Stabilization, Switching, and Restitution: Lessons from Chile for Distributed PV-Storage Investment

We propose a conditional policy-design framework for renewable small distributed generator (PMGD) adoption, informed by Chile. We hypothesize that stabilization with reversible access sustains investment, while restitution moderates that incentive. A least squares Monte Carlo model links deferral and remuneration choice for 4 MW photovoltaics and a project integrating 1 MW/2 MWh storage. Five configurations distinguish fixed-regime deferral, switching, and restitution. Common paths isolate time-block comparisons; historical flat stabilization uses a separate calibration. Without restitution, switching raises simulated exercise from 42.6% to 51.9% for photovoltaics and from 72.9% to 76.0% for the integrated project, relative to fixed stabilization. Twelve following-year monthly restitution installments reduce exercise to 16.3% and 30.2%, close to spot. A positive-NPV price sensitivity without restitution shows immediate investment under fixed stabilization but waiting under spot, with exclusive deferral premiums of USD 1.3269 and 0.6921 million for photovoltaics and the integrated project, respectively. Uncertainty also motivates waiting; restitution removes much support-induced acceleration. Policy choices require local calibration, transfer budgets, and connection safeguards. Annual accrual, real indexation, omitted guarantee and liquidity costs, and in-sample valuation limit the findings, which establish neither optimal deployment nor international welfare superiority.