On May 18, 2016, the Executive Branch of Argentina announced a public bidding process for the generation of electricity from renewable sources, the first one of a series to be made within the new Regulatory Framework for the Promotion of Use of Renewable Energy in Electric Power Generation (the "Regulatory Framework"), which sets forth milestones for the satisfaction of electric power demand from renewable sources. Pursuant to the Regulatory Framework, the percentage of electric power demand to be satisfied from renewable sources should increase to 8% by the end of 2017 and continue to grow up to 20% by 2025. The launch of the public bidding process includes the publication of the preliminary bidding specifications and power purchase agreement (the "Preliminary Documents") to be entered into by the winners of the bidding process and the Wholesale Electricity Market Administration Company ("CAMMESA", for its Spanish acronym).
1. Source and Total Power to be Tendered
According to the Preliminary Documents, the type of source and total power to be tendered in this first round are the following:
| Source | Power Requested |
|---|---|
| Wind | 600 MW |
| Solar | 300 MW |
| Biomass | 65 MW |
| Biogas | 15 MW |
| Mini hydro | 20 MW |
| Total | 1.000 MW |
2. FODER Trust Fund Guaranty
The Regulatory Framework also sets forth creation of a Trust Fund
for the Development of Renewable Energies ("FODER", for
its Spanish acronym), in an effort to finance, make capital
contributions and guaranty projects of electric power generation
from renewable sources approved by the Ministry of Energy and
Mining. The Preliminary Documents set forth that the FODER will
guarantee to the power producers the payment of an amount
equivalent to the payments for the following 12 months under the
power purchase agreements awarded, on a rolling basis.
3. World Bank Guaranty
The Preliminary Documents provide that the World Bank will issue a
US$500 million guarantee that would protect the FODER from the
potential failure of the Ministry of Treasury and Public Finance to
provide funds to the FODER in case the FODER is required to pay
certain termination amounts to the project company in connection
with the proposed power purchase agreement, and the FODER does not
have the funds allocated to do so. The guarantee will be allocated
to the different projects on a US$500,000 per MW basis.
4. Consultation Process
The Preliminary Documents have been made available to the general
public so that, during a period of 20 calendar days as from May 18,
2016, any interested party may make comments or suggestions in
relation to the Preliminary Documents to CAMMESA.
The publication of the final documents and start of the term to
make offers is expected for July 1, 2016.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
