https://www.bnamericas.com/en/news/neuquen-slams-federal-governments-move-to-take-control-of-hydro-plants

Neuquén slams federal government’s move to take control of hydro plants

Argentine province Neuquén criticized a federal government decision to take over the operations of hydropower plants on the Limay and Neuquén rivers.

The concession contracts for the facilities – currently in the hands of private companies – are due to expire this year. 

The plants are El Chocón (pictured) and Arroyito, operated by Enel; Alicurá, operated by AES Argentina; Planicie Banderita, run by Orazul Energy; and Piedra del Aguila, operated by Central Puerto.

State energy company Energía Argentina is poised to assume control, a move branded “illegal, antidemocratic and centralist” by Neuquén governor Omar Gutiérrez, who added that provinces had jurisdiction over their natural resources.

Neuquén, along with neighboring Río Negro, had petitioned for an active role in the administration of the plants. Last year they “ratified the convenience and need to intervene in everything related to the administration, operation, maintenance, commercial usage and conservation of hydroelectric facilities.” 

The federal government had commissioned reports on the technical, economic, legal and environmental aspects of hydropower concessions. Under the law, physical works are the property of the federal government, while water is the property of provinces. 

The Neuquén and Río Negro plants are located on rivers that constitute a border between the two jurisdictions. 

Neuquén aims to charge Buenos Aires to use the water and wants a slice of the revenue from the power generated, Gutiérrez stated. He said provincial officials “were working on it,” adding that the jurisdiction had also been unfairly impacted by a central bank measure forcing provinces to obtain dollars at the unofficial rate to address foreign currency-denominated debt.

Río Negro province, meanwhile, has called for a meeting with federal authorities. 

In a statement, Río Negro province said: "The position of the province as owner of the resource shared with the other provinces is clear regarding the need to 'approve' any kinds of decisions that involve the management of water for multipurpose uses, located in the Limay and Neuquén rivers."

Twenty-one generation concessions are scheduled to expire by 2029, the bulk within the next several years. Another is due to end in 2044. The plants have combined installed capacity of 5.8GW – around half of Argentina’s total hydroelectric capacity of 10.8GW. 

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Meanwhile, In Chile, energy minister Diego Pardow said a proposed US$2bn energy storage auction involves installing various systems in the country’s “Norte Grande,” which comprises sun-drenched regions Arica y Parinacota, Tarapacá and Antofagasta.

A bill paving the way for the auction would be presented shortly, Pardow said, adding that the process was a concrete step to support the country’s net-zero goals.

Winning bidders will be able to charge batteries during solar hours and inject electricity into the grid when the sun goes down, helping tackle electricity curtailment. Revenue could also potentially be obtained for associated grid services – not just for energy arbitrage.  

Officials aim to auction contracts in 2024 and for systems to be operating in 2026. Private players are already building some storage capacity. Some projects already have the environmental green light and billions of dollars’ worth of renewables-storage projects are in the environmental review phase. 

As is happening in other countries, Chile’s renewable energy park has grown rapidly over the past decade, outpacing transmission expansion, which is typically a more complex process. Various intertwined factors, such as solar oversupply and line congestion, is impacting the finances of some 100% renewables firms.  

Chile has an energy storage law that opens the door for remuneration for capacity and injection from standalone storage plants, that is, those not integrated into a renewable energy park. Energy ecosystem players are awaiting the secondary legislation, which will constitute an important signal for potential investors. The rules are due by year-end.

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