Lima power supply call falls through on demand risk, renewables

Peruvian power distributor Luz del Sur, which serves Lima, cancelled plans to procure electricity for supply to the regulated market.

The company announced the call three months ago for 15-year power purchase agreements starting in 2028. Current contracts expire in 2027.

“Despite the new market conditions, demand risk continues to be assigned to Luz del Sur,” the company said in a letter to energy and mining regulator Osinergmin, explaining its decision after receiving observations from the watchdog to adjusted reference terms.

“Osinergmin does not promote competition for the market for the entry of RER [non-conventional renewable] generation plants,” it added.

Luz highlighted that the process had yet to be launched and that there had been no expressions of interest from third parties.

RISK

Osinergmin did not entertain proposals assigning demand risk to generation, according to Luz, which said the regulator did not accept to include as a commercial condition that the contracted power consider the seasonality of Luz’s regulated market.

Luz added that the watchdog did not accept that a distributor could reduce contracted power when regulated users migrate to the free market, nor transfer part of the fixed contracted power to variable power due to regulatory changes or extraordinary situations such as COVID-19.

RENEWABLES

The distributor also called out Osinergmin for not accepting that Luz award half of required capacity to RER plants.

In addition, the company said the regulator proposed factors for updating awarded firm prices that favor non-renewable technologies, as these are the only ones that depend on international prices.

Luz argued that Osinergmin’s decisions go against law 28832, which governs the guarantee of efficient power generation development.

Osinergmin did not immediately respond to a request for comment, and Luz did not immediately respond to a request for comment regarding its electricity procurement requirements.

In recent weeks, Enel Distribución Perú, which also serves Lima, awarded contracts in its call to secure electricity for supply to regulated users in 2027-30.