Argentina's renewables raise the possibility of resuming the supply auction

Argentina’s renewables raise the possibility of resuming the supply auction

Members of Argentina’s renewable energy industry have welcomed a government-led plan that could lead to the resumption of auctions for renewable energy supplies.

The initiative – designed to stimulate the construction of clean power plants and storage systems that help replace forced diesel-powered generation in isolated areas – has sparked interest among players in the sector.

Argentina halted the successful RenovAr supply auction program several years ago, amid macroeconomic and project financing challenges, dampening the winds from the industry’s sails.

In a statement, Juan Manuel Alfonsín, CEO of the Argentine Renewable Energy Cadre Association, said the new plan is positive.

As part of early-stage work, a recent call for project proposals attracted more than 480 initiatives, spanning technologies including solar, wind, battery storage, biomass, natural gas, hydrogen, and micro-hydropower.

Thirty-four projects submitted are modular units – mainly solar and wind – with an installed capacity of over 100 megawatts, totaling 8.11 gigawatts.

“There is a strong interest and appetite to continue generating sustainable energy,” Alfonsin said. “From my point of view, it’s good news.”

Cammesa Wholesale Energy Market Manager is now analyzing offers. The next stage involves submitting a report, covering areas such as feasibility and transmission capacity, to the Federal Energy Administration, which will then explore potential regulatory frameworks that could move it forward.

Alfonsín said direct negotiations between the state and the project owner, or an auction mechanism similar to RenovAr, could be used to award supply contracts.

“I imagine there will be a ranking of the highest priorities in the country, and based on that, decisions will be made about which projects to allocate,” Alfonsin said. “Negotiations will follow with the entity that submitted the project, or an auction for the supply; it is not clear at this time.”

In terms of forced generation, levels tend to be higher in the country’s summer months of December and January, when electricity demand typically peaks. Forced generation is used mainly in the northeast, Buenos Aires, and the northwest.

Meanwhile, in parallel, the government recently published a regional relocation plan. Backed by a decarbonization line from the Islamic Development Bank, the plan is designed to help accompany the addition of renewable energy power that would replace liquid fuel-fueled generation. According to information published in the Official Gazette, the planned network work – both in the field of establishment and expansion – is 132 kV.

Major grid expansion work is needed in Argentina, particularly between the demand hub in Buenos Aires Province and renewable energy centers in the northwest and southeast.

In terms of financing the general project, the situation is moving slightly. The development bank BICE has the ability to raise financing for clean energy projects, while clean energy generators with projects under RenovAr are already looking at ways to use their pesos revenue, such as building projects under a rain market or self-supply plants for large consumers.

In addition, Banco Santander, one of the country’s largest commercial banks, partnered last year with energy solutions company Enel X to fund distributed generation facilities for small and medium-sized businesses.

PMGD

Cader is also seeking to change regulations in the distributed generation sector.

Using PMGD systems distributed in Chile and Brazil as a model, officials want a limit for eligible projects up to 30 MW – as Brazil has adopted – from 2 MW currently.

Chile’s PMGD system, which offers a series of incentives, has led to large-scale construction of grid-connected projects of up to 9 megawatts.

“We are working to reinforce this with the authorities,” Alfonsin said. “We have started holding meetings and issuing reports.”

Argentina’s goal, enshrined in law, is to generate 20% of its electricity from renewables by 2025. Renewables covered about 13% of demand last year.

The expansion of renewables in the country has slowed since the discontinuation of RenovAr. The new capacity being built today is largely consistent with Mater projects and self-supply stations. Large consumers are concerned not only with reducing carbon footprints but also with enhancing supply security.

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