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Argentina: National and international open call for thermal power generation

ESGArgentina: National and international open call for thermal power generation

In brief

On 27 July 2023, through Resolution 621/2023 (“Resolution“), the National Energy Secretariat called for interested parties to submit offers in the “TerCONF” open call to enter into thermal generation supply agreements with Compañía Administradora del Mercado Mayorista Eléctrico S.A. (CAMMESA) for a term of up to 15 years. Remuneration contemplates a payment for the availability of the power offered and another one for the energy supplied (“Open Call“).

The Open Call seeks to increase the thermal generation of the Argentine Interconnection System (SADI), modernize the power plants and their assets located in Tierra del Fuego, and adapt the reserves to accompany the increasing demand.

Consultations for the Open Call may be made until 29 August 2023, and offers may be submitted until 31 August 2023. Proposals could include any generation or cogeneration technology and may use natural gas or liquid fuels.

The Open Call includes two items:

Item 1. Thermal Generation for reliability and supply of the SADI (“Item 1“)  ̶  The purpose is to incorporate or replace thermal equipment with new power to reduce costs and increase reliability and supply capacity.

Item 2. Thermal generation to replace, modernize and make the Tierra del Fuego power plant more efficient (“Item 2“)

The successful tenderers will execute a Power Purchase Agreement (PPA) with CAMMESA for about 15 years.

The most relevant points of the Open Call are as follows:

Projects included. Generation or cogeneration with different combinations of power and performance, including associated works of transmission infrastructure or fuel tanks and installing new equipment with less than 15,000 hours of verified use; each technical project must have an associated economic offer and can be submitted with different prices for each item.

Maximum required and referential power. For Item 1, the maximum power required is up to 3,000 Mw, with a minimum reference target of between 2,250 Mw and 3,000 Mw, and different minimum and maximum power targets according to each item included in the Item 1. For Item 2, the maximum power required is up to 70 Mw, with a minimum reference target of between 30 Mw and 70 Mw, and different minimum and maximum power targets per subsystem.

Maximum and minimum power offered. The maximum/minimum power offered that may be submitted has the following limits: Item 1.0 (100/15 MW); Item 1.1 (480/15 MW); Item 1.2 and 1.3 (660/15 MW); and Item 2 (40/10 MW).

Fuel and supply. The fuel (natural gas or alternative liquid fuel) will be provided by CAMMESA. The generator’s duty is the availability of the committed equipment with the optimum dispatch fuel.

Projects for Item 1. They must be natural gas and have capacity for full operation outside the winter. In addition, they must have facilities for alternative fuel (gas oil and/or fuel oil) for at least 120 hours at full load. In case of connection to the gas pipeline network or in areas with sufficient capacity for the whole year, the projects must be gas only and will be analyzed on a case-by-case basis.

Projects for Item 2. They must solely be natural gas.

All projects must include an agreement with the gas distributor/carrier to which they are connected and must guarantee natural gas generation throughout the year. In case of unavailability in winter, they must be able to count on alternative liquid fuel.

Payments. CAMMESA will pay for the net available power committed at the delivery point of the power plant, which is in USD/MW-month based on the price offered, with a maximum price determined according to a base price of USD 18,000/MW-month applying on this value a maximum price factor for the different items. The tender also provides a payment for the energy supplied if CAMMESA requests it for the Committed Machine(s) and is not forced by the Generator’s requirements.

Payment schedule until commercial authorization. The tenderers must submit the compliment of several payments until the month corresponding to the date of commercial authorization of the power plant.

In this regard, as a prior requirement of the execution of the agreement, the tenderer must initially pay USD 2,500/MW for the net available power offered and committed by the tenderer in the agreement, from which the offer’s maintenance payment will be deducted. After this payment, a monthly payment schedule will apply. The agreement will be terminated without the opportunity to file a claim against CAMMESA or the national government if any of these payments are not made on time.

Admissibility of offers

Tenderers. The offer may be submitted individually or jointly by legal entities incorporated in Argentina or abroad, Special Purpose Entities (SPE), U.T., and Trusts. Each tenderer may submit one or more offers, and the offer must have separate accounts for each. The tenderer must be an agent of the MEM or have initiated the procedure to become one.

Offer maintenance guarantee. This will depend on the power offered (maximum, ARS 192 million).

Identification of the connection node or delivery point of the net available power offered and committed by the tenderer in the agreement, and the energy supplied. Projects must: (i) identify the delivery point, which must be one of those included in Annex 3 of the tender documents (however, the tenderer may request the incorporation of an additional one during the consultation period to be analyzed by CAMMESA and the Secretary of Energy); and (ii) submit in its offer a technical connection agreement with the carrier or distribution agent.

Relevant documents. The tenderers must submit their financial and technical offers in separate envelopes, and prove the initiation of administrative procedures, such as following: (a) have the availability of the property; (b) land use authorization; (c) be an agent of the MEM; (d) have access to the transportation capacity; and (e) obtain the environmental authorizations.

Click here to read the Spanish version.

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Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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