On December 21, 2018, Resolution No. 314/2018 (the “Resolution”) issued by the Secretary of Government of Energy (the “SGE”), under the Ministry of Treasury, was published in the Official Gazette of the Republic of Argentina.

The Resolution contains implementation rules of the Distributed Generation Law No. 27,424 (the “Law”) and its pertaining Decree No. 986/2018 (the “Decree”, and jointly with the Law and the Resolution, the “Distributed Energy Framework”).

Most relevant matters of the Resolution are outlined below:
 
1) Categories of users-generators and connection to the grid

The following categories of users-generators are contained in the Resolution:

  1. Small users-generators (UGpe, for its Spanish acronym): users connected to the distribution in low voltage, with an equipment of a nameplate capacity no greater than 3 kV.
  2. Medium users-generators (UGme, for its Spanish acronym): users connected to the distribution grid in low/medium voltage, with an equipment of a nameplate capacity comprised between 3 kV and 300 kV.
  3. Major users-generators (UGma, for its Spanish acronym): users connected to the distribution grid in low/medium voltage, with an equipment of a nameplate capacity comprised between 300 kW and 2 MW.

The Resolution also establishes that the equipment of any of the users-generators described above shall not exceed the total aggregate of 2 MW per each MW for each supply point and that such users are allowed to connect to the grid up to a nameplate capacity equivalent to the one actually contracted with the relevant distribution company (authorization of the pertaining regulatory agency is mandatory for greater installed capacity).

For those purposes, the procedure in order to connect to the grid will be carried out by means of a public access digital procedure, to be implemented by the Undersecretary of Renewable Energy (the “URE”).

Equipment already connected as of the date on which the Resolution is issued, must also follow the connection procedure to verify whether such equipment complies with legal and technical requirements set forth in the Distribution Energy Framework.
 
2) Distributed Generation Agreement

The distributed generation agreement will be entered by and between any of the user-generators described above and the relevant distribution company and shall become effective as of the date on which it is executed with no expiration date (except for those events allowing for termination, as further described below). This agreement will be ancillary in respect of the agreement already in place with the distributor.

Assignment of the distributed generation agreement is allowed upon prior consent of the distribution company.

Rights and obligations with respect of the user-generator and distribution company, as applicable, are foreseen in the Resolution, inter alia:

  1. distribution company’s right to verify compliance with the requirements set forth in the Distributed Energy Framework and to disconnect users-generators from the grid in case technical conditions are not complied with;
  2. distribution company’s obligation to purchase the electricity generated and injected to the grid by the user-generator;

  3. users-generators’ right to supply energy into the grid with no additional charges whatsoever; and
  4. user-generator’s ability to assign accumulated credits derived from surplus energy; accumulated credits by injected energy and receive payments from such credits.

Finally, the Resolution enables the pertaining distributor to suspend the distributed generator agreement should the user-generator fail to comply with the requirements set forth in the Distributed Energy Framework and in turn, terminate such agreement upon a material breach. Prior remedy stage and defense by the user-generator before the regulatory agency is foreseen.
 
3) Qualified Installer

Qualified installers shall verify that distributed generation systems comply with the requirements set forth in the Distributed Energy Framework. Professionals from different levels of education may participate as qualified installers and in order to act in such capacity, degree validated by the Ministry of Education, Culture, Science and Technology is required together with enrollment in the relevant professional association.
 
4) Payment structure

Payments under the Distributed Energy Framework shall be in accordance with the requirements set forth below:

  • At the end of each billing period, users-generators shall receive an invoice detailing their consumption and energy injected into the grid, expressed in kilowatt-hour (kWh) with the corresponding prices of each unit expressed in argentine pesos/kWh.
  • Energy injected to the grid shall be measured, registered and paid by distribution companies, which shall be duly reflected in the corresponding invoice.
  • No additional charges from the distribution companies allowed.
  • Should the energy injected into the grid be greater than the one consumed by the user-generator, the user-generator shall have a credit which will be taken into account for future billing periods.
  • Credits in favor of users-generators shall not expire and remain in the corresponding account until they are compensated.
  • Assignment of such credits to accounts of other users of the same distribution company shall be carried out in accordance with the procedure set forth by the corresponding regulatory agency.

 
5) Promotional Benefits

Promotional benefits shall be granted to users-generators acting under those jurisdictions which adhere to the Distributed Energy Framework. Local promotional benefits may also apply.
 
6) Pending Matters

Matters related to (i) the Distributed Generation Development Trust (Fondo Fiduciario para el Desarrollo de Generación Distribuida); (ii) the public access digital platform; (iii) the promotional benefits; and (iv) the fiscal credit certificates set forth in section 28 of the Law remain pending of implementation and are subject to future regulation by the URE.
 
At TRS&M we are available to provide clarifications or further information of any matter addressed above.