Vestas inks turbine deal with YPF Luz as Mater drives renewables growth

Danish manufacturer Vestas will supply turbines for Argentine generator YPF Luz's 155MW General Levalle I wind park.

Being built in Córdoba province, the plant is due to go online by the end of next year.

The deal will see the debut in Argentina of Vestas' EnVentus platform. Vestas will supply 25 EnVentus units, each with capacity of 6.2MW.

Last year YPF Luz placed US$150mn in debt to help finance the US$260mn project, which was awarded 38MW of transmission priority dispatch capacity in an auction in 2Q22.

In parallel, YPF Luz is finishing construction of its maiden solar park, 100MW Zonda I, in San Juan province.

YPF Luz has established a US$270mn construction capex pot for 2023, the bulk earmarked for General Levalle I. Overall, officials have issued over US$200mn in debt to help finance the wind and solar projects. Company capex in 2022 was US$145mn.

Both projects target private offtakers under the Mater term market. Last year, private power purchase agreements (PPAs) accounted for 37% of YPF Luz’s total revenue of US$484mn, up from 31% in 2021. The average length of its private PPAs is 10.8 years. Clients include carmakers Ford and Toyota, beverage company Coca-Cola and oil firm TotalEnergies.

Demand for private PPAs from corporates is healthy, driven by factors including price and supply security, decarbonization drives and compliance with local renewables targets.

Indeed, Mater and self-supply projects have been driving renewables growth in Argentina.

Andrés Gismondi (pictured), VP of sales for Vestas Latin America, told BNamericas: "Mater is one of the few real energy markets that we have in Argentina, among which there is a free contractualization between the demand and supply of electricity, being the engine of renewables in the country. 

"In the wind industry, it can be contracted at low prices and thus satisfy the needs of customers to contract sustainable, competitive and emission-free electricity, while having a guarantee that ensures supply in the medium and long term in relation to the costs that have had many variations in recent years. That is why Mater is so vital in the wind sector."

YPF Luz officials said last quarter that it had a large portfolio of renewables projects on the drawing board but that limited spare transmission capacity was a hurdle to investment. Lines of 500kV linking renewables hubs in southern, central and northern Argentina to demand centers are seen as vital to dispatch power to where it is consumed.

Multilateral IDB is financing some 220kV and 132kV transmission work. One objective is to ease reliance on expensive and polluting diesel-fired generation. 

On the transmission issue, Gismondi said: “Today, Argentina has transmission lines that have reached their limit, which is making contracts between private parties and users difficult, which is why it is essential that actions are taken to expand the electrical network and that progress is made in the contractualization of more energy with this development."

He added that benefits can be obtained in marginal costs and liquid fuel imports.

YPF Luz’s installed capacity stands at 2.84GW, the bulk from thermoelectric units. 

In a related development, YPF Luz last month said it would exercise its right to acquire Enel’s 40% stake in 926MW Buenos Aires province thermoelectric plant Dock Sud, which would increase YPF Luz’s stake to 80%. Pan American Energy holds a 20% interest in the power station.

Overall, YPF Luz’s capacity is spread across 12 thermoelectric and renewables plants, in Buenos Aires, Tucumán, Neuquén, Santa Cruz and Chubut provinces.  

Once in operation, General Levalle I and Zonda I will boost the company’s geographic footprint and expand installed capacity by 255MW.

Overall installed capacity in Argentina stands at around 42.9GW

YPF LUZ’S RENEWABLES ASSETS

Los Teros wind park: Buenos Aires province, 175MW

Manantiales Behr wind park: Chubut province, 58MW

Cañadón León wind park: Santa Cruz province, 123MW