2018 ARGENTINA RENEWABLE ENERGY REPORT

 
2018 ARGENTINA RENEWABLE ENERGY REPORT
22 - 25 OCTOBER 2018 - BUENOS AIRES

Argentina's largest clean
energy congress & exhibition

2018 ARGENTINA
RENEWABLE ENERGY
REPORT

  Written by
  Mariyana Yaneva, Plamena Tisheva, Tsvetomira Tsanova
  Edited by
  Mariyana Yaneva

  May 2018

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2018 ARGENTINA RENEWABLE ENERGY REPORT
CONTENTS

 INTRODUCTION                                        3

 POWER MARKET ARCHITECTURE AND INSTITUTIONS          4
 WHOLESALE ELECTRICITY MARKET                        4
 MARKET PARTICIPANTS                                 6

 ARGENTINA’S GRID INFRASTRUCTURE                     7

 THE RENOVAR PROGRAMME                               10
 ROUND 1                                             12
 ROUND 2.0                                           16
 PROJECTS PROGRESS                                   20
 ROUND 3.0                                           20

 SOLAR PV DEVELOPMENT IN ARGENTINA                   21
 SOLAR IRRADIATION AND GEOGRAPHICAL RESOURCE         21
 CURRENT INSTALLED CAPACITY & POWER GENERATION       21
 PROJECT LANDSCAPE AND CONSTRUCTION TIMELINES        22

 WIND POWER DEVELOPMENT IN ARGENTINA                 24
 WIND SPEEDS AND GEOGRAPHICAL RESOURCE               24
 CURRENT INSTALLED CAPACITY & POWER GENERATION       24
 PROJECT LANDSCAPE AND CONSTRUCTION TIMELINES        25

 FORECASTED INSTALLED CAPACITY OF WIND AND SOLAR
 POWER PROJECTS BY 2025                              27

 FINANCING RENEWABLE ENERGY PROJECTS IN ARGENTINA    28
 FODER AND WORLD BANK GUARANTEES                     28
 GREEN BONDS                                         30
 PROJECT FINANCING                                   30

 PROCURING RENEWABLE ENERGY TO C&I CUSTOMERS         31

 OPPORTUNITIES IN DISTRIBUTED GENERATION, OFF-GRID
 AND MINI-GRID                                       33

 ENERGY STORAGE                                      35

 REFERENCES & PHOTO CREDITS                          36

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2018 ARGENTINA RENEWABLE ENERGY REPORT
INTRODUCTION

  Argentina recently opened its electricity market to incorporate wide-scale clean
  energy and is currently one of the most promising markets for renewables in Latin
  America. The economic and political crisis at the turn of the millennium took its
  toll on the Argentine electricity market, providing little incentive to generators and
  distributors to further invest in increasing their generation and distribution capacity.
  However, the country’s bold clean energy targets and recent update of the regulatory
  framework has raised its profile for renewable energy investors. Argentina is targeting
  an 8% share of renewables in its power mix by the end of 2018, going up to 12% by
  2019, 16% by 2021, 18% by 2023 and 20% by 2025.

                                       3 GW                                                              10 GW

                                                                                                        20%
                                                                                    18%       19%
                                                                           17%

                                                                                                                    % of the total power demand
                                                                 16%
                                                         14%
                                                   12%

                                              8%
                   RenovAr Round 1.0
      Existing +   1.1 GW - 2.75%
                   RenovAr Round 1.5
       Auction     1.2 GW - 3.0%
        2016       Legacy Conracts (R202)
                   0.5 GW - 1.5%
        9%
                   Existing 0.8 GW - 1.8%

                                              2018 2019 2020 2021 2022 2023 2024 2025
     Note: Percentage of RE in toral demand calculate using P75 genartion estimates and 2018 projected demand

                                                               Source: Comisión Nacional de Energía Atómica - October 2017

  With an overall grid-connected capacity of 754 MW at the end of March 2018,
  renewables (excluding large hydro power plants) are currently generating around 2%
  of the electricity in Argentina. The 8% target for the end of 2018 looks ambitious but
  quite achievable if projects awarded in the RenovAr auction in 2016 get built in time,
  CNEA, the National Atomic Energy Commission in Argentina has estimated.
  This report will give you an overview of Argentina’s current power market architecture,
  the RenovAr auctions programme (including detailed project description of the
  rounds that took place so far), as well as the investment opportunities outside the
  tenders, both in the commercial and industrial (C&I) sector and off-grid, small scale
  developments.

  Wind and solar power advances are explored in greater detail with an outline of the
  latest capacity and generation figures, as well as project progress. Special attention is
  also paid to financing schemes, grid issues and future development of energy storage.

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2018 ARGENTINA RENEWABLE ENERGY REPORT
POWER MARKET ARCHITECTURE AND INSTITUTIONS

  The institutional framework of the electricity sector in Argentina is defined by three
  main government entities – the Ministry of Energy and Mines (MINEM), the National
  Electricity Regulator (ENRE) and the wholesale electricity market operator Compañía
  Administradora del Mercado Mayorista Eléctrico (better known as CAMMESA).

  The Ministry and its Secretaria de Energia Electrica (SEE) designs the national
  energy policy and sets the broad regulatory framework.

  ENRE is an autonomous entity responsible for regulating and supervising the
  functioning of the national electricity market. It grants grid access licenses and
  supervises compliance of generation, transmission and distribution entities with safety,
  quality, technical and environmental standards set in the regulatory framework and
  the license agreements.

  Argentina is a federal country, so provinces also have the legal capacity to regulate
  energy issues in their jurisdictions, implementing their own laws, regulations and
  support policies. Provincial energy laws and regulations cannot contradict the national
  regulatory framework but could build on it. Provincial electricity regulators (or ENRESP
  under their Spanish acronym) regulate the electricity activity in their respective
  provincial regulatory frameworks.

  As the wholesale energy market administrator, CAMMESA coordinates dispatch
  operations, determines wholesale prices, manages transactions in the national
  interconnected system (Sistema Argentino de Interconexión, SADI), and acts as
  off-taker in certain power purchase agreements (PPAs). The board of directors
  includes equal representation of all market participants, including the Government of
  Argentina, the generation companies, transmission and distribution utilities and large
  power consumers.

  WHOLESALE ELECTRICITY MARKET

  All electricity transactions in the Argentine electricity sector are conducted through a
  wholesale electricity market which acts as a clearing house for electricity trading. Set
  up in 1992, the wholesale electricity market in Argentina is organized as a competitive
  market, including a spot market and a term market (or contracts market). Prices on
  the spot market are established on an hourly basis as a function of marginal cost of
  production measured at the system's load center.

  On the term market, quantities, prices and contractual conditions are agreed upon
  directly between sellers and buyers. Generators declare their marginal costs

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2018 ARGENTINA RENEWABLE ENERGY REPORT
POWER MARKET ARCHITECTURE AND INSTITUTIONS

  semiannually. CAMMESA uses the semiannual marginal cost declarations from
  thermal and hydro generators to determine seasonal dispatch schedules to minimize
  energy cost in the spot market.

  A stabilization fund, managed by CAMMESA, was designed to stabilize prices for end
  users. Financed from the difference between the regulated and spot prices, the fund is
  used when spot prices exceed the regulated price and replenished when the regulated
  price exceeds the spot price. The following chart shows how the wholesale electricity
  market in Argentina was designed to work.

                  Electricity                  Transmission       Electricity
                                                                  flow
                  flow                          Companies
                                                                                 Seasonal         Regulated
                                                                                 Prices           Customers

                   Generators                      Pool           Distributors
                                              administered by
                                Spot Prices     CAMMESA
                                (limited by                         Other
                                RES 240-03)                       Generators                        Large
                                               Stabilization                                      Customers
                                                  Fund              Traders          Negotiated
                                                                                     Prices

                                                                SPOT MARKET

                                  Large
                                Customers
          Negotiated
          Prices                  Other
                                Generators

                                 Traders

            CONTRACTS MARKET
                                                                    Source: Endesa Americas SA SEC filing 2016

  However, in the aftermath of the country’s 2001–2002 economic crisis, the market
  was reorganized to become effectively controlled by CAMMESA. A government
  decree declared a state of emergency in the energy sector from December 16, 2015
  to December 31, 2017. Free bilateral trading was suspended and large customers were
  obliged to buy electricity directly from CAMMESA. Wholesale prices were virtually
  frozen and kept artificially below costs, therefore creating a structural deficit in
  the operation of the market. The deficit has been covered with subsidies from the
  Argentine government.

  In February 2017, Resolution 19/2017 established generation remuneration based on
  capacity by technology and scale. The remuneration is denominated in US dollars and
  is converted at the exchange rate published by Argentina’s central bank on the last
  day before termination of each period set by CAMMESA.

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2018 ARGENTINA RENEWABLE ENERGY REPORT
POWER MARKET ARCHITECTURE AND INSTITUTIONS

  MARKET PARTICIPANTS

  The Argentine wholesale electricity market has four types of market participants or
  agents: generators, transmission and distribution companies, traders and large users.
  At the end of March 2018, the market had 353 participants registered as market
  agents on the side of power generation:

                                                                 *A self-generator is an
                                  NUMBER OF                      electricity consumer
   GENERATION
                                  PARTICIPANTS                   that generates electric
                                                                 energy as a byproduct,
   GENERATORS                     320                            since its main purpose is
   SELF-GENERATORS*               26                             the production of goods
                                                                 and/or services
   CO-GENERATORS**                7
                                                                  ** A co-generator is
   TOTAL                           353                            a market participant
                                                                  who generates electric
                                                                  energy and steam or
  other type of energy for industrial, marketing, heating or cooling purposes jointly with
  a third party.

  On the consumption side, large consumers participating directly in the wholesale
  market are classified into three categories:

  • Major Large Users (Grandes Usuarios Mayores, or GUMAs), with capacity higher
     than 1 MW and energy consumptions higher than 4,380 MWh/year
  • Minor Large Users (Grandes Usuarios Menores, or GUMEs), with capacity between
     30 KW and 2 MW, and
  • Particular Large Users (Grandes Usuarios Particulares, or GUPAs), with capacity
     between 30 kW and 100 kW.

  At the distribution level, all clients with a medium demand of over 300 kW are
  considered Grandes Usuarios en Distrubución Mayores (GUDI).

  Each category has different requirements with respect to purchases of their energy
  demand. For example, GUMAs are required to purchase 50% of their demand through
  supply contracts and the remainder in the spot market, while GUMEs, GUPAs and
  GUDIs are required to purchase all of their demand through supply contracts.

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POWER MARKET ARCHITECTURE AND INSTITUTIONS

  At the end of March 2018, the Argentine wholesale electricity market had a total of
  8,547 large consumers registered as market participants, as illustrated in the table
  below.

                                                NUMBER OF
   TYPE OF CONSUMER
                                                PARTICIPANTS
   GRANDES USUARIOS MAYORES
                                                415
   (GUMA)
   GRANDES USUARIOS MENORES
                                                2,182
   (GUME)
   GRANDES USUARIOS PARTICULARES
                                                25
   (GUPA)
   GRANDES USUARIOS EN
                                                5,925
   DISTRUBUCIÓN MAYORES (GUDI)

   5,925                                        8,547

  ARGENTINA’S GRID INFRASTRUCTURE

  Argentina’s grid network currently includes about 14,000 km of 500 kV high-voltage
  transmission lines and about 19,500 km of mid-voltage lines.

  Internationally, the country has interconnections that allow electricity trading with
  Brazil, Paraguay, Chile and Uruguay. When national electricity demand set a new
  record of 26,320 MW on February 8, 2018, it was covered entirely by local generation,
  without the need for imports. In comparison, peak annual demands in 2016 and 2017,
  which were also registered in February, required 1,884 MW and 1,069 MW of imports,
  respectively.

  Since the country restructured and privatised its electricity sector in the 1990s,
  the 500-kV transmission grid has been operated by Transener under a 95-year
  concession.

  Besides the high-voltage transmission system (STEEAT), which carries electricity
  between regions, Argentina has a regional distribution system (STEEDT), which
  operates at 132 kV/220 kV and links generators, distributors and large users within
  regions.

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ARGENTINA’S GRID INFRASTRUCTURE

  There are six regional companies:

  • Transnoa - covers the northwestern region of the country, including the provinces
      of Tucumán, Catamarca, La Rioja, Salta, Jujuy and Santiago del Estero
  • Transnea - the north-eastern region, including the provinces of Formosa, Chaco,
      Corrientes and part of Entre Ríos
  •   Transcomahue/EPEN - the region of El Comahue, covering the provinces of Río
      Negro, Neuquén and part of La Pampa
  •   Transpa - serves the Patagonian region
  •   Transba - the province of Buenos Aires
  •   Distrocuyo - the provinces of San Juan and Mendoza

  Details by voltage level and regions are available in the table below.

   Transmission        500 kV 330 kV 220 kV 132 kV             66 kV        33 kV         Total
   system
   High-voltage
                       14,195              563       6                                    14,763
   (km)
   Trunk
                                 1,116     1,112     16,900    398          24            19,550
   distribution (km)

   Cuyo                                    641       626                                  1,267

   Comahue                                           1,368     398                        1,368

   Buenos Aires                            177       5,583                                6,158

   NEA                                     30        2,148                  24            2,202

   NOA                                               5,052                                5,052

   Patagonia                     1,116     264       2,123                                3,504
                                                                  Source: CAMMESA, Informe Annual 2016

  There are also independent transmission companies operating under technical license
  by the STEEAT or STEEDT companies.

  The transmission and distribution services in Argentina are performed under long-
  term concessions with periodic rebidding. Edenor, Edesur and Edelap, the distribution
  companies that once made up national utility SEGBA, account for a substantial part of
  the Argentinian electricity distribution market.

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ARGENTINA’S GRID INFRASTRUCTURE

  Transmission companies are responsible for the operation and maintenance of their
  networks, but not for expanding the grid. Thus, expansion of transmission capacity
  is mainly driven by its users. For example, to connect to the grid a renewable project
  developer must seek a permit from the local transmission system operator, which
  issues a preliminary decision for evaluation by CAMMESA. If approved by CAMMESA,
  the decision is forwarded to ENRE, which issues a final decision on grid access,
  followed by a five-day waiting period for contestations. The developer pays for the
  line that connects the plant to the connection point.

  Argentina’s grid is currently operating at near capacity
  as electricity demand in recent years has increased
  at a quicker pace than generation, transmission and
  distribution capacities. Spare transmission capacity
  that existed before the 2016 and 2017 renewable
  energy and thermal energy auctions has already been
  taken.
  Despite this, the World Bank has indicated that Round
  2 of the RenovAr programme is not expected to pose
  significant problems to grid integration. The round
  has incorporated some features to address concerns
  related to limited transmission capacity. It has set
  quotas per geographical region and technology,
  including an Annex with information about available
  capacity plus planned lines, and added a take-or-pay
  clause, under which projects will be paid for energy
  not dispatched if they become operational before the
  expected transmission expansion. About half of the
  awarded projects, or 940 MW out of 2,043 MW, have
  such a clause in their contracts.

  In view of the country’s renewable energy targets and
  future expansion of intermittent renewables capacity Map – 500 kV lines. Source: CAMMESA
  the Argentine government has asked the World Bank
  for technical assistance and capacity building on renewables integration to improve
  power sector planning and governance.

  According to recent energy scenarios by the energy ministry, Argentina expects to add
  between 14 GW and 18 GW of unconventional renewable energy capacity to reach 25%
  generation from unconventional renewables by 2030.

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ARGENTINA’S GRID INFRASTRUCTURE

  To follow demand growth and reinforce the transmission system in the short
  term, the government plans to tender 2,825 km of 500 kV lines in 2018.

  LEAT (Línea de Extra Alta Tensión) Río Diamante - Charlone (490 km, 600 MVA)
  LEAT Atucha - Belgrano 2 + ET Belgrano 2 (35 km)
  LEAT Belgrano 2-Smith + ET Smith (100 km, 1600 MVA)
  LEAT Atucha 2- Plomer + ET Plomer + doble LEAT 35 km (Anillo GBA) - (130 km, 800
  MVA)
  LEAT Charlone - Junín-Plomer + ET Junín (415 km, 600 MVA)
  LEAT Pto Madryn - Choele Choel + LEAT Vivoratá - Plomer (705 km)
  LEAT Rodeo - La Rioja Sur + ET Rodeo + ET La Rioja Sur (300 km, 300 MVA)
  LEAT Choele Choel - Bahía Blanca (340 km)
  LEAT Sto Tomé - San Francisco-Malvinas + ET San Francisco (310 km, 450 MVA)

  The ministry notes there are a number of challenges in the medium and long term.
  These include keeping pace with demand growth, while improving security of supply,
  and providing for dispatch of future renewables generation. As the country’s greatest
  solar potential is in the Cuyo and NOA regions and wind in the southern region, both
  away from the main demand zone, a network topology should be developed that
  allows renewable power to travel from these areas to the points of greater demand.

  According to a January 2018 booklet by the Agencia Argentina de Inversiones y
  Comercio Internacional (AAICI), tenders will be launched throughout 2018 for seven
  500 kV line projects totaling 2,175 km and representing investment of USD 2.2 billion.
  They will be based on the public-private partnership model. AAICI lists the first seven
  of the projects mentioned above

  THE RENOVAR PROGRAMME

  The RenovAr auction programme has the leading part in achieving Argentina’s
  objective of 20% renewables in electricity consumption by 2025. It was launched in
  May 2016 and has so far completed three bidding rounds, awarding 147 projects
  with a combined capacity of 4,466 MW.

  The public tendering mechanism involves a mix of incentives and guarantees and was
  designed in a way that seeks to overcome some of the issues that hindered previous
  attempts by the country to foster renewable energy development. An earlier auction
  effort, the GENREN programme, was launched in 2009 with the aim to contract 1 GW
  of renewable power but only a small part of the 895 MW awarded got constructed as
  developers had difficulties obtaining financing.

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THE RENOVAR PROGRAMME

     A key element of the new regime is the Fund for the Development of Renewable
     Energies (Fondo para el Desarrollo de las Energias Renovables, FODER), which was
     created to help mitigate risks and attract the much needed investments. FODER
     is a public trust fund set up to provide guarantees and financing. The fund, run by
     Argentina’s Investment and Foreign Trade Bank (Banco de Inversión y Comercio
     Exterior, BICE), provides two type of guarantees to RenovAr winners -- a liquidity
     guarantee, which ensures that project owners are paid for the electricity they
     deliver to the grid, and a solvency guarantee, designed to reduce country risk. The
     solvency guarantee allows project companies to exercise a put option under certain
     circumstances and transfer their assets to FODER in exchange for cash compensation.

     An additional optional guarantee was available to RenovAr bidders. The World Bank
     provided a USD-480-million guarantee to backstop the government’s failure to fund
     FODER when it needs to pay a put price. This guarantee backed projects in the first
     two tenders, Rounds 1 and 1.5, of the RenovAr programme. In March 2018, the World
     Bank approved another USD-250-million guarantee to support Round 2.

     The RenovAr programme has so far attracted strong investor interest, which led
     to significant oversubscription of the bidding rounds. Bidders compete to sign 20-
     year power purchase agreements (PPAs) with CAMMESA, which acts as off-taker
     on behalf of distribution utilities and wholesale market large users. Strike prices are
     denominated in USD and adjusted annually.

 Round                Capacity      Bids (MW)               Capacity     Average Price
                      tendered (MW)                         awarded (MW) USD/MWh

 1                    1,000              6,343              1,142               61

 1.5                  600                2,486              1,281               54

 2.0                  1,200               9,391             1,409               51

 2 phase two          600                -                  634

     Round 1.5 and phase two of Round 2 competitions were launched upon announcing
     the results of the original tenders, in order to take advantage of the large number of
     offers presented.

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THE RENOVAR PROGRAMME

  ROUND 1

  The first RenovAr auction, Round 1, was announced in July 2016. It sought to award
  1,000 MW (600 MW of wind, 300 MW of solar, 80 MW of biomass and biogas and 20
  MW of small hydro).

  A total of 123 bids were submitted, representing 6,343 MW of capacity, or more than
  six times the volume sought. In October 2016, the government announced 17 winning
  projects, totaling 1,108.6 MW -- 12 wind, four solar and one biogas project. Later that
  month, 34 MW of biomass, biogas and small hydro projects were added to the winning
  list after they agreed to match ceiling prices. A brief summary of contracted capacity
  and prices achieved by technology is available in the graphs below.

    Round 1 Contracted capacity (MW) by technology

     SMALL HYDRO            11
              BIOGAS        9
             BIOMASS        15
              SOLAR                               400
               WIND                                                      707

    Round 1 Average / Minimum price by technology
         Average Price (USD/MWh)                   154
         Minimum Price (USD/MWh)
                                                          118
                                     110   110                     105    105

     29.39             59.75 58.98
             49.08

       WIND                SOLAR     BIOMASS         BIOGAS     SMALL HYDRO

  In total, Round 1 awarded 29 projects with a combined capacity of 1,142 MW and
  average weighted price of USD 61.33/MWh. The complete list of projects follows.

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THE RENOVAR PROGRAMME

  Technology   Project name                 Capacity (MW)   Bidder name                  Province

               Vientos Los Hércules         97.2            Eren                         Santa Cruz
               Villalonga                   50              Genneia                      Buenos Aires
               Chubut Norte                 28.4            Genneia                      Chubut
               García Del Río               10              Envision/Sowitec             Buenos Aires
               Cerro Alto                   50              Envision                     Rio Negro
               Los Meandros                 75              Envision                     Neuquen
  WIND         Vientos Del Secano           50              Envision                     Buenos Aires
               Garayalde                    24.2            Pan American Energy/3 Gal    Chubut
                                                            Enat/Seg/Otamendi/ N.
               Kosten                       24                                           Chubut
                                                            Cerro Dragón
               La Castellana                99              CP Renovables                Buenos Aires
                                                            C.T. Loma De La Lata (Pam-
               Corti                        100                                          Buenos Aires
                                                            paEnergía)
               Arauco II (phase 1 and 2)    99.8            P.E. Arauco S.A.P.E.M.       La Rioja
               La Puna                      100             Fieldfare/Isolux             Salta
               Cauchari 1                   100             Jemse                        Jujuy
  SOLAR
               Cauchari 2                   100             Jemse                        Jujuy
               Cauchari 3                   100             Jemse                        Jujuy
               Río Cuarto 1                 2               Biomas Crop                  Cordoba
               Río Cuarto 2                 1.2             Biomas Crop                  Cordoba
               Yanquetruz                   1.2             ACA/Fersi                    San Luis
  BIOGAS
               San Pedro Verde              1.4             Adeco Agro                   Santa Fe
                                                            FECOFE/Coop. Huinca
               Huinca Renancó               1.6                                          Cordoba
                                                            Ranancó
               Biogás Ricardone             1.2             Nacarato/Otros               Santa Fe
                                                            Papelera Mediterránea/
               Gen. Biomasa Santa Rosa      12.5                                         Corrientes
  BIOMASS                                                   Lucena
               Pindó Eco-Energía            2               Pindó                        Misiones
                                                            EMESA/Const. Elect. Del
               C. C. Guaymallén - Salto 8   1.2                                          Mendoza
                                                            Oeste
                                                            EMESA/Const. Elect. Del
               C. C. Guaymallén - Salto 6   1                                            Mendoza
                                                            Oeste
  SMALL                                                     EMESA/Const. Elect. Del
  HYDRO        Dique Tiburcio Benegas       1.7                                          Mendoza
                                                            Oeste
                                                            EMESA/Const. Elect. Del
               Triple Salto Unificado       0.5                                          Mendoza
                                                            Oeste
               Rio Escondido                7               Patagonia Energia            Rio Negro

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THE RENOVAR PROGRAMME

  Unsuccessful solar and wind bidders from the first auction were given a chance to
  take part in a follow-up tender, called Round 1.5, which was completed in November
  2016. The required capacity was 600 MW, split into 400 MW of wind and 200 MW of
  solar power. This time, there were quotas for the location of the projects. The awarded
  capacity reached 1,281 MW, double the planned volume while prices were down about
  10% between the two auctions, which were a short time apart.

     Round 1.5 Contracted capacity (MW)

      SOLAR                                    516
       WIND                                             765

              Average Price (USD/MWh)

              Minimum Price (USD/MWh)

                           54.94
      53.34
                                        48
                46

        WIND                   SOLAR

  The 59 projects awarded in these two tenders are located in 17 provinces across
  the country. Argentina also converted 0.5 GW of legacy projects to the new legal
  framework in 2016.

  The full list of Round 1.5 winners is given n the next page.

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THE RENOVAR PROGRAMME

 Technology   Project name            Capacity (MW)   Bidder name                  Province

              Pomona I                100             Genneia                      Rio Negro
              La Banderita            36.8            Fravega/Lobo                 La Pampa
                                                      Petroquimica Comodoro
              Del Bicentenario        100                                          Santa Cruz
                                                      Rivadavia
              Loma Blanca 6           100             Isolux/Selena                Chubut
              Miramar                 97.7            Isolux/Selena                Buenos Aires
 WIND
              El Sosneado             50              EMESA                        Mendoza
              Achiras                 48              CP Renovables                Cordoba
                                                      Golden Peaks/ Sinohydro/
              Pampa                   100                                          Buenos Aires
                                                      Otros
              Arauco II (phase 3,4)   95              Arauco S.A.P.E.M.            La Rioja
              Vientos De Necochea 1   38              Centrales de la Costa        Buenos Aires
              Lavalle                 17.6            EMESA                        Mendoza
              Lujan De Cuyo           22              EMESA                        Mendoza
              La Paz                  14.1            EMESA                        Mendoza
              Pasip                   1.2             EMESA                        Mendoza
              General Alvear          17.6            EMESA                        Mendoza
              Cafayate                80              Fieldfare/Isolux             Salta
              Nonogasta               35              Energias Sustentables/Fides La Rioja
              Fiambalá                11              Energías Sustentables        Catamarca
              Tinogasta               15              Ivanissevich/Deykoll         Catamarca
              Saujil                  22.5            Energías Sustentables        Catamarca
 SOLAR        Sarmiento               35              Soenergy                     San Juan
                                                      Ivanissevich/Energías Sus-
              Ullum 3                 32                                           San Juan
                                                      tentables
              Anchoris                21.3            EMESA                        Mendoza
              Caldenes Del Oeste      24.8            Quaatro                      San Luis
              Ullum 4                 13.5            Colway/Clavijo/Maresca       San Juan
              La Cumbre               22              Diaser                       San Luis
                                                      Energias Sustentables/
              Ullum N2                25                                           San Juan
                                                      Fides/ Ivanissevich
              Ullum N1                25              Energias Sustentables/Fides San Juan
              Iglesia - Guañizuli     80              Jinkosolar                   San Juan
              Las Lomitas             1.7             Latinoamericana              San Juan

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THE RENOVAR PROGRAMME

  ROUND 2.0

  Round 2.0 of the RenovAr programme was launched in August 2017 with an objective
  to contract 1,200 MW, with quotas per region and technology. The tender again drew
  strong investor interest and was more than seven times oversubscribed. The results
  were announced in November 2017 and showed a continued decline in prices with
  1,408.7 MW of projects securing contracts. The government then decided to extend
  the auction by 600 MW and awarded a further 634 MW of projects in a so-called
  phase two of Round 2. Overall, 88 projects with a combined capacity of 2,043 MW
  were successful in this bidding round.

    Round 2 (phase 1) Contracted capacity (MW)

          SMALL HYDRO                20.8
    LAND FILL BIOGAS                13.1
                    BIOGAS             35
                  BIOMASS                     117.2
                      SOLAR                                               556.8
                       WIND                                                       665

                                                            156.8
          Average Price (USD/MWh)                                   150
          Minimum Price (USD/MWh)
                                                                          129.2 128

                                            106.7                                       98.9
                                                      92                                       89

   41.2                43.5
          37.3                  40.4

     WIND                 SOLAR              BIOMASS          BIOGAS      LAND FILL       SMALL
                                                                           BIOGAS         HYDRO

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THE RENOVAR PROGRAMME

  The full list of winning projects from Round 2.0 is available in the table below.
  Technology    Project name              Capacity (MW)   Bidder name                  Province

               Energetica I               79.8            CMS De Argentina S.A.        Buenos Aires
               Chubut Norte IV            82.8            Genneia S.A.                 Chubut
               Chubut Norte III           57.6            Genneia S.A.                 Chubut
               Vientos Fray Guen          100             Senvion GmbH                 Buenos Aires
  WIND
                La Genoveva               86.625          Central Puerto S.A.          Buenos Aires
               Cañada Leon                99              YPF Energía Eléctrica S.A.   Santa Cruz
               General Acha               60              Miguel Oneto                 La Pampa
               Arauco II (phase 5 , 6)    100             Windar Renovables S.L.       La Rioja
               Tinogasta II               6.96            360 Energy S.A.              Catamarca
               Saujil II                  20              360 Energy S.A.              Catamarca
               Nonogasta II               20.04           360 Energy S.A.              La Rioja
               Altiplano I                100             Neon SAS                     Salta
               La Pirka                   100             Monteverdi & Gray Group      Catamarca
               Ullum X                    100             Monteverdi & Gray Group      San Juan
  SOLAR
               Verano Capital Solar One   99.9            Monteverdi & Gray Group      Mendoza
               V.Maria Del Rio Seco       20              Neuss Fund LLC               Córdoba
               Cura Brochero              17              Neuss Fund LLC               Córdoba
               Villa Dolores              26.85           360 Energy S.A.              Córdoba
               Añatuya I                  6               360 Energy S.A.              Sgo Del Estero
                                                          EPEC Empresa Prov de
               Arroyo del Cabral          40                                           Córdoba
                                                          Energ. de Cordoba
               General Villegas           1.2             Maria Elena S.A.             Buenos Aires
               Arrebeef Energia           1.5             Arrebeef S.A.                Buenos Aires
               Bombal Biogas              1.2             Tanoni Hnos S.A.             Santa Fe
               Resener I                  0.72            Mario Gustavo Pieroni        Buenos Aires
               Citrusvil                  3               Citrusvil S.A.               Tucuman
               James Craik                2.4             Universum Invenio Limited    Córdoba

  BIOGAS       San Francisco              2.4             Universum Invenio Limited    Córdoba
               Pollos San Mateo           2.4             Pollos San Matero S.A.       Córdoba
               Bio Justo Daract           1               Biomass Crop S.A.            San Luis
                                                          Cotagro Cooperativa Agro-
               Jigena I                   1                                            Córdoba
                                                          pecuaria
               Del Rey                    1               Silvina Hacen                Santa Fe
               Recreo                     2.4             Universum Invenio Limited    Santa Fe
               Bella Italia               2.4             Universum Invenio Limited    Santa Fe

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THE RENOVAR PROGRAMME

               El Alegre Bio             1               Antiguas Estancias Don          Córdoba
                                                         Roberto S.A.
               Avellaneda                6               Industrias Juan F. Secco S.A.   Santa Fe
               Villa Del Rosario         1               Crops Investments S.A.          Córdoba
               Ampliacion Bioelectrica   1.2             Biomass Crop S.A.               Córdoba
 BIOGAS        Dos
               Don Nicanor               1               Silvina Hacen                   Santa Fe

               Don Roberto Bio           1               Antiguas Estancias Don          San Luis
                                                         Roberto S.A.
               Ampliacion 2 Central      1.2             Biomass Crop S.A.               Córdoba
               Bioelectrica
               Ensenada                  5               Industrias Juan F. Secco S.A.   Buenos Aires
 LANDFILL
               Gonzalez Catan            5               Industrias Juan F. Secco S.A.   Buenos Aires
 BIOGAS
               Ricardone II              3.12            Martín Alfredo Nacarato         Santa Fe
               Biomasa Unitan            6.6             Unitan S.A.I.C.A.               Chaco
               Generación Las Junturas   0.5             Emerald Resources SRL           Córdoba
               Prodeman Bioenergia       9               Prodeman Bioenergía S.A.        Córdoba
               Generacion Virasoro       3               Forestadora Tapebicuá S.A.      Corrientes
               La Escondida              10              Indunor S.A.                    Chaco
               Kuera Santo Tome          12.92           Norcon SRL                      Corrientes
               Fermosa S.A.              6               Pegni Solutions S.A.            Formosa
 BIOMASS
               Rojas                     7               Global Dominion Access S.A.     Buenos Aires
               Ticino Biomasa S.A.       3               Lorenzati, Ruetsch Y Cia S.A.   Córdoba
               Capitan Sarmiento         7.2             Granja Tres Arroyos S.A.C.A.F.I Buenos Aires
               BM MM Bioenergia          3               Molino Matilde S.A              Misiones
               Las Lomitas               10              BIOETANOL RIO CUARTO S.A. Formosa
               Cogeneración Ingenio      2               Compañía Inversora Industrial Tucuman
               Leales                                    S.A.
               San Alonso                37              Garruchos Forestación S.A.      Corrientes
               Lunlunta                  6.34            Soledad Vigil                   Mendoza

               Cruz Del Eje              0.5             Empresa Provincial de Energía   Córdoba
                                                         de Corboda E.P.E.C.
               Pichanas                  0.5             Empresa Provincial de Energía   Córdoba
                                                         de Corboda E.P.E.C.
               Boca Del Rio              0.5             Empresa Provincial de Energía   Córdoba
                                                         de Corboda E.P.E.C.
 SMALL HYDRO Salto De La Loma            0.7             Latinoamericana de Energía      San Juan
                                                         S.A.
               Salto 7                   1.2             Construcciones Electrome-       Mendoza
                                                         cánicas Del Oeste S.A.
               Salto 11                  0.51            Maximiliano Llamazares          Mendoza
               Salto 40                  0.52            Maximiliano Llamazares          Mendoza

               Las Tunas                 10              Construcciones Electrome-       Mendoza
                                                         cánicas Del Oeste S.A.

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THE RENOVAR PROGRAMME

  Phase 2 of Round 2 added the following projects:

 Technology   Project name          Capacity (MW)   Bidder name           Province       Price
                                                                                         (USD/MWh)
              Pampa Chubut          100             Enel Green Power      Chubut         40.27
              San Jorge             100             P.C.R.                Buenos Aires   40.27
 WIND
              El Mataco             100             P.C.R.                Buenos Aires   40.27
              Diadema II            27.60           Capex S.A.            Chubut         40.27
                                                    Energia Sustentable
              Nonogasta IV          1                                     La Rioja       41.76
                                                    S.A.
                                                    Energia Sustentable
              Tocota                72                                    San Juan       40.80
                                                    S.A.
 SOLAR                                              Latinoamericana De
              Los Zorritos          49.50                                 Catamarca      41.76
                                                    Energía S.A
                                                    Martifer Renewables
              Guañizuil II A        100                                   San Juan       41.76
                                                    SGPS S.A.
              Zapata                37              Kuntur Energia        Mendoz         41.76
                                                    Global Dominion
              Venado Tuerto         7                                     Santa Fe       106.73
 BIOMASS                                            Acces
              Biomasa La Florida    19              Genneia S.A.          Tucuman        106.73
              Pacuca Bio Energia    1               Pacuca S.A.           Buenos Aires   171.85
              Ab Energia            2               Ab Agro S.A.          La Pampa       156.85
              Enreco                2               Cecilia Debenedetti   Córdoba        156.85
              Santiago Energías                                           Santiago Del
                                    3               Los Amores S.A.                      156.85
              Renovables                                                  Estero
              Biogeneradora Santa                   Biogeneradora
                                    2                                     Córdoba        156.85
              Catalina                              Centro S.A
                                                    Bio Energia Yan-
 BIOGAS       Yanquetruz II         0.80                                  San Luis       177.85
                                                    quetruz
              Biocaña               3               Sesnich, Nestor Omar Santa Fe        156.85
              Pergamino             2.4             Seeds Energy          Buenos Aires   156.85
                                                    Seeds Energy De
              Venado Tuerto         2                                     Santa Fe       156.85
                                                    Venado Tuerto S.A.
                                                    Carnes De La Pata-
              General Alvear        1                                     Buenos Aires   171.85
                                                    gonia Neuquina S.A.
                                                    Carnes De La Pata-
              El Mangrullo          2                                     Buenos Aires   156.85
                                                    gonia Neuquina S.A.

  After phase two, the average price of Round 2 wind projects inched down to USD
  40.91 per MWh, and the price of solar projects to USD 42.84 per MWh. Bidders were
  invited to match the average prices of what was awarded under phase one of Round
  2. The 88 winning projects under this round are located across 18 provinces. After the
  three tenders, the leading province for wind power projects is Buenos Aires, and for
  solar power projects - San Juan.

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THE RENOVAR PROGRAMME

  PROJECT PROGRESS

  As of May 2018, 41 of the 147 RenovAr projects are under construction or in operation,
  representing an investment volume of over USD 2.5 billion and north of 1,600 MW in
  terms of capacity, data from the energy ministry shows. Five projects have already
  started commercial operations, 36 are under construction.

  The signing of the contracts awarded to the 59 projects in the first two RenovAr
  rounds was completed in January 2018. An initial set of seven projects under Round 2
  got their supply contracts signed in March 2018. A further four contracts were signed
  in May. According to a February 2018 World Bank document, 20 projects for 513 MW in
  overall capacity, or nearly a third of the 59 projects awarded in Rounds 1 and 1.5, have
  reached financial close. A group of 33 projects with a combined capacity of 1.7 GW are
  working to meet their contractual deadlines and close financing, while six projects,
  representing 204 MW, have missed their deadlines.

  At present, project developers in Argentina can mainly tap financing from domestic
  banks (which is relatively short-term), as well as development finance institutions and
  export credit agencies. For example, the province of Jujuy raised funds for a 300 MW
  solar development via a green bond sale.

  ROUND 3.0

  A new round of the RenovAr programme is planned for later in 2018. Energy minister
  Juan Jose Aranguren was cited by local media as saying that Round 3 would be
  launched between September and October. The size would be similar to Rounds 1 and
  2, or around 1 GW.

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SOLAR PV DEVELOPMENT IN ARGENTINA

   SOLAR IRRADIATION AND GEOGRAPHICAL RESOURCE

   The Argentine Northwest region (Noroeste
   Argentino), which encompasses La Rioja,
   Salta and Jujuy, and the mountainous area of
   central-west Argentina known as Cuyo, where
   the provinces of Mendoza, San Juan and San
   Luis are located, has the best solar irradiation
   in the country.

   In these two regions, the solar irradiation
   ranges from about 1,800 kWh/sq m to 2,200
   kWh/sq m per year.

   CURRENT INSTALLED CAPACITY &
   POWER GENERATION

   Argentina’s first solar photovoltaic systems
   were installed as part of the Renewable Energy
   in the Rural Market Project (PERMER) between
   1999 and 2012. The first grid-connected
   solar plant, a pilot 1.2-MW project in Ullum
   department, was built in 2010. There has been
   no significant progress in seven years -- at the end of 2017, the country had just 9
   MW of large solar power plants, according to a report by the International Renewable
   Energy Agency (IRENA), released in March 2018. Neighbours Chile, Brazil and Uruguay
   are several hundred megawatts ahead of Argentina with installed solar capacities of
   2,183 MW, 1,097 MW and 239 MW, respectively, at end-2017.

   On the other hand, the RenovAr tenders in 2016 and 2017 awarded contracts to 1.73
   GW of solar projects, which, once completed, will help Argentina catch up. In 2017,
   solar PV plants in Argentina produced 16.4 GWh, which represented just 0.012% of
   MEM demand. In the first quarter of 2018, the solar power output arrived at 5 GWh
   and its contribution, still negligible, was equal to 0.014% of MEM demand (CAMMESA,
   Informe Renovables ABR 2018).
   Data on solar power generation in Argentina since 2011 is available in the table below.
All in GWh   2011      2012      2013      2014     2015     2016      2017      Jan      Feb      Mar
                                                                                 2018     2018     2018
Solar
generation   1.76      8.1       15        15.7    14.7      14.3      16.4      1.6      1.4      2.0

MEM
demand       116,349   121,293   125,166   126,467 132,107   132,961   132,413   12,318   11,339   11,227

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SOLAR PV DEVELOPMENT IN ARGENTINA

  PROJECT LANDSCAPE AND CONSTRUCTION TIMELINES

  Four solar projects with a combined capacity of 400 MW won contracts in the first
  RenovAR tender round in the autumn of 2016, and another 20 solar schemes with a
  combined capacity of 516.2 MW were successful in round 1.5.

  PROJECTS FROM RENOVAR 1.0 AND 1.5

  The Cauchari solar complex in Jujuy province accounted for 300 MW of the 400
  MW awarded in round 1.0. It is a project of the Jujuy State Energy and Mining Society
  (JEMSE), with an 80% stake, and Chinese partners Shanghai Electric and Zhongli
  Talesun Solar. JEMSE announced the start of work on the complex, comprising three
  separate solar parks, in the autumn of 2017. The installation schedule, however,
  was changed because of delays with the construction of the needed electrical
  infrastructure.

  A JEMSE official in March told local media that a key substation would be ready to
  start work by February 2019. A new contract with CAMMESA has been agreed because
  of the delay, extending the deadline for the start of solar power supply to March 2019
  from the previous date in May 2018. Under the revised project schedule, the solar
  panels will be arriving at the site in the second half of 2018.

  The other big solar power project awarded in Round 1 has also been delayed. It was
  won by Isolux and FieldFare and later sold to French energy company Neoen. The
  company said in April it plans to start construction in November 2018 with the aim
  to have the La Puna Solar farm completed by end-2019 and operational in 2020.
  Isolux and FieldFare have also sold a solar project won in RenovAr 1.5, of 97.6 MWp
  in Cafayate, Salta province to Canadian Solar. The latter has announced plans to
  start construction in July. The park is to start feeding power to the grid by the second
  quarter of 2019.

  Five solar projects of Empresa Mendocina de Energia SA (EMESA) in Mendoza were
  also in the RenovAr 1.5 list of awards and in January 2018 signed their contracts
  with CAMMESA. With a combined capacity of 72.5 MW, the solar parks have to start
  operation in 12 to 30 months from the signing. According to renewable energy firm
  360 Energy, the 35 MW Nonogasta solar park was up and ready to run in April this
  year. More projects awarded in the 2016 rounds are progressing and, unless there are
  more delays, Argentina will grow its solar capacity significantly by the end of 2018.

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SOLAR PV DEVELOPMENT IN ARGENTINA

  PROJECTS FROM RENOVAR 2.0

  In November 2017 it was announced that 556.8 MW of solar projects have been
  successful in round 2.0 of the RenovAr programme. In the second phase of the tender,
  completed in December, there were five winning solar bids with a combined capacity
  of 259.5 MW.

  At the end of March 2018 the signing of contracts with the successful round 2 projects
  started with seven contracts, four of which were allocated to solar projects. The 72-
  MW Tocota in San Juan, 6.96-MW Tinogasta II in Catamarca, and the 1-MW Nonogasta
  IV and 20.04-MW Nonogasta II, both in La Rioja, have been won by 360 Energy SA.
  The contracts are crucial for the start of preparations, but even before these are in
  place, developers are drawing and presenting their plans. Martifer Renewables, for
  example, presented to authorities in the province of San Juan its design for the 100-
  MW Guanizuil II PV park before the first contracts were signed.

  In early April French firm Neoen informed government officials in Salta that it plans to
  start construction of a 100-MW solar farm in Altiplano in November and complete it by
  the end of 2019. The schedule is similar to that for the delayed La Puna Solar project.
  Financing for both projects, located in the same municipality, is being negotiated.

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WIND POWER DEVELOPMENT IN ARGENTINA

   WIND SPEEDS AND GEOGRAPHICAL RESOURCE

   The southern provinces of Argentina in the
   region of Patagonia, including Neuquén,
   Chubut, Rio Negro, Santa Cruz and Tierra
   del Fuego, have some of the richest wind
   resources on the planet (Gerlach et al. 2011).
   Central provinces such as Buenos Aires, La
   Pampa and Santa Fe also have sites with very
   good conditions. Wind speeds average 10 m/s
   in Patagonia and the central areas. Capacity
   factors are estimated to be around 45%-55%.

   CURRENT INSTALLED CAPACITY & POWER
   GENERATION

   So far, the enormous potential for wind power
   generation in Argentina remains largely
   untapped. The first large-scale wind farm
   connected directly to the SIN in Argentina was
   the 25.2-MW Arauco I project. It came online in
   2011 and since then has expanded into a much
   larger project, expected to reach 400 MW.

   At the end of 2017, Argentina had 228 MW of
   installed wind power capacity (GWEC, February 2018), after adding 24 MW in the year.
   The International Renewable Energy Agency (IRENA) put the figure at 257 MW in a
   recently published report. The country is lagging significantly behind Latin America’s
   wind leaders Brazil (12.8 GW), Chile (1.54 GW) and Uruguay (1.5 GW). This, however, is
   about to change when projects secured in the RenovAr tenders are fully realised.

   In 2017, wind farms in Argentina produced a total of 615.8 GWh, which could cover less
   than 0.5% of MEM demand. In the first quarter of 2018 that share was 0.44% with 152
   GWh produced by wind turbines. (CAMMESA, Informe Renovables ABR 2018)
   Details of wind power generation in Argentina are available in the table..

All in GWh   2011      2012      2013      2014     2015     2016      2017      Jan      Feb      Mar
                                                                                 2018     2018     2018
Wind
generation   16        348.4     446.9     613.3   593.0     546.8     615.8     56.2     45.7     50.2

MEM
demand       116,349   121,293   125,166   126,467 132,107   132,961   132,413   12,318   11,339   11,227

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WIND POWER DEVELOPMENT IN ARGENTINA

  PROJECT LANDSCAPE AND CONSTRUCTION TIMELINES

  Argentina’s wind energy capacity is expanding mainly thanks to the RenovAr awards.
  Back in 2009, there was also the GENREN tender, which got 1.4 GW in offers and
  resulted in 895 MW of contracts signed, but only 128 MW of commissioned capacity.
  The GENREN experiment failed due to investor concerns over the credit-worthiness of
  CAMMESA, and the overall risk perceived to be present in Argentina.

  Wind capacity in the country is also growing through power purchase agreements with
  large energy consumers and wind projects for own use.

  KEY PROJECTS FROM RENOVAR 1.0 AND 1.5

  The first tender round of the RenovAR programme in the autumn of 2016 contracted
  12 wind projects with a combined capacity of 708 MW. The government immediately
  launched an additional auction, round 1.5, in which it awarded contracts to 10 more
  wind projects, representing 765.4 MW of capacity.

  One of the big wind farms being built under round 1.0 is the 97.2-MW Los Hercules
  wind farm in Deseado department, Santa Cruz province. The developer -- Total Eren,
  has to complete the plant by December 2018. Financing for the project was secured at
  the end of 2017 and the turbine supplier -- Senvion of Germany, said in December 2017
  its contract for the supply and delivery of the 27 turbines for the park has become
  firm. It was later announced that the turbines would start arriving at the site in May
  this year.

  Argentina-based power producer Central Puerto SA also secured financing, about USD
  119 million, for the 100-MW La Castellana wind project in Buenos Aires province near
  the end of 2017. The wind turbine supplier, German firm Nordex, expects to complete
  the wind park in the summer of 2018.

  Several phases of the Arauco expansion project in La Rioja province were also
  successful in the 2016 RenovAr rounds. Round 1.0 awarded a PPA for 100 MW of
  additional capacity at Arauco, while a further 95 MW were secured in round 1.5 of the
  programme. Parque Eolico Arauco SAPEM, 75% owned by the La Rioja government, is
  the company behind the expanding project. The 195 MW new capacity will be up and
  running by 2019.

  Argentine thermal and renewable energy group Genneia SA secured several projects
  in the round 1.0 and 1.5 auctions, including the 100 MW Pomona wind farm.

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WIND POWER DEVELOPMENT IN ARGENTINA

  The turbines for it will be installed in early 2019, according to the supplier Nordex.
  Construction works started in the spring of 2018 at the 38 MW Necochea Wind Park,
  Buenos Aires province, also secured by Genneia.

  Danish wind turbine manufacturer Vestas is to start equipment delivery in the third
  quarter of 2018 for the 40 MW project Parques Eolicos Vientos del Sur SA, a unit of
  Grupo Frali SA. The contract for the La Banderita project in La Pampa was won in the
  RenovAr 1.5 renewable energy auction. The first turbine foundation was completed in
  April and the park is set to go on stream in the first quarter of 2019.

  KEY PROJECTS FROM RENOVAR 2

  The Argentine government in November 2017 awarded 1,408.7 MW of renewable
  energy capacity under round 2 of its renewable energy programme. This includes
  eight wind projects, representing 665.8 MW of capacity. A second auction in December
  2017 awarded 634 MW, of which 328 MW were wind contracts.

  Argentina signed the first seven contracts with successful projects in round 2 of its
  RenovAr renewable energy auction programme at the end of March 2018. The list
  did not include any wind. Updates regarding the financing, equipment orders and
  construction of the winning wind projects are expected after they sign firm contracts
  with CAMMESA.

  WIND POWER PROJECTS OUTSIDE RENOVAR

  There are a number of wind projects in Argentina that are being built outside the
  renewable energy auctions programme. This market is driven by companies in
  Argentina which want or need to buy wind power to cover some of their demand.

  Aluminum producer Aluar Aluminio Argentino SAIC in the first quarter of 2018 started
  receiving components for 14 Vestas wind turbines of a 50-MW wind farm. It will help
  the company meet requirements for large electricity users to source a portion of their
  demand from renewables. The company has announced plans to install a total of 200
  MW of wind power generation capacity in Chubut province.

  Argentine state-run oil company YPF also built a wind farm -- the 100-MW Manantiales
  Behr, to meet a portion of its needs.

  In early 2018, Argentina-based power company Pampa Energia announced the start of
  construction of two wind farms with a combined capacity of 100 MW, whose power will
  be sold to private large-scale consumers. The Pampa Energia and De la Bahia wind
  parks have been granted dispatch priority for 50 MW and 28 MW of their respective
  capacities.

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FORECASTED INSTALLED CAPACITY OF WIND AND
  SOLAR POWER PROJECTS BY 2025

  Demand for electricity in Argentina is expected to increase to 170 TWh in 2025 from
  135 TWh in 2015. (Ministry of Energy and Mining, June 2017). Renewables will play a
  major role in meeting the additional demand with 10 GW of new capacity planned to
  be put online in the period. Thermal power, large hydro and nuclear power are to add
  6 GW, 3 GW and 1 GW respectively.

  According to market estimates, Argentina could have 5 to 6 GW of wind power
  capacity at the end of the year 2025. At least 2.5 GW have already been secured in the
  RenovAr tenders and a new one is coming up in the second half of 2018. For solar, the
  expectation is that the country could reach up to 2 GW of capacity by 2025.

  The energy ministry has also released two scenarios to 2030. The “Trend+Investment”
  scenario envisaged total of 34.3 GW of new power capacity, including 18.2 GW from
  renewable energy sources. Capacity additions under the “Efficient+Investment”
  scenario stand at 26.4 GW, including 14.3 GW of renewables.

            Estimated Investment (in US$ billions)
                                                                                 5 Bill. US$

      TRANSMISSION                                      5                            >5K km
      THERMAL POWER                                     4.8                          +6 GW
      NUCLEAR POWER                                           6                      +1 GW
      HYDROPOWER                                                   10.2              +3 GW
      RENEWABLES                                                                15   +10 GW
         DEMAND 2015 - 135 TWh                                       DEMAND 2025 - 170 TWh

   Source: Ministry of Energy and Mining, June 2017

  According to market estimates, Argentina could have 5 to 6 GW of wind power
  capacity at the end of the year 2025. At least 2.5 GW have already been secured in the
  RenovAr tenders and a new one is coming up in the second half of 2018. For solar, the
  expectation is that the country could reach up to 2 GW of capacity by 2025.

  The energy ministry has also released two scenarios to 2030. The “Trend+Investment”
  scenario envisaged total of 34.3 GW of new power capacity, including 18.2 GW from
  renewable energy sources. Capacity additions under the “Efficient+Investment”
  scenario stand at 26.4 GW, including 14.3 GW of renewables.

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FINANCING RENEWABLE ENERGY PROJECTS
  IN ARGENTINA

  Renewable energy projects in Argentina still mainly seek financing from domestic
  banks and for relatively short-term loans. Development finance institutions (DFIs) and
  export agencies can also be approached as well as the green bond market.

  Though international banks are increasingly interested in the Argentine power sector,
  they have not yet fully re-entered the market, so projects in the country rely on equity
  more than is common in other markets, the World Bank observes. Via its FODER
  guarantees, the international institution is a key actor on the renewable energy stage
  in Argentina, offering guarantees to projects competing in the tenders.

  In November 2017, long-term international project finance returned to the power
  sector in Argentina, where it had not been available since the early 2000s, with the
  financial close of Central Puerto’s 100-MW La Castellana wind project. It was led by
  the International Finance Corporation (IFC), which is also assessing options to extend
  debt financing to other IPPs in the country. It is working in close collaboration with
  the International Bank for Reconstruction and Development (IBRD), both being World
  Bank Group members. The Multilateral Investment Guarantee Agency (MIGA), another
  member of the group, is also contemplating its reengagement in the energy sector of
  Argentina.

  FODER AND WORLD BANK GUARANTEES

  Law 27.191, which in 2016 set the 20% renewable power target by 2025, also created
  the Trust Fund for the Development of Renewable Energies (FODER) and offered
  a VAT tax rebate and accelerated depreciation in order to boost investments in
  renewables. The government’s plan was to make it possible for RenovAr winners to
  get better financial conditions by getting access to guarantees by FODER, through
  escrow accounts (Cuenta de Garantía), and the World Bank, through the IBRD.

  The risk mitigation instruments provided by FODER were welcomed by potential
  financiers, but these were not sufficient to attract the required investments. The
  political risk and the lack of experience financing renewable energy projects in
  Argentina were major concerns for financiers. Here is where the IBRD stepped in and
  announced a guarantee of USD 480 million for renewable energy IPPs in RenovAr
  rounds 1.0 and 1.5. The Indemnity and Guarantee Agreements were signed in August
  2017 and the guarantee became effective in December 2017. A total of 27 projects with
  a combined capacity of 1,033 MW, out of 2,424 MW awarded in the 2016 rounds, opted
  for the IBRD guarantee.

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FINANCING RENEWABLE ENERGY PROJECTS
  IN ARGENTINA

  In March 2018, the World Bank approved a new USD-250-million guarantee for
  RenovAr 2 projects. Fifteen projects with a combined capacity of 605 MW, out of
  2,043 MW awarded in that round, have requested the guarantee. Overall, the World
  Bank observes increasing confidence in investing in the Argentinian renewable energy
  market, as the percentage of bidders requesting the guarantee has been decreasing
  in the three tenders. It stood at 52% in Round 1.0, at 35% in round 1.5, and at 19% in
  Round 2.0.

  Wind and solar developers are more interested in the IBRD guarantee as 37% to
  39% of the solar and wind capacity awarded has received it. In contrast, about 19% of
  bioenergy and small hydro projects have the guarantee. The difference is consistent
  with the greater size, financing needs and international profile of wind and solar
  projects, the World Bank explains.

  The pie charts below show the origin of bidders with or without the guarantee.

      RenovAr Program - Awarded bidders' origin with or without IBRD Guarantee

      With IBRD Guarantee                              Without IBRD Guarantee

                                                                    3% 2%
         15%                                                   2%
                                                       15%
                                          Argentina
 5%
                                          Europe
                                          Usa / Canada
                                          China
                                          Brazil             77%
   29%
                       51%

  As a whole, 48% of bidders that opted for the IBRD guarantee included foreign
  investors. In rounds 1.0 and 1.5 the percentage of international investors that
  requested the IBRD guarantee stood at 56%, while in round 2 it increased to 67%.

www .AIRECWEEK. com                   www.airecweek.com                                    29
FINANCING RENEWABLE ENERGY PROJECTS
    IN ARGENTINA

    GREEN BONDS

    Argentina was one of 10 new entrants to the green bond market in 2017, according
    to the Climate Bonds Initiative (CBI). La Rioja province announced the issuance of a
    USD-200-million green bond due 2025 to support the expansion of the Arauco wind
    farm. The bond has an amortizing structure bearing a semi-annual coupon of 9.75%.
    The CBI recognised La Rioja’s issuance at its 3rd Annual Green Bond Pioneer Awards
    (GBPA) in 2018, in the “New Countries Taking Green Bonds Global” category. GBPA
    recognize organisations, financial institutions and government bodies and individuals
    who have led the development of green finance and green bond markets in the past
    year, providing positive examples of climate resilient and low carbon investment.

    Jujuy province issued a USD-210-million green bond several months after La Rioja,
    raising financing for the 300-MW Cauchari solar project. It was several times
    oversubscribed, attracting offers for a total of USD 744 million. The term is of five
    years and the coupon is 8.62%.

    Argentina’s Banco Galicia in March 2018 announced that the IFC has subscribed to its
    USD-100-million green bond. The proceeds will be used to support climate change
    mitigation projects, including energy efficiency, renewable energy, and sustainable
    construction projects. Argentina’s Banco Galicia in March 2018 announced that the
    IFC has subscribed to its USD-100-million green bond. The proceeds will be used to
    support climate change mitigation projects, including energy efficiency, renewable
    energy, and sustainable construction projects.

    PROJECT FINANCING

    The table shows details on financing secured for some of the bigger wind and solar
    projects in Argentina.
Project              Capacity   Project owners                Debt         Lenders/Backers
                                                              financing
                                                                           IDB Invest, international commercial
San Juan Solar       80 MW      JinkoSolar                    USD 60.15m   entities, Canadian Climate Fund for the
Power Project                                                              Private Sector in the Americas (C2F)
Vientos los Hércu-                                                         KfW IPEX-Bank, DEG, FMO, Euler
                     97.2 MW    Total Eren                    USD 167m
les Wind Farm                                                              Hermes
La Castellana Wind 100 MW       Central Puerto                USD 119m     IFC, MCPP, IDB, Banco Galicia
Project
El Corti Wind                   Greenwind SA (owned by Pam-
                     100 MW                                   USD 104m     IIC, Banco Santander, ICBC
Project                         pa Energia & Castlelake LP)
Cauchari solar                  JEMSE, Shanghai Electric,
                     300 MW                                   USD 331.5m   China Exim Bank
complex                         Zhongli Talesun Solar
Manantiales Behr     100 MW     YPF                           USD 200m     IIC, BBVA, Citibank, Banco Santander
Wind Farm

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PROCURING RENEWABLE ENERGY FOR COMMERCIAL
  AND INDUSTRIAL ENERGY USERS

  Industrial and commercial users account for about 60% of the electricity consumption
  in Argentina, as illustrated by data for the first quarter of 2018, provided by CAMMESA.

  Back in 2006, the government
  launched its Energia Plus             100%
  programme, which offered an                    27%            28%            30%
                                        80%                                                Industrial
  alternative electricity supply
  service to large industrial clients   60%                                                Commercial
                                                 29%            29%            29%
  with a demand higher than 300
  kW. Large users were allowed          40%                                                Residential
  to contract directly with new                  44%            44%
                                        20%                                    40%
  generation and/or generating
  agents, co-generators or self-        0%
  generators who were not agents               January 2018   February 2018   March 2018
  of the electricity market.

  The renewable energy legislation (Laws 26.190 and 27.191) later introduced a
  requirement for the same group of power users to source 8% of their power from
  renewable energy sources by 2018, scaling up biannually to 20% by 2025. Following
  up, in August 2017, the Argentine Ministry of Energy and Mining published Resolution
  No. 281-E/2017, spelling out details of how this requirement should be met and how
  the new Renewable Source Electric Power Term Market Regime (or MATER in its
  Spanish acronym) will operate.

  In a nutshell, to comply with their renewable energy consumption quotas, large power
  consumers can choose between 1) the joint purchases system (Compras Conjuntas
  through CAMMESA and the RenovAr programme), 2) concluding a private PPA, or 3)
  developing a self-generation project or a co-generation project.

  Private PPAs are expected to be the preferred form of complying with the renewable
  energy consumption quota as the PPA terms and conditions can be freely agreed
  between the contracting parties with the only exception that the price cannot exceed
  USD 113/MWh.

  Before concluding such a PPA, large consumers need to specifically opt out of the
  government’s joint purchasing mechanism. The opt-out notification can be done twice
  a year, at the beginning of the seasonal schedules of the MEM. The minimum term for
  the exclusion is set at 5 years.

www .AIRECWEEK. com                     www.airecweek.com                                                31
PROCURING RENEWABLE ENERGY FOR COMMERCIAL
  AND INDUSTRIAL ENERGY USERS

  A total of 2,287 large electricity consumers with a combined consumption of 33,087
  GWh in 2017 will need to meet the renewable energy consumption quota this year,
  CAMMESA said in April 2018. The 403 GUMA users account for the largest part of
  the demand or 19,961 GWh in 2017. Three GUMA companies – cement and aluminum
  producers, have already notified CAMMESA that they wish to opt out of the joint
  purchasing mechanisms. Details are given in the table below.
   Company name                Type of    Consumption in    Medium capacity    Opt-out
                               user       2017 (MWh)        in 2017(MW)        from date
  Loma Negra (Catamarca)       GUMA       137,841.9         15,735             1/2/2018
  Loma Negra (Olavarria)       GUMA       162,758.7         18,580             1/2/2018
  Aluar SA                     GUMA       2,521,557.3       287,849            1/8/2018

  Cement maker Loma Negra was the first to sign a corporate renewable PPA under
  Argentina’s new regulatory framework. In October 2017, it announced it will buy wind
  power from the 24 MW extension of the Rawson wind farm of Argentine energy
  company Genneia SA under an agreement that runs through December 31, 2037.

  According to Resolution No. 281-E/2017, to supply energy for the consumption quotas
  of large, renewable energy generation, self-generation and cogeneration projects
  must meet the following conditions:

  1 - Started operation after January 1, 2017;
  2 - Have been registered in the National Register for Renewable Energy Power
       Generation (RENPER)
  3 - Do not qualify as projects committed under a different contractual regime (e.g.
       having an existing PPA with CAMMESA).

  In the event that more than one project has filed for the same interconnection point,
  and the transport capacity is not enough for all of them, the regulation provides for a
  dispatch priority depending on: (i) the earliest beginning of the operation; and (ii) the
  biggest factor capacity project, fixed in accordance to the updated provisions of the
  production of energy, which shall be duly certified by a qualified independent consultant.
  Granted such priority, the renewable project will have the same dispatch priority as the
  projects in the joint purchasing mechanism.

  In January this year, an initial group of nine wind and solar power projects, with
  a combined capacity 273.12 MW, was granted dispatch priority within the MATER
  framework. These assignments followed the receipt of 38 requests for 2,150 MW of
  capacity by the deadline of November 30, 2017.
  A total of 44 renewable energy projects with a combined capacity of 2,031 MW have
  submitted dispatch priority requests during the first quarter of 2018, CAMMESA said in a
  recent report.

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