amended by Ley Nº 21.505, Art. 149, 2022-11-21 official text · verified 2026-10-26

7. Price regulated end users with their own non conventional renewable generation, storage (including an electric vehicle battery) or efficient cogeneration, individually or jointly, may inject energy into the distribution network. Installed capacity per property or customer facility may not exceed 300 kW. Injections are valued at the regulated energy price the distributor passes to its customers, plus the value of reduced losses, and are deducted from that month's bill. Any balance carries forward to later bills, adjusted by the consumer price index. The distributor may not impose requirements beyond the regulation, and the SEC resolves disputes. Network adaptations are paid by the owner and cannot raise other customers' costs.
Cost to do it: Equipment and network adaptation paid by the customer; no State fee.DFL Nº 4 of 2006, Ley General de Servicios Eléctricos, as amended by Ley Nº 20.571, Ley Nº 21.118 and Ley Nº 21.505, Art. 149 bis, 2022-11-21 official text · verified 2026-10-26

8. Every company selling energy to distributors or end customers must show that 20 percent of its yearly withdrawals came from non conventional renewables, or pay 0.4 UTM per MWh of shortfall (0.6 UTM if repeated within three years). The details, including the 2026 changes by Ley Nº 21.804, are on sectors/mining-energy-and-key-sectors.
Cost to do it: 0.4 UTM per MWh of shortfall, CLP 28,860 or about US$29.25 at the October 2026 UTM of CLP 72,151.DFL Nº 4 of 2006, Ley General de Servicios Eléctricos, as amended by Ley Nº 21.804, Art. 150 bis, 2026-02-13 official text · verified 2026-10-26

Participant	Rule	Price basis
End user up to 300 kW	Price regulated	Regulated tariff based on tender contracts
End user over 300 kW up to 5,000 kW	May choose regulated or free, 4 year minimum, 12 months' notice	Regulated tariff or bilateral contract
End user over 5,000 kW	Free prices	Bilateral contract
Distributor buying for regulated customers	Public tenders run by the CNE at least 5 years ahead	Tender result
Generator or storage owner, surplus to the system	Right to sell	Instantaneous marginal cost (energy), node price (capacity)
Plant or storage up to 9,000 kW on distribution	Right to connect; price stabilisation by regulation	Marginal cost or stabilised price
Regulated customer with own renewables up to 300 kW	Net billing	Regulated energy price as bill credit

Who buys and sells at what price (DFL Nº 4 of 2006 art. 131, 147, 149, 149 bis; Res. Ex. Nº 58 of 2024)

Worked example

A supermarket chain store with 400 kW of connected capacity is above the 300 kW threshold, so it may leave the regulated tariff and sign a bilateral contract with a generator. It must give the distributor 12 months' notice and stay at least four years in the free regime (DFL Nº 4 art. 147; Res. Ex. Nº 58 of 2024).
A 6 MW solar plant connected to a distributor's medium voltage network is under the 9,000 kW limit, so the distributor must allow the connection. The developer pays the additional works net of network savings and sells at marginal cost or under the stabilised price mechanism set by regulation (DFL Nº 4 art. 149).
A factory with a 250 kW rooftop solar plant on a regulated tariff uses net billing: surplus injections are valued at the regulated energy price and credited on the next bill, with unused credit indexed to CPI (DFL Nº 4 art. 149 bis).

Step by step

1. Decide the business model: merchant or contracted generation, transmission (separate corporation, ownership caps), distribution (concession), or self supply.
2. For lines, substations or hydro plants, decide whether to seek a definitive concession for easements; file with the SEC and plan for its 60 day report and the Minister's 15 day decision (DFL Nº 4 art. 29).
3. Obtain environmental approval for plants over 3 MW and high voltage lines (see investing/project-permits-and-environmental-assessment).
4. Register with the Coordinator to sell at marginal cost, or sign PPAs with free customers or bid in CNE regulated supply tenders (DFL Nº 4 art. 131 and 149).
5. Plan compliance with the 20 percent renewable obligation if you sell to end customers or distributors (DFL Nº 4 art. 150 bis).

Common traps

Assuming any large customer can buy freely: below 300 kW supply is regulated, and between 300 and 5,000 kW the switch needs 12 months' notice and a four year lock in (DFL Nº 4 art. 147).
Splitting a site into several connections to stay under a threshold: a user with interconnected installations may have only one connection (DFL Nº 4 art. 147).
Buying into national transmission as a generator or large customer beyond 8 percent: the ownership caps apply to groups and parties acting jointly (DFL Nº 4 art. 7).
Sizing a net billing system over 300 kW per property: the cap is per property or facility (DFL Nº 4 art. 149 bis).
Building a line without a concession and without agreed easements: the legal easements of art. 2 Nº 4 attach to concession holders.

Sources

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