(Bloomberg) -- Wind was the cheapest source of energy in Argentina's first power auction after the country implemented reforms designed to transform its fossil fuel-dependent grid.
The minimum price for wind power reached $49.10 a megawatt-hour in the auction, Sebastian Kind, undersecretary for renewable energy, told reporters in Buenos Aires Friday. Solar power came in at $59 a megawatt-hour, biomass was $110 and hydropower projects were $111.10. The government said it will announce the winners on Oct. 7, five days earlier than it had initially planned.
“We hope future prices keep declining as we have more competition,” said Energy Minister Juan Jose Aranguren.
President Mauricio Macri has made renewable energy one of his main priorities since taking office in December, by establishing new regulations and organizing auctions. The government expects to attract $1.5 billion to $2 billion in investments with the tender. One of Macri's first acts was a law requiring industrial consumers to get 8 percent of their power from renewable sources in 2017 and 20 percent by 2025.
Renewable energy developers applied to sell 6,366 megawatts of power in the auction, more than six times the amount the government plans to sell. Wind farms accounted for more than half, or 3,478 megawatts of capacity.
The average price for wind power was $69.50 a megawatt-hour. That's a bit higher than Brazil got last year, 203.46 reais ($62.37). Wind power in Brazil is some of the cheapest in the world. The Argentinian government expected companies to offer rates of $40 to $100 a megawatt-hour, lower than current power prices that exceed $100.
More than 60 percent of Argentina's energy capacity comes from fossil fuels. While Mexico and Chile have 4.8 gigawatts and 3 gigawatts of renewable energy installed at the moment, respectively, Argentina has 682 megawatts, according to Bloomberg New Energy Finance.
To contact the reporters on this story: Vanessa Dezem in Sao Paulo at vdezem@bloomberg.net, Silvia Martinez in Buenos Aires at smartinez19@bloomberg.net. To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Will Wade, Robin Saponar
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