What does RenMDI consist of?

Since he took office, this is Alberto Fernández’s first concrete initiative to increase the renewable generation park.

After several months, the Argentinian Ministry of Energy recently opened a national and international call (RenMDI) for the realization of new contracts for the supply of small-scale renewable energy to the wholesale market, either for the reduction of forced generation, or for the diversification of the energy matrix.

This was provided through Resolution 36/2023 published in the Official Gazette. The call is carried out by the Compañía Administradora del Mercado Mayorista Eléctrico (Cammesa), an entity that regularly calls for tenders to celebrate renewable energy supply contracts and that will act as an energy buyer on behalf of distributors and large users of the wholesale market.

The resolution clarifies that the new projects will not be covered by the guarantees granted by the Fund for the Development of Renewable Energies (FODER) to the beneficiaries of the RenovAr program.

In addition, the bidders will support compliance with all the obligations required in the specifications “constituting a guarantee of seriousness and maintenance of their offers” by means of a guarantee payment to Cammesa. The value will depend on the power offered, which ranges from projects of less than 0.5MW to more than 20MW, and the amounts are between USD $450,000 to USD $7,200,000.

The call aims at the reception of Manifestations of Interest (MDI) of projects that contribute to incorporate renewable energy in points of the transportation network, in such a way as to increase the participation of this type of energy in the supply of the demand of the Argentine Interconnection System (SADI), reducing in the process the costs and increasing the reliability of the system.

The projects that are presented will be evaluated by Cammesa based on their “economic convenience, substitution capacity of forced generation, and their firmness in comparison with the generation that they will replace” criteria.

How is RenMDI divided?

The call is divided into two lines. The first of these will be for projects that aim to replace forced generation with biomass technologies, photovoltaic solar – with and without storage – and wind with storage.

Meanwhile, the second line is for projects that allow the incorporation of small-scale renewable generation with biogas technologies, landfill biogas, and small hydroelectric developments.

The total target power is 500MW in the case of the first scheme and 120 MW in the second, for a total Required Power of 620 MW among the various projects.

The new infrastructure will also allow “contributing to greater stability in the networks, bringing generation closer to demand by reducing electrical losses and promoting regional development”, while “encouraging the substitution of forced generation of existing alternative fuels”.

Furthermore, it seeks to “attract new investments from both traditional and non-traditional players to the electric power generation sector from renewable sources” with a “solid and reliable contractual framework”.

The contracts that are made will be for 15 years with a maximum term of 3 years for commercial authorization; and seasonality will be renumbered to encourage generation in periods of greater demand for the system.

The call covers 20 provinces of the country that are divided into 6 regions, each of which has specific maximum powers in the case of line 1.

While the second (line 2) will seek to “diversify the matrix”, it will have 120MW of awardable capacity and will be destined for biogas plants, landfill biogas, small hydroelectric and biomass projects.

In the case of line 2, there will be a maximum of 30MW for biogas technology, 20MW for landfill biogas, 30MW for hydroelectric uses, and 40MW for biomass. And regardless of the powers indicated, the maximum number of projects to be assigned for each technology will be 7. Although if there are plants without being awarded with prices offered less than 90% of the maximum prices corresponding to each technology, the limit could be extended up to 10 if the application authority designates it.

In 2022, renewable energies (biomass, wind, solar, biogas and hydroelectric projects of less than 50MW) registered an increase in generation of 10.9% compared to 2021, going from 17,437 GwH to 19,340 GwH.

All this allowed them to have a participation of 13.33% of the total generation and 13.9% in the attention of the demand, according to a report by Cammesa.

It should be noted that the biomass plants proposed and not awarded in Line 1 will be added to the Biomass projects that would have been submitted exclusively for Line 2.

And in the same way, the power limits by region will apply only to those ventures that are presented under line 1, while in the case of those offered under line 2, they will be considered for all regions of the country.

The renewable projects that are the winners of line 1 of the tender must reach the commercial authorization date 3 years after the signing of the contract with Cammesa, while those assigned under the stage aimed at diversifying the matrix will have an additional year to achieve COD.

But in both cases, the supply contracts will be entered into for 15 years from the date of commercial authorization, at the bid price awarded in dollars per MW/hour and seasonality will be remunerated to “encourage generation in periods of greater demand for the system”.

The so-called RenMDI will be open until March 15 of this year, the day on which the opening of envelopes A of the offers will also take place, while the opening of envelopes B is scheduled for May 10. And two weeks later, on 5/24, the award will be made, which will lead to the signing of supply contracts between May 29 and September 20.

According to sources, if all the power planned in the tender is awarded, the investment in the sector would be around USD$ 500 million.

Transport and nodes

The main bottleneck experienced by the renewable generation park in recent years was the saturation of energy transportation. There is no capacity to incorporate new generation. From the Executive, measures were promoted to release the transportation capacity retained by previous tenders, especially from the RenovAr program calls. Much of that released capacity was occupied with projects in the Renewable Energy Term Market (Mater), which are agreements between private parties.

For this reason, for this RenMDI tender, the government identified nodes with available transmission capacity. In fact, the tender will not focus on wind technology without storage (of the 5,189MW of installed renewable energy capacity in the country, wind farms add up to 3,310MW) because the nodes where the energy from the wind farms enters are already saturated. In other words, the vast majority of the offers in this new tender will be for solar generation located in nodes with not such high performance, but with available transmission capacity.

To download the complete RenMDI Specifications and Conditions (Spanish), visit: https://5266177.fs1.hubspotusercontent-na1.net/hubfs/5266177/Argentina%20Green%20Energy%202023/anexo_6791749_1%20(1).pdf

Moving forward

The RenMDI tender, as well as key clean projects and solutions will be discussed during IN-VR’s Argentina Green Energy Summit 2023, which will take place in Buenos Aires on 27-28 April. During the Summit, national and international participants will be able to network and further learn from existing opportunities that are shaping the South American country’s energy landscape, especially in regards to renewables and the upcoming tender.

About the Author: Felipe Gaitán Michelsen