The publication of the draft Regulations for Complementary Services of Law 32249 in Peru opens a new stage for the electricity market, but also debates about whether the proposed design responds to the needs of a system in transition.
Raquel Carrero, a renewable energy specialist, was emphatic: “The proposal is insufficient and repeats what was already observed in the bidding process; it leaves important decisions out of the regulations and transfers them to technical procedures.”
This structure, he explains, weakens the instrument's ability to establish clear rules for the new market and opens up areas of discretion.
“It lacks a systemic vision in line with the energy transition. It ignores that the Peruvian electricity system will be increasingly renewable in the short and medium term and, consequently, does not anticipate mechanisms to provide it with the new flexibility requirements nor does it incorporate clear investment signals,” he analyzed.
In his opinion, the regulation is not predictive, so "it does not allow for guiding investment decisions in complementary technologies to prepare the system for the future; it is limited to adapting schemes designed for a conventional system."
“A true market is not being built, but rather a hybrid scheme in which voluntary supply mechanisms coexist with permanent regulatory obligations and administrative decisions that condition the economic functioning of the services,” he added.
One of the key points Carrero emphasized is the approach to the principle of causality, as its application could create distortions in a system with high renewable energy penetration. The specialist explains that variability cannot be interpreted as an individual failure, but rather as an inherent condition of these technologies within the electrical system.
“Ancillary services are a systemic good that benefits all users. Transferring these costs directly to renewable technologies, as seems likely to happen if no changes are made, distorts economic signals, discourages investment, and ignores the technical logic of how the modern electrical system works,” the specialist argued.
This is compounded by the lack of key operational tools. The absence of redispatch and intraday updates of generation forecasts limits the system's ability to adapt to variability. Without these mechanisms, schedules lose precision, and deviations cease to be exceptions, becoming unavoidable situations.
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“In practice, this transforms the regulation into a penalty scheme for deviations from a rigid schedule, that is, into a disguised system of fines, instead of a market that efficiently manages uncertainty,” he stated.
It is worth remembering that the sector has been demanding the publication of this regulation for more than a year, in a context of growing regulatory uncertainty and more than USD 12 billion in renewable projects on hold , awaiting rules and regulations that will allow their implementation to proceed.
Within this scenario, the role assigned to the System's Economic Operation Committee (COES) becomes critical. The proposal grants it a central role by entrusting it with the preparation of the technical studies that will define the requirements for complementary services.
According to Carrero, this expansion poses significant institutional risks. She believes that the entity is being delegated functions that exceed the system's operation, which blurs the separation between operation and regulation, increases uncertainty for stakeholders, and could lead to barriers to entry for new participants.
“It is necessary to reduce the discretion of COES, limiting it to its operational role and incorporating into the regulations the essential rules of competition, remuneration and cost allocation,” he emphasizes.
At the same time, he insisted that market design must respond to a long-term logic. The distinction between availability, as a systemic need, and activation, linked to individual behaviors, appears as a key aspect for correctly applying the principle of causality.
He also highlighted the lack of clear incentives for investment in flexibility, a component that will be crucial in a system with greater renewable energy participation.
“The regulations should have been designed with a solid long-term technical and economic vision, which has not happened. Instead, what is presented is a proposal that formally complies with the law, but does not build a real market. However, there is still an opportunity to correct it, to the extent that the best proposals from the observations of the sector's stakeholders are incorporated,” he concluded.
In parallel, the Ministry of Energy and Mines has 120 calendar days to adapt the technical regulations related to the real-time operation of interconnected systems. COES, for its part, will have up to 180 days to submit the necessary technical procedures for providing these services to Osinergmin.
Thus, the entry into force of the regulation will be conditional upon the approval of these adjustments, with a progressive implementation subject to the development of complementary regulations.