The Argentine Government announced on July 27, 2023, by Resolution No. 621/2023 of the Secretary of Energy (“Resolution 621”), a bid seeking 3,000 MW of new/revamped thermal power facilities. Preferred bidders will enter into long-term US Dollar-denominated Power Purchase Agreements (“PPA”) with CAMMESA (the wholesale electricity manager, for its Spanish initials, Compañía Administradora del Mercado Mayorista Eléctrico S.A.).

The PPA provides for a fixed capacity/availability payment capped at US$ 18,000/MW-month and a variable inflow based on dispatch of the facility.

Offers may be for any type of thermal power generation or cogeneration, and the projects may include associated transmission and/or fuel infrastructure works. Power facilities shall be new or have less than 15,000 fired hours.

Below are the key takeaways of Resolution 621 and the request for proposals:

1. Projects included

  1. Line 1 “Thermal Generation for reliability and supply of the SADI” (“Line 1”): includes: (a) 1.0. Repowering – repowering existing combined cycles; (b) 1.1. Improvement of the supply reliability in critical areas; (c) 1.2. Improvement of efficiency and regional reserve; and (d) 1.3. Improvement of reliability of the wholesale electricity market. Line 1 seeks offers aggregating 3000 MW with a minimum goal of 2250 MW.
  2. Line 2 “Thermal Generation to replace, modernize and improve efficiency of the Tierra del Fuego power system” (“Line 2”): Line 2 seeks offers aggregating 70 MW with a minimum goal of 30 MW.

2. Authorized bidders

Bids may be submitted (individually or collectively) by legal entities incorporated in Argentina or abroad. SPVs (sole purpose vehicles), trusts and collective associations are also permitted.

3. Main aspects of the PPA

Selected bidders will enter into a PPA (in the form attached thereto), that, among other aspects, foresees:

  • Target date for COD: The target date to achieve Commercial Operation Date (“COD”) is: (a) Line 1.0, 1/1/2025; (b) Line 1.1 and Line 2, 10/1/2025; and (c) Line 1.2 and 1.3, 4/1/2026.
  • Long-Stop COD: The long-stop date for COD is: (a) Line 1.0, 06/30/2027; (b) Line 1.1 and 2, 03/31/2028; and (c) Line 1.2 and 1.3, 09/30/2028.
  • PPA Term Commencement Date: The PPA shall commence upon the later to occur among (a) the COD effective date or (b) six (6) months prior to the target date for COD.
  • PPA Expiration Date: The PPA expiration dates are as follows: (a) for Line 1.0, 12/31/2034; (b) for Lines 1.1 and 2, 9/30/2040; and (c) for Lines 1.2 and 1.3, 3/31/2041.
  • Tenor of the PPA: The tenor of the PPA is as follows: (a) for Line 1.0, 10 years, and (b) for the other lines, 15 years.
  • Partial COD: Partial COD is allowed, with a reduced remuneration scheme until COD is obtained for the total committed capacity.

4. Deadlines to be considered

Questions are permitted until August 29, 2023, whereas bids shall be submitted no later than August 31, 2023. Award of bids is targeted for October 10, 2023, and the PPAs shall be entered starting on October 15, 2023.

 

For additional information, please contact Nicolás Eliaschev, Javier Constanzó, Daiana Perrone, María Eugenia Muñoz, Pablo Arrascaeta, Florencia Martínez, Luciana Tapia Rattaro and/or Rocío Valdez.