On 2 October saw the announcement of the tenders submitted under the 1,000 MW renewable power auction called by the Argentine Government as part of the RenovAR programme. As expected, for both solar and wind power, companies have bid to generate electricity at values several times lower, reportedly some four times lower than those previously contracted. In fact, the Argentine government estimates that it could save around $2.5bn as a result of the auction.
Out of the initial 123 participants, 105 qualified, eliminating 18 offers (1,134 MW, of which almost were 550 MW of wind power, 505 MW solar and 30 MW biomass, among other technologies) due to their failure to comply with technical requirements of an electric and environmental nature. The 105 qualifying proposals represented 87% of all the projects submitted, amounting to around 5,000 MW. The successful bidders will be announced on 7 October.
The cut-off price, which establishes the limit that the Administrator of the Argentine’s Electricity market (CAMMESA) is willing to pay, as decided by the Ministry of Energy, was 82 $/MWh in the case of wind; 90 $/MWh for solar; 110 $/MWh for biomass; and 160 $/MWh for biogas. The prices of the latter rule the bioenergy sector almost out of the game, a sector that barely featured at all in the auction, given that its prices were unable to compete with the majority of the projects. So much so that the Under Secretary for Renewables himself, Sebastián Kind, affirmed that some kind of mechanism has to be put into place to incentivise investments in this sector.
Another of the surprises of this auction, unlike the experience of auctions in others Latin American countries, such as Chile and Mexico, is that the technology that achieved the lowest price was wind power, with an average 96.5 $/MWh, compared to the 76.2 $/MWh average for PV. The average prices for biomass, biogas and hydroelectric were all in excess of the maximum price established by CAMMESA.
It was reported that the boldest offer came from Envision, with 49 $/MWh for its Vientos del Secano wind project; for solar power, the lowest offer corresponded to the Spanish company Fieldfare, with 58.98 $/MWh for its 100 MW solar project, La Puna, in Salta.
Following publication of the winning projects, PPA supply contracts will be signed by the end of this year. Regulations set 31 December 2018 as the deadline for these projects to enter into commercial operation, however some are expected to start injecting power into the grid within 12 to 24 months. Argentina’s electrical grid is ready and waiting as, according to CAMMESA, there are currently 3,000 MW available via high-voltage lines for the installation of wind and solar farms.