Last Monday, September 5th was the deadline for renewable energy developers and independent power producers to present their technical and financial offers to the first Argentinian renewable auction. The first auction process, under the name “RenovaAr-1,” tendered 1000MW of renewable capacity including 600MW of wind and 300MW of utility scale solar PV. The participation was a success with a PV+Wind combined capacity demand of 6.3GW, or 10 times the capacity offered in the first tender including 49 wind projects and 58 PV plants. The presentation of auction participants by the Ministry can be found here: https://youtu.be/LK3K3tMlkQA.
AWS Truepower has been responsible for independently assessing more than a third of the total capacity that bid in the auction for wind projects. Key global developers and utilities are participating in the auction indicating faith and trust in the new government’s renewable plans and country stability. Participating companies include names such as Enel, Sowitec, Acciona, Corporacion America, Arauco, IMPSA, Genneia, Invenergy, Interenergy and many others. The full list of projects and developers can be found here: http://goo.gl/ZNcmiO.
The financial bids will be opened and published on October 7th and the winners of the auction will be announced on October 12th. Contact executions are expected by November 11th. It is expected that the country will be auctioning around 1GW per year from now to 2025 to reach Argentina’s renewable energy objectives.
The first projects will be partly backed up financially through a warranty from the World Bank to reduce country risk (and bidding prices) and it is expected that other Import-Export warranties will also be available. It is also expected that standard project finance with participation of commercial bank entities will start to emerge in future, and my impression is that it will not take a long time for this to happen.
One of the main questions on everyone’s mind is the bidding prices from the different participants, especially the ones being awarded. The country will benefit from tailwinds in many respects, including a more mature and lower-risk technology, the large investment appetite for renewables from large utilities, and increasing difficulty for large institutional and private investors to find productive and large enough investments with sufficient return. My personal bet is that the awarded price ranges will be between $50-$70/MWh in this first auction for wind energy.
The Global Wind Energy Council (GWEC) has already organized a one-day interactive seminar in Buenos Aires under the title “Financing Wind Power in Argentina: Challenges and Opportunities” comprising of multilateral financing institutions, investors, developers, suppliers. The event will help to understand how the different players are planning to manage the financial structure in this ROUND 1 of RenovAR. (If you’re attending don’t miss the opportunity to meet with AWS Truepower staff there).
If the process to award the winners is transparent it is expected that many other lower-risk profile players show up and invest in the country as new auctions are announced, and that will also mean investment in the entire value chain, including one of the most important: qualified job demand and creation from tower installers, technical, legal, tax and financial consultants, turbine and component manufacturers, logistics, lenders… that is good news for the country as a whole. The government is expecting that this first round could trigger investments of $1.5-2 billion, and create 5,000-8,000 jobs.
A good start for Argentina’s renewable energy industry. Good work by all AWS Truepower technical staff who managed the rush and pressure to meet strict auction deadlines and rules while keeping high quality standards.
As one of the countries with the largest renewable resources in the world, the best meat for their famous all-day-long ‘asados’ (barbecues) and great natural landscapes like Perito Moreno in Patagonia, Argentina could not continue to fall behind the global and unstoppable renewable movement and is beginning to fulfill their commitment to the Paris Agreement to combat Climate Change.
Joan Aymamí, VP of International Business, can be reached at email@example.com.Back to #smarterpower (blog)