On September 23rd, Congress passed a bill amending Law 26.190 (Renewable Energies Regime). Although the enactment of this bill by the Executive Power and its publication in the Official Gazette is still pending, we hereby point out seven out-standing aspects of the reform approved that may have a strong impact on the development of renewable energies in Argentina:

1. The goal for the contribution of renewable sources in electricity consumption is divided in two stages and is expanded

A short-term target is set to reach an 8% by 2017 (first stage), and a long-term goal is established to reach 20% by 2025.

2. A tax incentive regime is introduced

The regime includes the anticipated reimbursement VAT, accelerated amortization of income tax, tax certificates, and exclusion from the application of tax on minimum presumed income.

3. Creation of the Trust Fund for the Development of Renewable Energies (FODER)

A Government trust-fund named FODER is created in which the Ministry of Economy and Finance will act as trustor, the Bank for Investment and Foreign Trade (BICE) will act as trustee and the beneficiaries will be investors in renewable energy projects.

The FODER will be funded by the National Treasury with sums equating to no less than 50% of annual cash savings fossil fuels imports due to the addition of renewable energy generation in the previous year.

The FODER will be entitled to provide funds and grant loans, issue securities, make capital contributions and provide guarantees.

4. An obligation that all power users must contribute to achieve the goals of renewable energy consumption share is imposed

In order to achieve this goal, a gradual scale of contribution is established as follows: 8% at December 31, 2017; 12% at December 31, 2019; 16% at December 31, 2021; 18% at 31 December 2023 and 20% at December 31, 2025.

Large users with power demands greater than 300 kW must meet these targets at the dates specified above, and in order to do so they may auto-generate their consumption or purchase power generated by renewable sources. PPA prices may not exceed an average of U$S 113 per MW/h.

Should large users fail to meet these targets they will liable to pay a fine at a cost equivalent to the variable cost of power production with the use of imported diesel oil.

5. An import regime is introduced

Until December 31, 2017, those companies developing renewable energy projects are exempted from import duty payment for capital goods, special equipment or parts.

6. It is established that access and use of renewable energy sources will not be taxed and will not be liable for royalty payment

This provision is valid until 31 of December, 2025.

7. Dispatch rules
It is established that power from intermittent renewable resources will have a similar treatment to the one received by run-of-the-river hydropower plants.