PMGD in Chile: a technical guide for investors

What a PMGD is

PMGD stands for pequeño medio de generación distribuida: a small distributed generator whose surplus power is up to 9 MW and which connects to the facilities of a distribution company. The rules are in Supreme Decree 88 of the Ministry of Energy, published on 8 October 2020, which replaced Supreme Decree 244.

Two features explain investor interest:

• A dedicated connection procedure, handled with the distribution company.
• A price option. The owner can sell energy at the marginal cost or opt into a price stabilization mechanism. Decree 88 changed how that mechanism is calculated and left a transitional regime for projects that came from the previous system.

Which regime applies to the plant you are looking at is one of the first questions of any due diligence.

The seven areas

1. Grid connection

Status of the connection process with the distribution company, the connection criteria report, additional works required and who pays for them, feeder capacity and the risk of injection limits.

2. Permits and land

• Environmental review. Power plants above 3 MW must enter the environmental impact assessment system (SEIA). The review covers the environmental approval and compliance with its commitments.
• Land. Titles or lease, term, rights of way and easements for the line.
• SEC filings and other sector permits.

3. Solar resource and yield

An independent assessment of expected output with P50 and P90 scenarios. P50 is the value expected to be exceeded in half of the years; P90, in nine out of ten. Lenders look at P90. The review checks the irradiation source, loss assumptions, degradation and whether curtailment was considered.

4. Design and equipment

Modules, inverters, trackers and transformers: manufacturer, certifications, warranties in force and whether they transfer to the buyer.

5. Construction

Site inspection of mounting, cabling, earthing, drainage, fencing and roads. In an operating plant, infrared thermography and I-V curves on a sample of strings.

6. Contracts

Construction (EPC): warranties, punch list, penalties and retentions. Operation and maintenance: scope, guaranteed availability and price. Manufacturer warranties and insurance.

7. Operation and revenue

In an operating plant, real data rules: output, performance ratio, availability and fault history. Two risks belong to the system rather than the plant:

• Curtailment. In 2025, Chile curtailed 6,084 GWh of renewable energy, 7.8% more than the year before, mostly in the north and during daylight hours.
• Price. Which price regime the plant has, until when, and how marginal costs behave during its generating hours.

The technical advisor provides the yield and curtailment assumptions; the financial model belongs to the financial advisor. That is why technical, legal and financial due diligence are coordinated.

What the data room should contain

Timeline and fees

Three to six weeks, depending on the size of the asset and how organized the data room is. Carlos Jofré publishes his fee: from UF 240 for a PMGD up to 9 MW. The report can be delivered in English. See the technical due diligence service.