On April 25, 2023, the Secretary of Energy issued Resolution No. 284/2023 (“Resolution 284” and the “SE”), which includes new rules allowing early termination of Power Purchase Agreements (“PPA”) entered under Resolution No. 202/2016 of the former Ministry of Energy and Mining that have not yet achieved  commercial operation date (“COD”), and RenovAr 2 and 3.

The purpose of Resolution 284 is to help free up power transmission capacity, in turn making it available to new projects and subject to request for dispatch priority.

Similarly, Resolution SE No. 1,260/2021 had already contemplated the right to amend the terms of PPAs under RenovAr 1, 1.5, 2 and 3, in addition to early-exit rights (for additional information on Resolution SE No. 1260/2021, please click here). However, Resolution 284 only allows early termination and is limited to PPAs under Resolution No. 202/2016 of the former Ministry of Energy and Mining and RenovAr 2 and 3.

Following the enactment of Resolution 284, Annex 3 of the Corporate Market Regime (MATER, for its Spanish acronym, Mercado a Término de Energías Renovables) that is updated and published periodically by Compañía Administradora del Mercado Mayorista Eléctrico Sociedad Anónima (CAMMESA), should be followed closely to see whether the capacity being released will be included in such annex and if dispatch priority requests will be allowed with respect to such new capacity.

Please see below a summary of Resolution 284.

1. Key takeaways of Resolution 284

1.1. Eligible projects for early termination

Projects with PPA under (a) Resolution 202/2016 of the former Ministry of Energy and Mining, that have not obtained COD, and (b) RenovAr 2 and 3, may choose to voluntarily terminate their PPA.

1.2. Requirements for early termination

Projects that may choose to voluntarily terminate their PPA must:

  1. Make a one-off payment of US$ 35,000 per MW;
  2. Waive to any right, action or administrative, judicial, extrajudicial or arbitration claim, either in local or foreign venue, against the National Government, the SE and/or CAMMESA;
  3. Indemnify the National Government against, and hold the National Government harmless from, any action, administrative, judicial, extrajudicial, extrajudicial or arbitration claim, either in local or foreign venue, that may be asserted by its shareholders or controlling, controlled or affiliates; and
  4. Waive to any tax benefits granted thereto.

1.3. Deadline for requesting early termination

All requests must be filed with CAMMESA within a term no longer than 30 calendar days as of April 25, 2023 (i.e., May 25, 2023). Since May 25 and 26, 2023 are holidays in Argentina, it is advisable to confirm with CAMMESA if requests will be received on the business day immediately thereafter (i.e., May 29, 2023).

2. Additional matters

The proceeds of the termination payments will be destined to the Fund for the Development of Renewable Energies (“FODER”, for its Spanish acronym, Fondo para el Desarrollo de las Energías Renovables).

Projects that are early terminated will also be required to terminate their FODER Joinder Agreement.

 

For additional information, please contact Nicolás Eliaschev, Javier Constanzó and/or Rocío Valdez.