Argentina prepares tender to modernize Los Nihuiles hydropower complex

The government of Mendoza province in Argentina is preparing a new competitive tender to modernise and reactivate the Los Nihuiles hydropower complex, aiming to restore damaged infrastructure while enabling the project to sell electricity through the country"s Mercado a Término (MAT), Argentina"s private power contracting market.

According to Jimena Latorre, Mendoza"s Minister of Energy and Environment, the project will operate under Resolution SE No. 400/2025, a regulatory framework issued by Argentina"s national Energy Secretariat that allows thermal, hydroelectric, and nuclear plants to sign bilateral power supply contracts directly with large electricity consumers.

Under normal operating conditions, the Los Nihuiles complex would reach 220 MW of contractual capacity in the MAT market.

"Within Resolution SE No. 400/2025, hydropower plants will be able to sign contracts.

For example, Los Nihuiles will contract through the MAT with a capacity of 220 MW under normal operating conditions," Latorre explained.

The provincial government is designing a tender process that goes beyond a simple refurbishment of the existing hydropower facilities located in the Atuel Canyon, one of Mendoza"s main hydroelectric hubs.

Authorities aim to attract private investment not only to restore the current infrastructure but also to increase future generation capacity.

The provincial government expects to launch the tender during the first half of the year.

The process comes at a pivotal moment for the complex, whose original 30-year concession expired in 2024 and has been temporarily extended until mid-2025 while a new operational model is defined.

The tender also faces technical challenges after severe storm damage in early 2025, which affected several hydroelectric plants in the Atuel Canyon.

The event caused significant structural damage and forced multiple turbines offline, reducing the complex"s operational capacity and making rehabilitation works a key part of the upcoming concession.

As a result, the new contractual structure will differ from the traditional mechanisms used by hydroelectric plants in Argentina"s wholesale electricity market (MEM).

Instead, the project will rely on the Mercado a Término (MAT) framework, which enables generators to sign direct power supply agreements with large industrial users, providing more flexible revenue mechanisms.

Alongside the hydropower tender, Mendoza is advancing a major electricity transmission expansion program financed through provincial compensation funds, with the goal of strengthening grid infrastructure and enabling new energy investments.

One of the most significant projects is the construction of the Valle de Uco 220/132 kV transformer substation and the expansion of the Capiz substation, both considered strategic to reinforce the regional grid.

The project involves an initial investment of approximately $51.2 million and is expected to:

• Improve the electricity supply quality for more than 150,000 residents

• Increase the reliability of Mendoza"s interconnected grid

• Enable future expansions of the 132 kV transmission network

• Facilitate new energy and industrial projects

The initiative has already attracted strong private sector interest, with six companies competing in the tender process, according to provincial authorities.

Mendoza"s government is also evaluating new transmission infrastructure in the southern part of the province, potentially linked to the DiamanteCharlone interconnection corridor, a strategic project for Argentina"s power grid.

According to Minister Latorre, expanding the transmission network is essential to support new generation projects and broader economic development.

"If we want more projects like those being developed by renewable energy companies such as Genneia and greater economic growth, transmission lines are key," Latorre concluded.