Argentina seeks 1GW in first renewables tender

ARGENTINA: The Argentinian government has launched the first tender for renewable energy under new legislation approved by congress last year.

The first Argentinian tender is for around 1GW (pic: Genneia)
The first Argentinian tender is for around 1GW (pic: Genneia)

The tender is for around 1GW of installed capacity to supply electricity from early 2018.

The legislation passed last September requires 8% of Argentina's electricity to come from renewable sources from the end of 2017, a quota that rises gradually to 20% by 2025.

The government sees renewable technologies as key to fixing the country's energy crisis, which faces shortages and costs of more than $150/MWh.

Wind energy is expected to dominate initial tenders, accounting for 80% of the demand on offer in the first tender, compared with 10% from solar and 10% from other technologies.

Projects certified as eligible can submit bids by next August to compete for 15-year contracts to sell electricity to wholesale power market operator Cammesa.

According to Marcelo Alvarez, president of renewable energy association Cader, the tender represents a major test for the trust of investors in Argentina's new authorities and regulatory framework.

A previous attempt to attract investment in the sector largely failed as projects struggled to secure financing. Only projects with access to state funds were developed.

This time investments will be offered guarantees, and in some cases project-level equity, from the government's renewable energy development fund.

However, given the uncertainty surrounding Argentina after a decade of interventionist economic policy, Alvarez predicted that bids would not match the low prices seen elsewhere in the region.

"Argentina is going to see significantly higher prices than Peru in the first tender," he predicted.

Instead, the first tender represents an opportunity for the government to prove the system works and attract greater interest in the following rounds.

"The government needs to have a reasonable first tender to really shine in the second, third and fourth tenders," Alvarez said.

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