Paraguay plans to publish the tender documents for its first photovoltaic project, 140 MW, for the Loma Plata project, in the coming weeks , following successive legal modifications and the conclusion of the public consultation phase of the call for bids.
“The bidding documents will be released at the end of October or the beginning of November, after many twists and turns and legal transformations, more than anything else,” said Mauricio Bejarano, Vice Minister of Mines and Energy of Paraguay, during the Future Energy Summit (FES) Government and Investment meeting.
The Loma Plata project, located in the Central Chaco region, will be the first experience with this contracting model. The state-owned company will purchase all of the electricity generated through an agreement of up to 30 years , which includes 18 months of construction, 27 years of operation and maintenance, and six months of decommissioning.
With this, the government seeks to finalize the first contract for private generation and establish a mechanism of successive calls for bids, with long-term contracts and guarantees that allow financing of new capacity, based on what Argentina did almost a decade ago.
The initiative was even informally named RenovPar during the panel discussion at FES Government and Investment, although this is not an official name.
“With this first solar tender, we want to replicate what Argentina did with the RenovAr Program (which awarded over 5,000 MW of renewable energy in Argentina between 2016 and 2018). We are trying to copy it and call it RenovPar, with a Paraguayan component, and even the same backup mechanisms for that energy purchase,” Bejarano stated.
The Loma Plata project, located in the Central Chaco region, will be the first experience with this contracting model. The state-owned company will purchase all of the electricity generated through an agreement of up to 30 years , which includes 18 months of construction, 27 years of operation and maintenance, and six months of decommissioning.
The first call for tenders will thus have an additional function: to serve as a reference for subsequent contracts, in a market where demand is growing at a rate that requires the sustained incorporation of new power.
The precedent that Paraguay is looking to is that of Argentina. Between 2016 and 2023, public tenders that included RenovAr, RenMDI and other procedures awarded 5,929 MW through 283 PPA contracts .
However, the power historically awarded does not equal all the projects that maintain active contracts, since according to data from the Wholesale Electricity Market Management Company (CAMMESA) , 123 contracts remain in force, with an average cost for the Wholesale Electricity Market of USD 73.5 x MWh .
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Beyond the volume of contracts, Paraguay is focusing on the financial support mechanisms that accompanied the Argentine experience. The possibility of replicating them appears to be one of the conditions for attracting developers and mobilizing larger-scale investments.
“The planned regulations include a trust fund by ANDE for the purchase of that energy, but later we will seek a sovereign guarantee or a multilateral guarantee to have the level of investment we need in all sectors,” Bejarano explains.
The financial challenge is considerable, given that the Executive estimates that Paraguay will need between USD 15 billion and 20 billion in investments (around USD 2 billion annually) over the next ten years to meet the needs of generation, transmission and distribution, resources that it intends to attract through private capital, commercial banks and multilateral organizations.
“ The big step we are taking in the country is the regulatory changes with which we seek greater openness to private capital, to the entry of private capital ,” says the deputy minister.
The changes affect laws promoting renewable energy, small hydroelectric plants, and natural gas for power generation. They also open new possibilities for sales between individuals, exports, self-consumption, and concessions .
This opening comes as electricity consumption accelerates. According to Bejarano, demand increased by 19% during the six-month period in question , putting pressure on the system's expansion plans.
“ In our calculations, we anticipate a projected growth of 400 MW of installed capacity per year ,” the official stated. Additional estimates indicate that Paraguay could need up to 800 MW of new capacity to meet consumption and accommodate the incorporation of industrial projects. Meanwhile, ANDE (the Paraguayan National Electricity Administration) anticipates an expansion of 400 to 500 MW annually .
Regulatory changes and a new framework for the electricity sector
The government is also planning an institutional reorganization to support the opening to new energy generators. Immediate measures include the creation of a new Ministry and the establishment of an independent regulatory body .
“ In a very short time we will have a Ministry of Energy, Mining and Logistics ,” emphasized the current Vice Minister of Mines and Energy of Paraguay.
In a second phase, the Government intends to modify ANDE's Organic Charter and create an independent office . Both reforms would be implemented in the medium term and would form part of the structural transformation proposed by the Deputy Minister.
“So this high consumption of electricity that we are experiencing leads us to rethink absolutely everything, in order to have a robust energy matrix margin with greater possibilities of electricity security,” concludes Bejarano.
For now, the publication of the Loma Plata tender documents will be the next milestone . Its development will allow for testing private contracting of power generation, while Paraguay defines the necessary guarantees and regulatory conditions to extend the model to new auctions.