Argentina's government is expected to begin working on a new framework for base energy remuneration in the coming months following the issue of a resolution on March 1 that replaced a resolution from January 2017 as part of efforts to promote "greater freedom and competition" in the wholesale power market.
During power producer Central Puerto's 2018 results presentation on Tuesday, CEO Jorge Rauber said that in a meeting with authorities this week, they were told that a new regulation could be in place by next year.
When asked about the impact on the company's financials, the executive estimated an impact of 15-20% on current Ebitda , but that this will depend on dispatch.
Central Puerto's financials highlight that power capacity payments to be applied starting March 1 for thermo generation are up to US$7,000/MW/month in December, January, February, June, July and August, and up to US$5,500/MW/month in March, April, May, September, October and November.
Power capacity payments under the previous resolution were up to US$7,000/MW/month.
In addition, under the March 1 resolution, energy payments for generation with natural gas and fuel oil/gas oil was pegged at US$5.4/MWh and US$8.4/MWh, respectively, versus the previous structure of US$7/MWh and US$10/MWh.
Rauber added that authorities did not provide an indication of what the new framework could include, but he stressed that any new regime must take into account the interaction of renewable energies, given their variability versus baseload power.
With regard to Argentina's supply and demand situation, the CEO said: "What we see today is a kind of excess capacity in the market so we don't see much opportunity for new projects except perhaps for renewables."
He stressed that the lack of transmission capacity needs to be addressed , but that the country's current financial and economic situation poses a challenge.
Pictured: The Brigadier López thermo plant which Central Puerta picked up last month in an auction by state energy company IEASA.