Argentina to auction 1 GW of renewable energy

The government of Argentina will open the first auction for the acquisition of electricity from renewable energy. President Mauricio Macri has announced the opening of an auction for 1 GW of renewable energy capacity, which should be incorporated into energy mix by summer of 2017/2018, and with a deadline of March 21, 2018. According to the president’s schedule, the opening of the auction is scheduled for today.

Provisional specifications which will be published in one month, and interested companies will have an opportunity to comment. In June, the definitive terms of the auction will be published. This will be managed by Cammesa, a public company which administers the larger Argentine electricity market. The close of offers is planned for August and completion of the auction one month later.

Without knowing the final conditions, it is believed that new solar, wind, biomass and small hydro projects between 10 and 40 MW will be eligible to participate. With a target price of US$100 per megawatt-hour, it is expected that “roughly half of the capacity will be provided by wind parks”, as Argentine Minister of Mines and Energy Juan José Aranguren indicated recently in Houston, Texas.

This is the first call for an auction in Argentina since the approval in October 2015 of the law of Renewable Energies, under which 20% renewable energy is planned for the energy mix in 2025. The law also mandates that 8% of electricity consumption come from renewable sources in 2017. Currently, only 1.8% of the electricity in Argentina is generated using renewable energy.

After assuming the presidency of Argentina last December, Mauricio Macri has bet strongly on renewable energy. Among his achievements, in March, mechanisms were set to reach green objectives with the publication of decree 531/2016. This law plans for auctions to reach the 10 GW of potential necessary to achieve the renewable energy objective in 2025, among other mechanisms.

Among the variables being considered for the auctions is the integration of domestic content, the timing of entrance into commercial operation and financing from public renewable energy fund Foder.

“The more domestic content it has, the better, the sooner it enters into commercial operation, the better, the less money is required from Foder and the more that comes from outside investment, the better, the lower the price presented or the more domestic content the better, and the lower the price presented in the bid, the better. These will all enter into the formula.” explained National Renewable Energy Subsecretary Sabastián Kind in an interview with with local media

Despite not having more than 10 MW of solar capacity currently installed, Argentina has multiple PV module factories, with a combined capacity of around 90 MW annually.

President Marci expects that 1 GW auctioned will mobilize an investment of around US$2 billion, while around 3 GW are expected to be auctioned in the next two years, which could mean an investment of around US$5 billion.

The government of Argentina is negotiating with the World Bank for a Triple A multilateral guarantee, which will support the eventual payment to projects awarded in the solicitation.

Translation by Christian Roselund. The original in Spanish is available on the pv magazine Latinoamérica website.