RenovAr started its first round auction in May 2016 with an auction to add 1,000MW of renewable energy to the grid, comprising 600MW of wind, 300MW of solar, 65MW of biomass, 20MW from small dams and 15MW from biogas. Each project will need to be built in no more than 24 months after the execution of the PPA. Investment between US$1.5 and US$2 billion is expected for the first round of projects.
The Government announced that it will carry out at least one of these auctions each year for the next 10 years, in line with its goal of installing 10GW of renewable energy by 2025.
This first auction round was approximately six times oversubscribed, leading to speculation that the Government might increase the 1,000MW capacity on offer in this first round or accelerate a second auction round. From recent discussions with Sebastian Kind (Undersecretary of Renewable Energy of Argentina) it was clear that these measures were being considered, together with other key factors like ensuring that there is adequate funding available for the FODER and sufficient grid capacity to do this.
It was announced on September 30, 2016 that of the 123 bids submitted in the first round, 105 bids (representing 5,209MW of proposed capacity) satisfied the technical criteria and qualified to go forward for economic assessment on the basis of price and some other economic factors: the main assessment criterion was the electricity price offered, but in addition, local content and geographic location of the project were also determining factors (local content was not a mandatory requirement for bids, but may have been a deciding factor where competing bid prices were the same).
Having completed the economic evaluation, on October 10, 2016 the Government announced the final results of the tender awarding just over 1,100MW of wind, solar and biogas. Only 1.2MW of biogas was awarded with wind and solar projects taking most of the quota for this first tender. Government officials stated that given the strong interest received for this auction they decided to raise the amount of solar and wind by allowing the auction to award 1,100MW instead of the initial 1,000 MW envisaged.
Out of the 1,100MW of long term PPAs awarded, 12 were for wind projects, 4 for solar projects and 1 for biogas. The PPAs are expected to be signed within 45 days after the award. For a detailed list of the winning projects please see Annex 1 below.
Wind was contracted at an average price of 59.4 US$/MWh and solar at an average price of 59.7US$/MWh. These figures are a significant reduction in comparison with what was seen in an earlier renewables auction held in December 2015, where the prices awarded were in the range of US$ 120-240 / MWh.
With the announcements made on 10 October, the Government also said it will hold a second stage tender by the end of November in order to award a further 400MW of wind and 200MW of solar.