Intense lobbying efforts surrounded the debate over Tiny Distributed Generation (PMGD) projects and the distortions they cause in the Chilean electricity market, particularly regarding stabilized pricing and the substantial compensation captured by large global financial players. These pressures peaked during legislative discussions on an electricity subsidy bill proposed by the previous government.
Sources familiar with the details describe the lobbying campaign as “brutal.” The proposed bill aimed to offset a sharp increase in electricity bills for vulnerable households following the end of price controls by drawing funds from the profits PMGDs earned through stabilized pricing.
Efforts to prevent the bill’s passage came from influential law firms, well-connected public affairs agencies, and, according to sources, organizations like the Chilean-American Chamber of Commerce (AmCham). At the time, AmCham was led by Paula Estévez – a close associate of the Socialist Party – who is now the Undersecretary of International Economic Relations in President Kast’s government.
Amidst this high-stakes environment, an economic report emerged, intended to challenge the narrative that regulatory incentives were distorting the market in favor of PMGDs.
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The report, conducted by Quiroz & Associates – the parent company of current Finance Minister Jorge Quiroz – mirrored a pattern seen in previous cases of market manipulation, such as the “chicken” and pharmacy collusion scandals.
According to high-level sources, the report was used to warn of critical effects on the financial viability of the PMGD segment. It claimed that 64 out of 180 analyzed solar PMGDs would default within the first year if the new charge were applied, jeopardizing approximately USD $1 billion in investments.
The central argument of the Quiroz report, used to highlight the financial risk to the PMGD segment, was to portray these companies as financially fragile and highly dependent on regulatory stability.
the strategy was to present these generators as individual and vulnerable projects to changes in revenue. In other words, as projects without backing.
Though, an “upstream” analysis of the ownership of these plants suggests a different picture: behind several of these plants lies a global manager with access to capital, portfolio purchases, professional management and multiple corporate layers.
The PMGD Corporate Swarm
The PMGD business in Chile is not dominated by “small generators,” but by global funds, international platforms, and local financial vehicles that package assets under sophisticated investment structures. This structure is attracting significant attention as investors assess the long-term stability of Chile’s energy market.
How does it operate? Multiple sources describe a process of sophisticated financial engineering. A developer identifies and builds a PMGD project, structuring it as a limited liability company (SpA). Once approved, the asset is sold. An international fund or platform acquires one or more projects, grouping them into investment portfolios. A local administrator manages the assets.
These actors manage asset portfolios, purchase projects in bulk, and operate with a portfolio logic.
For example, BlackRock – one of the world’s largest investment managers, administering funds for major pension funds like California Public Employees’ Retirement System (CalPERS) or Canada Pension Plan Investment Board (CPP Investments), and likewise a significant administrator of Chilean AFP funds – acquired assets in Chile through its Global Renewable Power III fund, using intermediate structures like Aediles Capital, consolidating nearly 297 MW in PMGD.
Another example is JP Morgan Asset Management – the investment arm of JP Morgan, whose mission is to take money from large clients and invest it globally to generate returns – which operates through Sonnedix, with around 125 MW, including purchases from Grenergy and the ARCO II vehicle, linked to the Arroyo Investors fund.
Then there’s Brookfield Renewable Partners, a subsidiary of the Canadian group Brookfield Asset Management, one of the world’s largest asset managers. This global company controls assets through Interenergy, with approximately 44 MW, after acquiring plants from local developers.
This network of upstream companies also includes Macquarie Asset Management – the investment division of the Australian bank Macquarie Group–, which participates indirectly in the Chilean market through Reden, a platform with around 180 MW, also backed by British Columbia Investment Management Corporation and MEAG.
Antin Infrastructure Partners – a specialized investment fund that manages money from large investors such as pension funds and insurers – controls Blue Elephant Energy, with nearly 173 MW in Chile, structured through joint ventures and acquisitions from funds like Rockville Solar Energy.
These are joined by platforms such as Matrix Renewables – owned by the TPG fund through The Rise Fund – which exceeds 430 MW after purchasing portfolios from Trina Solar and Verano Capital; CarbonFree, with more than 360 MW backed by Connor, Clark & Lunn Infrastructure, which has acquired assets from Grenergy and JREL Solar; and CVE Group, with more than 255 MW structured through a series of financial vehicles in Chile.
The legal structure supporting this model is equally revealing. Each project is typically housed in a separate limited liability company: Parque Solar Villa Seca SpA, Los Paltos SpA, Pegasus Solar SpA, Orión Solar SpA, in the case of CarbonFree; or a series of numbered vehicles, such as CVE Chile Fin 1, 2, 3 and 4, in the case of CVE.
all these large global funds benefit from the Chilean subsidy originally designed to promote energy generation by small local actors.
*Editorial Note:** This article was subsequently amended to supplement information regarding BlackRock’s administration of part of the AFP funds.
