IntelStor has analyzed the previous tenders and the current market. To date, 44 onshore wind energy projects have been tendered in the three previous rounds for a total of 2,595.5 MW. This will bring the total market capacity in Argentina to more than 4,300 MW by 2022 if all capacity is successfully installed and commissioned according to schedule.
A beneficial market characteristic are the US Dollar denominated tenders, which have resulted in price reductions in the previous bidding rounds. Ronda 1 saw prices range from just under US$70/MWhr down to approximately US$47/MWhr which Envision Energy used to pry their way into the market. The Ronda 2 saw prices dip below the US$40/MWhr threshold.
While some previous bid participants have publicly speculated that they anticipate higher prices for Ronda 4 than what we saw in Ronda 2, there appears to be a general trend towards the US$30/MWhr threshold in forthcoming tenders. The Ronda 3 bids were a bit of a market anomaly because they were largely for much smaller capacity projects, necessitating a higher price to remain economical to build.
Regional distribution of capacity in the three previous rounds sees the lowest prices located in Chubut, which possesses some of the best wind resource in the country, as well as Buenos Aires which is co-located with the majority of load centers / demand.
Some companies who have participated in the previous tender rounds have made bids consistently below US$42/MWhr. This includes ABO Wind, GENNEIA, YPF, Enel Green Power, Pan American Energy, CMS de Argentina, and Central Puerto.
Analysis of the bid ranges by each developer indicates some downside potential on the overall price below the previous low of US$37.3/MWhr for the 99MW of capacity by CMS de Argentina. However, bids below US$30 - 33/MWhr are unlikely in significant capacity as the market appears to have reached a plateau for economical build at this stage.
For their part, the supply chain has been eager to engage the market with developer partnerships who are prepared to make low bids. Envision, Goldwind and SGRE are the only active wind turbine OEMs in the market who have not been able to go below the US$42/MWhr level like their competition has. The local representative for Goldwind has publicly indicated they are awaiting some clarity on whether sufficient transmission will be built that will support their bid in the sub-US$40/MWhr range.
The Argentinian Government currently foresees 750 MW of wind and 250 MW of solar energy to be included in Ronda 4, however the final capacity amounts are yet to be finalized.
Additionally, and importantly, this upcoming round will also incorporate bidding for new transmission and distribution lines that will reinforce the grid in areas of the country which have significant renewable resource, but limited capacity to evacuate power.
Specifically, high voltage lines up to 500 kV are expected to be included with a focus on getting power from central areas of Santa Cruz and Chubut towards the load centers in the northeastern part of the country. The addition of transmission capacity to the bidding process only helps renewable energy capacity additions, but some of the Ronda 4 bid participants are awaiting specific details of the transmission capacity and the lines which are planned.