Electric power market reform in Argentina could trigger medium-term investment in new generation capacity and gas pipelines supplying thermoelectric plants, BNamericas was told.
A broad market normalization process is set to enter the implementation phase in November, when a series of requisite rules must be in place.
Decree 450/2025, which sets the reform in motion, was introduced in July. Implementation is scheduled through 2030.
A key pillar is the return to a spot market based on a marginal cost pricing system, alongside a broader term market for corporate power purchase agreements (PPAs). In the current regulated (spot) market, prices are set by the federal energy department and updated periodically.
Another element allows generators to procure their own fuel, a process typically managed today by wholesale power market administrator Cammesa. Self-procurement will be voluntary at first, with incentives for early adopters, before becoming mandatory.
“It is a very promising step toward returning to the normality of what the Argentine electricity market is – or was until 2013,” Juan Cruz Azzarri, energy partner at Argentine law firm MHR (Martínez de Hoz & Rueda), told BNamericas.
A period of market intervention began in 2013, with a major step being the halting of PPAs between thermoelectric and hydroelectric generators and private offtakers.
President Javier Milei is currently working to reduce state control over the industry and expand the role of the private sector.
On the marginal cost pricing shift, Azzarri said: “It’s going to generate business and revive the term market [corporate PPAs] for any type of technology.”
To shield against potential spot price volatility, large users will need to sign contracts in the term market for both electricity and capacity.
Regarding new infrastructure investment, Azzarri said opportunities could emerge in generation and natural gas transport, noting that progress on macroeconomic stabilization remains a prerequisite.
“Undoubtedly, in the medium term such a system will allow the market to develop, the signing of new PPAs, and the construction of new projects, both for generation and gas transportation,” he said.
Demand for new gas pipelines – both trunk and branch – is expected to rise as supply-side players seek to capitalize on the abundant and relatively cheap gas from the Vaca Muerta shale play.
“The opportunities will be there, because the consumer, the large user, has a way to guarantee not only the supply of energy, but also the price. That is critical. Otherwise, they will have to go to the marginal price,” Azzarri said.
Silvia Zumarraga, Latin America general manager for market development at Finnish energy solutions company Wärtsilä, said: “The lineamientos [the reform roadmap published recently by Cammesa] are a prime opportunity for Argentina to send out market signals concerning optimum generation technology needed, and to structure a market with higher resolution that provides visibility of true costs. In addition, the adoption of what works in other markets around the world.”
Zumarraga added that Wärtsilä, which has around 700MW of installed thermoelectric capacity in Argentina – mainly open cycle – and is analyzing over 140 power systems worldwide, could support Argentina by contributing its technical and regulatory expertise.
Argentina also has abundant and under-tapped wind and solar resources, with wind in some parts of the Patagonia region offering particularly high capacity factors.
Investment in transmission infrastructure is needed, especially in regions with the best renewables resources. A related reform effort is underway to incentivize private investment in new lines.
Rating agency Fitch said the reform was credit positive for generators, as it allows more PPAs at competitive prices and reduces their counterparty exposure to the government via today’s intermediary, Cammesa.
For supply to smaller users such as households and SMEs, electricity distributors will be required to procure most of their demand directly from generators via PPAs, instead of through Cammesa. Existing PPAs between generators and Cammesa will be transferred to distributors.
Fitch said the reform would reward the most efficient generators, but also warned of potential political risk stemming from any sudden price hikes that affect end-users.
“Sharp tariff hikes risk political backlash and weaker collections” for distributors, the agency said, adding that funds previously channeled to Cammesa could be used to soften the blow on consumer bills.
Alongside monitoring the macroeconomic scenario, market participants will also watch the results of October’s midterm elections to assess congressional support for Milei and his party.
(The original version of this content was written in English)