New renewables boost as Argentina drafts non-regulated plans

Argentina’s government this week published draft rules for its non-regulated power market that will allow consumers with demand of 2.6MWh per year or more to contract renewable energy.

The draft regulations are open for public consultations over the next three weeks. After that, the government plans to kick-start the non-regulated market in time to meet its progressive renewable energy targets starting at 8% for all consumers in 2018 and 20% in 2020.

The eagerly-awaited regulations are a key step towards implementation of the country’s 2015 renewable energy law, which led to the first regulated market tenders in 2016.

In those tenders, Argentina’s wholesale market operator CAMMESA contracted 1.4GW of wind and around 1GW of solar PV, as well as a smaller amount of biomass and small-hydro, that will inject power into the national grid from 2018 and 2019 under long-term US dollar denominated PPAs.

Argentina’s congress is also finalising a bill to promote renewable distributed generation, which is expected to boost the country’s solar market.

According to Juan Bosch, CEO of Buenos Aires power consulting and trading firm SAESA, the non-regulated market will attract a “large amount of investment to the country”.

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“This will give the power sector a huge velocity and versatility. Generators that didn’t sign contracts with the government [in the tenders], will now be able to obtain PPAs with private companies and make their investments without having to wait for a new government tender,” he wrote.

In the first two tenders, 4.4GW of wind and 3.3GW of solar projects were registered, but only 1.4GW of wind and 900MW of PV have been contracted at lower than expected prices below $60/MWh. This shows the huge interest of companies in investing in the Argentine market.

As Recharge reported in January, the non-regulated market could top 1GW a year for renewable energy projects as an estimated 8,000 companies will be eligible for the non-regulated market.

According to the draft rules, the non-regulated market includes projects for self-supply, merchant plants and the formation pools of consumers that could contract a renewable energy plant, as well as allowing power trading companies to buy for resale.

The rules also establish that renewable energy projects will have preference in connection to the national grid over non-renewable sources.

The government outlined heavy penalties for not meeting the minimum renewable energy requirements of 8% in 2017-18, 12% for 2019-20, 16% for 2021-2022, 18% for 2023-24 and 20% from 2025 onwards.

Companies that do not reach the limits will have to pay a fine based on the price of imported fuel oil for generation for each MWh of renewable power it consumed below the requirement.

Note: Corrects earlier headline to clarify that non-regulated market access will not be via auctions. Corrects demand figure in first paragraph.