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The generators presented proposals to install more than 3,700 MW in a new round of MATER. It is almost three times more than what the available electric transport capacity allows, which is around 1400 MW. The tender will mobilize investments of around US$1.5 billion. The oversupply of projects will be resolved through a tie-breaker event in which each bidder must auction how much they are willing to pay to secure a place on a saturated high-voltage network.
More than 20 generating companies—Genneia, YPF Luz, MSU Green Energy, PCR, Aconcagua and Capex, among others—offered to build generation projects for almost 4,800 megawatts (MW) in the tender carried out last week by Cammesa, the company that manages the Wholesale Electricity Market (MEM), under the umbrella of the Renewable Energy Term Market (MATER). Strictly speaking, the net (maximum) power included in this new round of the MATER is limited to 3,702 MW, but even so the registered offers triple the amount of generation that Cammesa originally sought to award, which based on the available dispatch capacity was around 1,400 MW.
In total, 27 companies participated, presenting 48 wind and solar photovoltaic energy projects.
Private sources consulted by EconoJournal explained that “the interest of the companies in this round has to do with the fact that in recent months and for reasons of a different nature (several projects that were awarded were dropped and the dispatch criteria were made more flexible, among others) A dispatch capacity of more than 1,400 MW was released, when MATER tenders usually seek power for 300 MW or 400 MW. The highlight now is that 1,000 new MW were found. The private sector sees it as water in the desert,” they added.
Where did the 1,400 MW that Cammesa planned to award in the round come from? They refer, strictly speaking, to about 800 MW of dispatch capacity available in the system in the Central and Comahue regions and another 600 MW in the Argentine Northwest (NOA).
Majority factor
In fact, as Cammesa received more offers than expected, the tie-breaking instance incorporated in the MATER rounds will be key to resolve this type of situation. Ultimately, the competition will be resolved based on the increase factor proposed by each company, which is the award mechanism used by Cammesa to assign projects in saturated transport nodes. The company that administers the MEM set a figure of $500 per MW awarded (paid quarterly) as the base amount that each generator that wins a project within the MATER must pay from the moment the work is awarded. until it enters operation. It is a kind of guarantee to ensure transport capacity in a saturated high voltage network.
When more projects are presented than the available capacity in the transportation system allows (that is, when several initiatives compete to secure a place in an over-demanded network), Cammesa established that each bidder must offer a major factor to break the tie, that is, That is, you have to propose a multiplier of the base guarantee (500 US$/MW/Quarter) that reflects how much you are willing to pay to be awarded the project. «Each company can offer, for example, to pay 3, 5 or 10 times the base markup factor. In some cases, more than 50 times that figure was even offered,” explained a sector executive.
Thus, for example, if a company chooses to pay five times as a magnification factor, it will pay $2,500 per MW per quarter and will beat another company that has presented a lower factor (or multiplier). The funds that Cammesa collects through this tie-breaking mechanism in the MATER rounds go to the Transportation Works Trust for Electrical Supply (FOTAE). The management company plans to raise around US$150 million over the next year and a half through this tie-breaking mechanism. With the funds it is planned to carry out some complementary transportation works.
The companies that presented the most projects and MW are Genneia, which reached 1,374.4 MW offered. Then follows YPF Energía Eléctrica with 461 MW, the company Eoliasur with 285.6 MW of the Vientos Choele I wind farm, the firm Luz de Tres Picos (PCR) with 260.6 MW, Parques Eólicos Las Pasturas (Eoliasur) with 133 MW, among others.
Tenders
The MATER is the contract for the purchase and sale of renewable energy between private parties and the projects compete in tenders organized by Cammesa to obtain dispatch capacity and be able to inject energy into the system. One of the main problems for the development of renewables in the country is that the energy transport networks have been saturated for years and there is practically no capacity for new generation to be added.
That is why it was striking in the sector that in this Cammesa tender there is three times more dispatch capacity than usual. The companies had until April 5 to present the projects and on the 19th of this month the proposals that need to go to a tiebreaker in the allocation process will be reported. On April 30, the winning projects will be announced that will obtain dispatch capacity to transfer generation into the system, once the generation plants are built.
Why is there more capacity in this tender?
Through resolution 360 last year, the Secretary of Energy enabled what is known as Dispatch Priority Assignment Reference Type A, which allows a project to deliver up to 8% less than its maximum production capacity. In the jargon it is known as curtailment or cutting energy production. This occurs at a time of greater supply than demand or due to transportation limitations, as occurs in Argentine networks.
The same sources also indicated that “there are projects that have 2% or 3% curtailment, even (normatively) it can reach 8%, and a lot of capacity was free. That is, the sector knows that in certain nodes, Cammesa can cut and free up capacity. This explains the appearance of the 1,400 MW in this tender and the interest it aroused.”
“There is no certainty that this important capacity will be available again in the next rounds of MATER, which is why it could be the last tender for large projects, at least for a while. Surely there is some very minor capacity left for small renewable energy developments,” they concluded. |
