Sebastian Kind, National Sub-Secretary of Renewable Energy, has taken advantage of congress being in session to organize the Argentine Association of Wind Energy (AAEE), “Wind and Energy”, in order to provide information to the market with regards to the next round of renewable-energy tenders through the RenovAr Program and with hopes that it can help said contracts be fully realized.
He arrived at 9:40 in the morning, accompanied by the Energy and Mining Ministry’s communication team. In silence, he waited at the door of the beautiful auditorium that houses the Buenos Aires Engineering University on Paseo Colon Avenue. He was there to give a
discourse that lasted 45 minutes. The calm was noteworthy, as many were in preparation hear announcements.
Kind knew the expectations of the businessmen. For that reason, he gave them what they wanted in his exposition: “In a few more days we will release the terms and conditions for Round 2 of RenovAr. It will come with a force that I am not willing to full anticipate, but it should be about as impressive as what happened last year in Round 1.”
Without explicitly stating, in case something were to change in the last minute and he would become a prisoner of his words—the official confirmed that the tendering would be for around 1000 MW of power, just as the private sector had speculated.
An important act politically, President Mauricio Macri announced to millions of investors that the envelopes would be opened in the middle of October, at the height of the election frenzy.
Participants will have only 60 days to present their economic offers, and only those who already have been working in the field are apt to present. There is no space in the field for “newcomers.”
What will the technological diversity look like? Will it be 60% wind, 30% solar and the rest small hydro projects, biomass and biogas? That is how things played out in Round 1 of RenovAr. Faithful to his style, Kind did not get into details. He limited his response to “There will be a change in function as we have been continually receiving interest from the market.”
At the moment questions were received, the sub-secretary was asked if there lied any interest on behalf of the Executive Power to extend the extensions for the importation of equipment and parts that is established in Law 27.191 until December of this year.
The response made it clear that the intention to extend the fiscal period is present. He said that the methodology is being evaluated, “be it through a new Resolution, Presidential Decree, or law, so that the projects of round 1 and 1.5 have a few more months of time.”
Regarding this point he admitted and justified the fact that “There were delays that were not entirely the fault of the projects themselves, but also on behalf of the National Government. The problem lied in allowing incorporation of taxes, parts, machines and technology.”
Neither slow nor lazy, to avoid complaints from national industry, he clarified: “This will not be prolonged over time, as it is already defined in relation to December 2017.”
Prediction of the installations for projects won in RenovAr Rounds 1 and 1.5
Can things be built within the country?
Sebastián Kind highlighted that the Energy Ministry, together with that of Production, “Is working to incorporate Argentine technology and that we want this to also happen in Round 2.0.”
According to his words, this implies that “the offers incorporate the manufacture of aerogenerators in Argentina. We have had well-developed conversations with many of the technology figures that are the largest in the world.” In another presentation there was mention of the contact with five international firms.
With such an objective, he said, “We are going to release a modified Resolution 123, that is a joint resolution, where we will mark a few important points involving the incorporation of technologies in a few potential places within national territory.”
“Erico, speaking of this, I don’t want to say 10 years ago, rather just one—it was unthinkable, right? He winked towards the Wind Association’s president, Erico Spinadel.”
The Ministry of Prices
If the conditions for investment are not identical to previous auctions, the official trusted in Energy Strategy that still awaits better competitiveness in economic bids.
“In general, the prices, the industry and the tender processes show the least amount of market movements possible because the market is maturing and figures are entering that can create economic situations that are more favorable to project structuring,” he sustained.
“What is it that we’re waiting for? Argentina arrived very quickly at a very competitive price. Maybe another market would need five or six years to go up just one step. We hope that things continue in a low-key manner, not like what happened in 2015,” he said while positioning himself.
The Key—Obtain Guarantees
Yesterday, the Minister of Energy and Mining, Juan José Aranguren, and the Minister of Finane, Luis Caputo, signed the Indemnity Agreement with the World Bank. The agreement was for “a Program to Guarantee Funds for the Development of Renewable Energy (FODER).” The agreement was for 480 million US dollars.
The challenge faced by the Renewable Energy Sub-Secretary is to obtain “trust” for Round 2.0. “We are working with the World Bank to gain a new support, something that the bank is studying with focus and enthusiasm with regards to collaborating. The bank understands that it was been a successful instrument and that a large part of the program’s success is owed to how things were structured.”
At the same time, the official laid out other changes: “The government also requested the guarantee on a low level; to such an end, we are requesting the diagram of FODER, which is where we have the benefit structure that the National Government lowering the account from 365 days to 6 months; account 2 is 100% with treasury bills. With account 3, the idea is to raise it to a 250-million dollar guarantee with the World Bank, obviously subject to approval from the bank.”
State of the Situation
How to advance with the projects awarded in Rounds 1 and 1.5? With the Powerpoint to aid his memory, Kind was precise: Today there are 16 projects under construction for a total of 59 awarded, of which 48 have signed contracts. 11 remain to celebrate on the upcoming 29th of September.”
“Today there should be around 2 billion dollars being put together,” Kind estimated.
Changing pace, he went on to declare that “to this we may add 10 projects from Resolution 202. They have advanced very well and their financial structures, such as equipment and technology purchase is what has truly motivated investment—installations and physical structures.”
Kind assured that the definitive Resolution would be published in the Official Bulletin in the “next few days,” incorporating changes proposed by the public consulting company.
“The main suggestion was to not leave the RevonAr and market situation on the back burner. Doing so would leave empty space on the grid. We are resolving this by assigning limits at nodes to justifiably leave this situation to the private market and form direct contracts with large-scale users and generators.”