New Power Purchase Agreements From Renewable Energy Sources

Last April 13th, Resolution No. 108/2011 issued by the Secretary of Energy (“SE”) was published. This resolution has the goal to implement the execution of new Power Purchase Agreements (PPA) between the Wholesale Energy Market and some tenders on generation and associate energy from renewable sources.

Law No. 26,190, published on January 2, 2008, approved the National Regime of Incentives for the use renewable energy sources directed to power generation (see “Measures adopted to tackle energy supply contingencies in 2008” at Marval News #69).

The renewable energy sources included in this regime are the following non-fossil renewable energy sources:

• Wind
• Solar
• Geothermal
• Tidal
• Hydraulic (power plants up to 30 MW).
• Biomass
• Exhaust gases and biogas (with the exception of uses foreseen in Law No. 26,093.

Law No. 26,190 stated a target for the year 2016 by means of which 8% of the electric energy consumed in the country should come from renewable sources mentioned above.

Resolution No. 108/2011 has enabled the execution of PPA between the Wholesale Electricity Market Administrator (“CAMMESA”) —acting on behalf of the WEM— and projects or companies which:

• At the moment of the issuance of the Resolution have no power generation facilities which are operational, or that, having finalized their interconnection to the WEM, have not committed their capacity under any contracting form,
• Submit projects involving the National Government, represented by ENERGIA ARGENTINA SOCIEDAD ANONIMA (“ENARSA”)

The PPA will have a maximum term of 15 years, which may be exceptionally extended for 18 months by the Energy Secretary. Payment will be on US dollars, monthly and established out weighing up the annual incomes and costs accepted by the Energy.

Those companies seeking to execute PPA under this regime must submit to the SE the following information:

• Location of the units involved;
• The energy resource to be exploited;
• The / s unit / s to be deployed and their technical description;
• Guaranteed Availability of the equipment
• Duration of PPA required;
• Validity period of the offer;
• Price and commercial terms;
• Interconnection point and date of entry into the Argentine Interconnection System (SADI);
• The breakdown of all fixed and variable costs, in particular for the financing used for the installation of the capacity offered;
• The electricity production projection together with all information on the resource to be exploited.

The SE will send the project to CAMMESA for its advice on the technical and economic-financial feasibility. Then the SE will evaluate the bids based on such report and will decide on the execution of the PPA.