Privatisation of the Power Industry and Sanction of the Regulatory Framework

During 1989, privatisation took place in relation to many of the assets the national government had in the power industry, including the units of generation, transportation and distribution of energy. At the beginning of the 1990s, the national government called different tendering processes for the selling of the aforementioned assets. In addition to this, several regulations were passed, such as Law No 24,065, its Regulatory Decree 1398/1992, and Resolutions Nos 61/92 and 137/92 (and their complementary ones), issued by the Secretary of Energy, that establish the operation programming procedures, the dispatch of loads and the calculation of prices in the wholesale electricity market (regulations known as “the Procedures”), as well as other provisions issued by the same Secretary and the National Electricity Regulatory Entity (Ente Nacional Regulador de la Electricidad, or ENRE). This legislation, together with Law No 15,336, which had been issued previously, make up the Regulatory Framework for the Electricity Industry.

Structure of the Energy Industry

Under Law No 24,065, the power industry is divided into three segments: (i) generation, (ii) transportation, and (iii) distribution, with general and specific regulations for each segment, as well as limitations on the right to participate simultaneously in these segments (see 2.4 Market Concentration Limits).

Generation

Generation is defined as an activity of general interest, to which free competition rules apply. However, the activity is controlled by the national government, due to its importance in terms of general interest. Control over generation activity ensures its correct functioning and, ultimately, guarantees the supply to residential, commercial and industrial users.

Transportation

The transmission of power is a public service, which is provided by certain companies that have signed a concession contract with the national government. In addition to the concessionary carriers, there are independent carriers, companies that are in charge of the operation and maintenance of a transportation line that was built after the privatisation of the industry, and that do not fall under the responsibility of a concessionary carrier.

Distribution

Distribution of electric power is a public service. Unlike transportation companies, which are all bonded with a concession contract with the national government, distributors can be divided into two groups: (i) Edenor and Edesur, which carry out the service in the City of Buenos Aires and in Greater Buenos Aires, and have signed a concession contract with the national government given the inter-jurisdictional nature of the service; and (ii) the provincial distributors, which do not perform an inter-jurisdictional service and do not sign a concession contract. Provincial governments control their regime tariff and control the service. However, provincial distributors are also subject to the control of the national government (ENRE and the Secretary of Energy) with regard to the purchase of energy to supply users.

The Generation of Renewable Energies

Generation of electricity from renewable sources is ruled by Laws No 26,190 and No 27,191, which are complemented by Decree No 531/2016, Resolution 281/17 and Provision 1/18.

Ownership in the Energy Industry

Most of the assets in the industry are owned by private capital, with some exceptions because the national government participates in some companies as a minority or majority shareholder (see 1.2 Principal State-Owned or Investor-Owned Entities).

Storage

Energy storage is the process of accumulating energy in particular equipment or systems for later use. The importance of these systems is that they cover short-term capacity requirements and provide fast-response back-up services.

The current development of electrical energy storage technology represents an opportunity for its integration into the transmission and generation lines, and for incorporation of some of its applications to contribute to supplying demand, optimising dispatch, reducing costs and providing additional services to the operation.

Energy storage can be combined with intermittent renewable generation in order to expand its penetration and optimise the incorporation of the electrical power transmission and distribution network infrastructure, allowing the development of a cleaner and more efficient energy matrix.

Generation

The following are generating companies in which the national government has a majority shareholding:

• Energía Argentina SA (ENARSA) – Its sole owner is the national government. Note that the limitations under Law No 24,065 regarding participation in more than one segment of the industry do not apply to ENARSA. The company is also active in the oil and gas industry.
• YPF Luz – The national government is indirectly the majority shareholder of the company, through YPF SA. The other shareholder is General Electric.
• Nucleoeléctrica SA (NASA) – Wholly owned by the national government, it is the only company in Argentina dedicated to the generation of energy from a nuclear source.
• Yacyretá.
• Salto Grande.

The main private generation companies are:

• Pampa Energía;
• AES;
• Central Puerto;
• Orazul;
• MSU; and
• in the renewable energy sector, in addition to the aforementioned companies – Genneia, 360 Energy, Latinoamericana de Energía SA, Petroquímica Comodoro Rivadavia SA, JEMSE, Arauco SAPEM, and Construcciones Electromecánicas del Oeste SA.

Transmission

All the companies in the transportation segment are the majority property of private capital and, in certain cases, the national government acts as a minority shareholder:

• TRANSENER (the national government is an indirect minority shareholder);
• TRANSBA (the national government is an indirect minority shareholder);
• TRANSPA;
• DISTROCUYO;
• TRANSNEA;
• TRANSNOA;
• TRANSCOMAHUE;
• Compañía de Transmisión del Mercosur SA (CTM) and Transportadora de Energía SA (TESA); and
• the independent carriers are the property of private capital, the most relevant being YACYLEC, LITSA and LIMSA.

Distribution

The companies with a concession contract with the national government are EDENOR and EDESUR and, in both cases, the national government has minority participation. In addition, there are several distribution companies that operate locally at a provincial level.

There are no foreign investment restrictions or protections in the Argentine power industry, except in the case of construction of new facilities by government-owned companies, for which the supply of local goods may be applicable.

The specific thresholds and conditions for investment approval may vary depending on the segment of the industry and the nature of the investment. Argentina needs to renew and expand its energy infrastructure, and new projects are envisaged in the coming years.

Argentina has legal frameworks in place to protect foreign investments, including in the power industry. These protections include safeguards against seizure, confiscation and expropriation without proper compensation. Foreign investors have access to domestic courts to resolve disputes, as well as to commercial arbitration. International arbitration regarding investment is also available in accordance with applicable international treaties.

Foreign investment in Argentina is undergoing a drastic change due to Law No 27,742, which was sanctioned in July 2024. This law is named the “Law of Basis and Starting Points for the Freedom of Argentines” and it contains a chapter about investment called the “Incentive Regime for Large Investments” (Régimen de Incentivo para Grandes Inversiones, or RIGI). With the purpose of promoting the economic development of the country and attracting investments, both domestic and foreign, this regime proposes, in general terms, the creation of a scheme that grants conditions of predictability and stability, legal certainty and special protection to private individuals from the conduct of the state. In line with this, large investment projects that enter into this system will have important exchange, tax and customs benefits. Investments made under the RIGI will be considered to be of “national interest”, meaning that any national or local rule that may infringe on this will be null and void.

YPF LUZ has requested that the 305 MW “El Quemado” solar farm that plans to build in Mendoza be accepted under the RIGI. The project has already been approved, which means that the investment is subject to the RIGI. Also, Petroquímica Comodoro Rivadavia and Acindar requested that a wind farm they plan to build be accepted under the RIGI.

General

Law No 24,065 (Sections 31 and 32) and Decree 1398/92 (Section 9) include the following limitations for the transfer of shares of carriers and distributors:

• no generator, distributor, high-demand user or company controlled by any of them, or a controller thereof, may be the owner or majority shareholder of a carrier or its controller;
• only with the prior authorisation of ENRE may two or more carriers, or two or more distributors, consolidate in the same business group or merge;
• only with the prior authorisation of ENRE may a carrier or distributor buy shares of another carrier or distributor, respectively; and
• the holder of a distribution concession may not own generation units.

Generation

Hydroelectric generators with a capacity above 500 kV that use public watercourses must enter into a concession contract with the national government and are subject to the limitations provided therein to transfer the assets. Generators that use thermal and renewable technologies are not subject to restriction to asset transfers but may not own or be majority shareholders of a carrier or its parent company.

Transmission and Distribution

Transmission and distribution concession contracts generally provide the same restrictions: the transfer of the majority stockholding requires ENRE’s prior approval. The approval process is ruled by ENRE’s Resolutions 548/99 and 499/05. Typically, although not expressly required by law, ENRE may require that the new shareholders comply with certain financial ratios and industry expertise background.

Market Influence

Antitrust is governed by Law No 27,442, which sanctions conduct that may be detrimental to the general economic interest. This law establishes as a restrictive practice of competition, to fix, agree or manipulate, directly or indirectly, the selling price of a good offered in the market.

National Secretariat of Energy

The National Secretariat of Energy is the authority overseeing the application of the Regulatory Framework and has the power to dictate the provisions that regulate the national dispatch of loads. The Secretariat has dictated the regulations known as Los Procedimientos (“the procedures”), which organise the wholesale electricity market.

ENRE

ENRE’s main role is to regulate and supervise the electricity sector to ensure the reliability of the electricity system and the adequacy of supply to meet the demand for electricity. The scope of ENRE’s functions and powers is set forth in Law No 24,065.

CAMMESA

The joint stock company, CAMMESA, which administers the wholesale electricity market has two main functions: (i) it is in charge of electricity dispatch; and (ii) it settles the operations in the wholesale electricity market, making the collections and remitting to each creditor the amounts that correspond to them for the services provided (generation, transmission or distribution). The shareholders of CAMMESA are the national government, and the associations of generators, transportation companies, distributors and big users.

National Government

The distribution of electric power in the City of Buenos Aires and in Greater Buenos Aires falls under Edenor and Edesur, who have signed a concession contract with the national government given the inter-jurisdictional nature of the service. The national government rules on their regime tariff and controls the service.

Provincial Government

The distribution of electric power in the rest of Argentina is carried out by the provincial distributors, which do not perform an inter-jurisdictional service and do not sign a concession contract. Provincial governments rule on their regime tariff and control the service. However, provincial distributors are also subject to the control of the national government (ENRE and the Secretary of Energy) with regard to the purchase of energy to supply users.

Argentina’s energy sector has undergone significant regulatory changes aimed at enhancing efficiency, attracting investment, and modernising the electricity market. This section deals with the changes that have already been implemented, while the following section, 1.7 Announcements Regarding New Policies, discusses the guidelines that the Secretariat of Energy is designing for the industry.

One of the most notable developments has been the government’s decision to reprivatise the Comahue hydroelectric plants. These facilities, including Alicurá, El Chocón, Cerros Colorados, and Piedra del Águila, collectively contribute approximately 4,107 MW of electricity, representing about 13% of the nation’s total generation capacity. The new concession model proposes a 30-year term, during which, 95% of the generated energy will initially be allocated to meet residential demand at a preferential rate of USD15–20 per MWh. The remaining 5% can be sold at market prices, with this proportion expected to increase over time.

In April 2024, the Secretariat of Energy issued Resolution No 34/2024, altering the payment priority order of CAMMESA, the wholesale electricity market administrator. This change prioritises payments to electricity transmission service providers over payments to generation companies, aiming to ensure the reliability of the transmission network amid financial constraints.

Furthermore, the Secretariat of Energy enacted Resolution No 21/2025, which repeals several provisions of Resolution No 1,281/2006. This new regulation allows new electricity generation installations to allocate their energy to the term market (Mercado a Término), providing greater flexibility and encouraging investment in the sector.

Collectively, these regulatory changes reflect Argentina’s commitment to revitalising its energy sector by promoting private investment, ensuring reliable service delivery, and aligning with market-oriented practices.

General elections were held in 2023, and in December 2023 a new government took office, under the promise of restructuring the energy industry, going back to what legislation issued in the 1990s contemplated, which was almost never applied.

In this sense, on 28 January 2025, the Secretariat of Energy issued Note NO-2025-09628437-APN-SE#MEC, addressed to CAMMESA, introducing the “Guidelines for the Normalization of the Wholesale Electricity Market and Its Progressive Adaptation” (the “Guidelines”). These Guidelines outline the strategic regulatory and economic framework that will govern the progressive reform of Argentina’s Wholesale Electricity Market (Mercado Eléctrico Mayorista, or MEM).

Overall Objective

The Secretariat of Energy aims to re-establish economic and regulatory discipline in the MEM, addressing long-standing imbalances caused by price distortions, subsidies, and delayed investments.

The reform is designed to ensure long-term sustainability, fiscal efficiency, and enhanced reliability of the electricity grid.

Adapted Marginal Spot Factor (FSA)

• A central instrument in the reform is the introduction of an “Adapted Marginal Spot Factor” (Factor de Spot Marginal Adaptado, or FSA), which will allow prices to progressively reflect marginal generation costs.
• The FSA will initially apply to large users (known as GUMAs, GUMEs, and GUDIs), with the potential to expand to other segments in later phases.
• This mechanism seeks to improve cost signalling, efficiency, and investment conditions in the MEM.

Cost recovery and tariff reform

• The Guidelines propose tariff adjustments aimed at recovering generation and transmission costs in a gradual, socially responsible manner.
• While full cost transfer is not immediate, the policy sets a path towards economic sustainability by reducing reliance on state subsidies.
• The reform includes pricing schemes that differentiate among user segments based on their consumption profile and capacity to pay.

Investment promotion

• Improving price signals and economic rationality is seen as essential to reviving investment flows in generation, particularly in thermal back-up capacity and renewable projects.
• The Guidelines emphasise the need for a stable investment climate, underpinned by transparent rules and reliable remuneration mechanisms.

Regulatory stability and institutional strengthening

• The reform prioritises regulatory predictability and clear rule-making as core enablers of market confidence.
• CAMMESA will continue to administer the market, but its planning and operational processes will be strengthened to improve decision-making and efficiency.
• Co-ordination with ENRE and stakeholders will be enhanced.

Renewable and distributed generation

• The Guidelines support the integration of renewable energy and distributed generation, providing tailored price signals to reflect their grid value.
• Complementary storage systems are also being promoted to facilitate the transition to a flexible and modern energy matrix.

Consumer impact and protection mechanisms

• Large users will experience a gradual transition towards marginal-cost pricing, while households and small commercial users will remain under the current segmentation and subsidy regimes.
• Transitional protection mechanisms and gradual implementation are intended to avoid social disruption and ensure policy acceptability.

Phased implementation and stakeholder dialogue

• Implementation will occur progressively, allowing the market to adapt and policymakers to refine measures based on real-world performance.
• The Secretariat is committed to consulting stakeholders – including industrial users, generators and provincial authorities – to ensure a co-ordinated roll-out.

Strategic vision

• The reform is embedded in a broader vision of modernising Argentina’s electricity system, reducing fiscal pressure, and enabling energy transition.
• The end goal is a competitive, cost-reflective, and innovation-friendly electricity market that ensures long-term energy security and financial health.

Argentina’s electric power industry presents several distinctive features that make it particularly attractive to investors. One of the most relevant is the shift in political direction under the new government, which is promoting a liberalisation of the electricity market. This includes a move toward cost-reflective pricing, reduced state intervention, and increased participation of private players in generation, transmission and commercialisation. Recent regulatory reforms are aimed at restoring economic rationality to the market, providing legal certainty, and unlocking investment flows that have remained dormant in recent years.

The country also possesses exceptional natural conditions for the development of renewable energy. Argentina has one of the world’s highest wind capacity factors, particularly in Patagonia, and excellent solar radiation levels in the northwest. These factors make large-scale wind and solar projects not only viable but globally competitive in terms of generation cost and output reliability. Furthermore, Argentina is emerging as a strong candidate in the green hydrogen economy due to its abundant renewable resources, access to water, and potential port infrastructure for export.

Additionally, the government has reaffirmed its commitment to nuclear energy as part of a long-term diversification strategy. The national nuclear plan includes the completion of the fourth nuclear power plant (Atucha III), and long-term plans for small modular reactors (SMRs) such as CAREM, developed by Argentina’s National Atomic Energy Commission (Comisión Nacional de Energía Atómica, or CNEA). These initiatives are intended to provide baseload generation with zero carbon emissions, supporting energy security and decarbonisation objectives.

Lastly, Argentina offers significant potential for hosting energy-intensive infrastructure such as data centres. The availability of competitive electricity – especially from renewable and nuclear sources – alongside a favourable climate (that reduces cooling costs) and a skilled technical workforce, positions the country as an attractive location for companies requiring large, stable power loads. As global demand for digital infrastructure grows, Argentina stands out as a strategic platform in Latin America for sustainable, high-consumption operations.

Structure

Generators are involved in the wholesale electricity market or MEM, together with the other agents: transporters, distributors and high-demand users.

Two markets co-exist in the MEM: (i) a forward market, with volumes, prices and conditions freely agreed between sellers and buyers; and (ii) a spot market, with prices sanctioned hourly based on the economic cost of production, unlike the forward market where the price is freely agreed between the parties.

Forward market

Since 2013, entry into new contracts in this market has been prohibited, if they involve generation from a conventional source (thermal or hydroelectric). However, contracts in this market are allowed if energy comes from a renewable project. This government expressed its intention to allow the celebration of new contracts in these markets. The new regulation is expected to be issued in 2025.

Spot market

Prices in the spot market come from the marginal cost of the system (cost of the most inefficient machine that covers the demand) at a certain hour. Based on the demand at each moment and the availability of supply, CAMMESA dispatches the generation equipment that is able to cover the demand and is the most economical. The spot market price of each hour is the cost fixed for the most expensive machine dispatched in that hour.

In addition to the spot price, there is the seasonal price – the cost paid by distributors for the energy they acquire from generators to supply users. Prices are stabilised on a quarterly basis since they are what users pay for the supply of energy. In this way, the distributors know the price of the energy purchased in the spot market, which they transfer to the rate paid by their customers. This modality is known as pass-through, since distributors transfer this cost directly to their customers’ rates.

The differences between the spot price, paid to generators by CAMMESA, and the seasonal price, paid by distributors to CAMMESA, are accumulated in the stabilisation fund, which reflects the aforementioned gap and is used by CAMMESA when there are insufficient funds to pay generators from what was raised from distributors, when the spot price is higher than the seasonal price.

Storage

In 2025, the Argentine government officially launched a landmark public tender through Resolution No 67/2025 issued by the Secretariat of Energy. The tender calls for the development of battery energy storage systems (BESS) in the Buenos Aires Metropolitan Area (AMBA), one of the country’s most critical electricity demand zones. Known as the “AlmaGBA” project, the initiative aims to install 500 MW of storage capacity in strategic nodes within the grid, with an estimated investment of USD500 million. The goal is to enhance grid stability, especially during peak demand periods, and to reduce reliance on emergency generation.

The systems will be deployed in collaboration with the main electricity distribution companies, Edenor and Edesur, and will be backed by CAMMESA as financial guarantor. The project is part of Argentina’s broader energy modernisation agenda and seeks to attract private investment under a transparent and competitive framework. Supported by international financing, the programme prioritises speed of deployment and long-term operational reliability. Additionally, the federal government is encouraging the provinces to replicate the model in other regions identified as critical by CAMMESA. The tender reflects Argentina’s strategic move towards a more resilient, flexible and sustainable energy system.

Data Centres

The current president, Javier Milei, has expressed interest in creating an important technological hub in Argentina, with a primary focus on AI. In May, Milei gave a presentation at an event that brought together leading figures from Silicon Valley technology companies, where he affirmed his commitment to working towards a regulatory framework that balances the need to allow technology companies to thrive and contribute to the economic growth of the country and the world.

In addition, the chief adviser to the president, Demian Reidel, has articulated a vision positioning Argentina as a prime location for establishing energy-intensive infrastructure, such as data centres. He emphasises that the exponential growth in energy demand driven by AI necessitates power sources that are clean, scalable, and stable – qualities he attributes uniquely to nuclear energy. To meet this demand, Reidel has advocated for the development of SMRs, specifically the ACR-300, designed by Argentina’s state-owned tech company, Invap. This initiative aims to leverage Argentina’s nuclear capabilities to support the burgeoning AI sector.

Reidel envisages the creation of a “Nuclear City” in Patagonia, a region characterised by its cooler climate and abundant land, making it ideal for hosting large-scale data centres. This strategic plan includes constructing a 1.2 GW SMR project, fully financed by private American investment, with the goal of operational readiness by 2030. The project not only aims to supply the necessary energy for AI-driven data centres but also positions Argentina as a potential exporter of SMR technology. Reidel underscores that the combination of Argentina’s nuclear expertise and favourable geographic conditions presents a unique opportunity to attract significant foreign investment in the tech sector.

Furthermore, Reidel highlights the broader economic and strategic benefits of this initiative. By capitalising on the global shift towards AI and the corresponding energy demands, Argentina can establish itself as a leader in next-generation nuclear technology. This approach not only addresses the immediate energy needs of AI infrastructure but also fosters long-term economic growth through technology exports and enhanced energy security. Reidel’s plan reflects a concerted effort to align Argentina’s energy strategy with emerging global technological trends.

Argentina is connected to neighbouring countries through various transmission lines but currently, generators cannot freely enter into contracts for the export and import of electrical energy in the forward market, with volumes, prices and conditions freely agreed between sellers and buyers. The export and import of electrical energy are currently centralised in CAMMESA. If a generator requests to export electrical energy, it must obtain authorisation from the Secretariat of Energy and CAMMESA.

According to information available on the CAMMESA website, in the 2023 annual report, the supply mix of electricity in Argentina, considering the total installed capacity, is as follows:

• thermal – 54.4%;
• renewable – 37.7%; and
• nuclear – 8.2%.

Considering only renewable energy, the total installed capacity is:

• wind – 76%;
• solar – 19%; and
• other technologies – 5%

There are no specific concentration limits regarding the percentage of electricity supply, but there is legislation regarding concentration limits that provides a general framework applicable to several industries. Law No 27,442 on Antitrust provides that economic concentrations with the object or effect of limiting, restricting or distorting competition are prohibited, as they may be detrimental to the general economic interest.

On the one hand, the law controls conduct on an ex-post basis, preventing concerted practices and abuses of a dominant position; and, on the other, it controls M&A transactions, ex-ante, through a system of prior notification. The prior notification system is triggered when an economic operation meets certain requirements. As established by law, the National Competition Authority is in charge of studying the impact of the operation in the relevant market and will decide if it is approved, rejected or conditioned. In any case, the National Competition Authority has not yet been constituted, and its functions are carried out by the National Commission for the Defence of Competition (Comisión Nacional de Defensa de la Competencia, or CNDC).

If M&A transactions involve regulated activities (eg, utilities such as transmission and distribution of electricity), the pertinent regulatory body, in this case, ENRE, must be consulted and must issue an opinion on the operation, on the impact on competition in the respective market, and on compliance with the regulatory framework. The response is not binding, however, and the absence of a response is taken to mean that the regulatory entity does not object to the operation.

Heavy penalties may be imposed on companies that do not comply with antitrust regulations.

See 2.4 Market Concentration Limits. Anti-competitive conduct and market surveillance, and the enforcement process are contemplated in Antitrust Law No 27,442. This establishes the legal framework for the promotion of competition, the prevention of anti-competitive practices, and the protection of consumers.

The CNDC has jurisdiction over the entire country. Its powers and scope of authority include conducting investigations, compelling production of records, entry to property and search and seizure, and conducting interviews.

Potential sanctions for anti-competitive behaviour may include fines, injunctions, divestitures and other remedies to compensate harm caused by anti-competitive conduct. The specific penalties and sanctions are determined on a case-by-case basis, taking into account the severity of the behaviour and its impact on competition and consumers.

The CNDC operates in co-ordination with other regulatory authorities, such as the National Securities Commission (Comisión Nacional de Valores) and ENRE, to ensure comprehensive enforcement of competition regulations in their respective sectors.

The main laws that govern the construction and operation of generation facilities in Argentina include the following:

• Law No 24,065, mainly focusing on the general functioning of the electricity industry, with references to the operation of facilities rather than construction.
• The Environmental Impact Assessment Law (Law No 25,675) – This law establishes the requirement to conduct environmental impact assessments (EIAs) for certain projects, including power generation facilities. It sets out the procedures and criteria for evaluating and mitigating the potential environmental impacts of these projects.
• Provincial regulations – Each province in Argentina may have its own specific regulations and requirements for the construction and operation of generation facilities within its jurisdiction. These regulations can include permitting processes, environmental standards, land-use regulations, and other relevant considerations.
• Grid connection regulations – The construction and operation of generation facilities also involve compliance with grid connection regulations, which define the technical requirements and procedures for connecting new power plants to the transmission or distribution grid, which are essentially the Procedures.

The regulatory process for obtaining the approvals necessary to construct and operate a commercial generation facility in Argentina typically involves the following steps:

• An EIA – Depending on the size and nature of the project, an EIA may be required. The EIA involves a detailed review and assessment of the potential environmental impacts of the proposed facility. It includes the preparation of an environmental impact statement (EIS) that outlines the project’s characteristics, potential impacts and proposed mitigation measures.
• Public participation – Public participation and input are usually an integral part of the regulatory process. The EIA process often includes opportunities for public consultation, allowing interested parties, stakeholders and affected communities to provide feedback and raise concerns related to the project’s environmental aspects.
• Regulatory authority review – The Secretariat of Energy has to provide each project with authorisation to act as a wholesale electricity market agent, a process that involves the evaluation of the technical, economic and environmental aspects of the project to determine its compliance with applicable regulations and policies.
• Authorisations and permits – Based on the review process, the regulatory authority grants the necessary authorisations and permits for the construction and operation of the generation facility. This includes permits related to land use, environmental impact, grid connection (by the issuance of a certificate by ENRE), and other relevant aspects.
• Compliance monitoring – Once the facility is operational, the regulatory authority monitors compliance with the approved plans, permits and environmental commitments to ensure ongoing adherence to regulatory requirements.

Public hearings are not always required by law, but may be conducted as part of the public participation process or if deemed necessary by the regulatory authority. The exact requirements for public hearings may vary depending on the specific circumstances and the applicable provincial regulations.

The terms and conditions imposed within approvals to construct and operate a generation facility in Argentina can vary depending on several factors, including the size and type of project, its location, and the specific regulations and requirements applicable at the time of approval. However, some typical terms and conditions that may be imposed include the following:

• Technical specifications – The approval may specify the technical requirements and standards that the facility must meet, such as capacity, efficiency, voltage regulation, and grid interconnection parameters.
• Environmental compliance – The approval may include conditions related to environmental protection and mitigation measures. These may involve requirements for monitoring air emissions, noise levels, water usage, waste management, and compliance with applicable environmental regulations.
• Construction and operational timelines – The approval may establish specific timelines for the construction and commissioning of the facility, as well as any milestones or reporting requirements during the operational phase.
• Grid connection and system stability – The approval may include conditions related to the connection of the facility to the transmission or distribution grid, ensuring compliance with grid code requirements, and maintaining system stability.
• Reporting and monitoring – The approval may require regular reporting on the facility’s operational performance, environmental compliance, and other relevant aspects. It may also involve monitoring by the regulatory authority to ensure ongoing adherence to the approved conditions.

The local legislation does not contemplate the possibility of obtaining an amendment or relaxation of a term/condition of approval, but does not prohibit making a presentation to the competent authority in order to obtain this.

The rights to the surface of land for the purpose of constructing and operating a generation facility are typically obtained through negotiation and agreement with the landowners. The proponent of the facility does not have automatic eminent domain, condemnation or expropriation rights to obtain surface access and use.

The process for obtaining rights to the surface of land involves the following steps:

• Negotiation and agreement – The proponent of the generation facility engages in negotiations with the landowners to reach a mutually acceptable agreement for the use of their land. This includes discussions on lease or purchase terms, duration, access rights and compensation.
• Land lease or purchase agreement – Once the parties have reached an agreement, a formal land lease or purchase agreement is executed, documenting the rights and obligations of both parties. The agreement outlines the terms of access, land use and compensation.
• Compensation – The compensation required for obtaining the rights to the surface of land is typically negotiated between the proponent and the landowner. The compensation can take various forms, including one-time payment, annual lease payments, or other agreed-upon arrangements. The compensation is intended to provide fair and reasonable remuneration to the landowner for the use of their land.
• Determination of compensation – The quantum of compensation is determined through negotiations between the proponent and the landowner. It is influenced by factors such as the size and location of the land, its current use, market value, and the expected impact of the generation facility on the land’s value and use. Valuation experts may be involved in assessing the fair market value of the land and assisting in the determination of compensation.

In Argentina, the requirements for decommissioning a generation facility vary depending on the specific circumstances, the type of facility and the applicable regulations. However, there are general obligations and considerations regarding the decommissioning of generation facilities.

The decommissioning of a generation facility typically involves the safe and environmentally sound removal or retirement of the infrastructure and equipment associated with the facility. The specific requirements may include the following:

• Compliance with environmental regulations – The decommissioning process must comply with applicable environmental regulations and standards. This may involve conducting environmental assessments, obtaining necessary permits, and implementing proper waste management and remediation measures.
• Restoration of the site – After decommissioning, there is often a requirement to restore the site to its original or agreed-upon condition. This may involve remediation of any environmental impacts and addressing any potential risks associated with the site.

The principal laws, known as the Regulatory Framework, are referred to in 1.1 Law Governing the Structure and Ownership of the Power Industry. In addition, environmental matters are regulated by the General Environmental Law No 25,675 and several other specific national and provincial laws, as well as administrative regulations.

ENRE has issued specific regulations that establish environmental criteria related to the public service of electric power transmission. The current requirements were determined by ENRE through Resolution 558/2022, which establishes the minimum requirements that electric power transmission companies must comply with regarding their environmental management systems for the facilities under their responsibility.

Regulations for Obtaining Approvals

The construction of new transmission lines is primarily regulated by the Regulation for Access to Existing Capacity and Expansion of the Electric Power Transmission System, determined in Annex 16 to the Procedures. Annex 16 states that users or prospective users of the transmission system (generators, distributors or large users) who require access to the existing energy transmission system must submit an application to the corresponding transmission company, whose system will integrate the line to be constructed.

The regulatory standard provides for the construction of new transmission lines under three basic modalities, depending on the characteristics of the project:

• By contract between parties – The user requiring the connection directly enters into a contract with the transmission company that owns the system where the transmission line will be built.
• By public tender – The party interested in having the expansion constructed can request authorisation from the Ministry of Energy to construct a transmission line through a public tender, which will be incorporated into the “System Expansion Plan” prepared by the Ministry of Energy. The selection of the contractor for the construction of the line will be subject to a bidding process, and the bidding documents will contain the terms and conditions governing the contract. The work will be executed by the company that presents the best offer.
• Minor expansions – These are small-scale projects, the cost of which does not exceed the values specified in the regulations.

Construction of Transmission Lines Under the Public-Private Partnership Regime

In 2017, the National Congress enacted Law No 27,328, which regulates infrastructure projects to be carried out through public-private partnership contracts. For this reason, the Ministry of Energy, through Resolutions No 2/19 and 7/19, incorporated the regime applicable to the construction of transmission lines under Law No 27,328 as Annex 19 to the Procedures. Although no electric power transmission lines have as yet been constructed under this regime, it is currently in effect and there may be such projects in the future.

Holding Public Hearings

ENRE must convene a public hearing whenever it resolves issues related to the implementation of expansion works for electrical transmission facilities. The public hearings are one of several means to guarantee citizen participation in public decision-making, but they are not the only constitutional alternatives.

The construction of transmission lines is governed through construction, operation and maintenance contracts (referred to as “COM contracts”).

According to the provisions of Annex 16 to the Procedures, from a regulatory and economic-financial perspective, the project is divided into two clearly differentiated stages: (i) the construction of the line until it is commercially able to begin transmitting power; and (ii) the stage of the operation and maintenance of the constructed facilities, during which the investment for the construction of the line is recovered. This stage is referred to as the “amortisation period” and cannot exceed 15 years.

Financial Terms

In the classic scheme of the COM contract, the constructor fully finances the works, which are remunerated in the second stage through the payment of a “canon” that covers the value of the construction of the power transmission facilities and the cost of operation and maintenance of the facilities during the amortisation period.

However, it is worth noting that the authorities may determine other financing modalities for the execution of the project in the bidding documents. These may include the possibility for the constructor to receive advance payments of the canon during the execution period of the works. Once the line is commercially enabled, the constructor concludes its participation in the COM contract, and the concessionaire of the transmission system or a third party can be contracted for the operation and maintenance of the constructed facilities.

Technical Licence

Additionally, the constructor must sign a technical licence with the concessionaire carrier of the transmission system to which the line is connected. The technical licence is a contractual document that contains the technical conditions for construction, operation and maintenance, as well as the technical requirements necessary to ensure the required service quality in the electric system. The concessionaire carrier has the duty to supervise the constructor during the different stages of the COM contract and can impose sanctions if the quality parameters established in the licence are not respected.

Argentine legislation introduced the concept of “Administrative Easement of Power Line” (Servidumbre Administrativa de Línea Eléctrica, or AEPL) as a right granted by a competent authority to a company or entity responsible for the transmission of electrical energy, to use and access certain private or public properties for the purpose of constructing, operating and maintaining electrical transmission lines. The AEPL is established through a legal and regulatory process that involves obtaining permits and authorisations from the relevant authorities. Additionally, conditions and economic compensations are established for the owners of the lands affected by the installation of the transmission lines.

The AEPL is regulated by Law No 19,552, which states in Section 1 that an AEPL will be granted to the concessionaire of electrical substations, power transmission lines and electricity distributors. This servitude grants the legal right to occupy and use lands where electrical transmission system facilities are installed.

The AEPL affects the land and includes restrictions and limitations on the landowner so that the concessionaire can construct, maintain, repair, supervise and dispose of all the system installations required for energy transmission. Law No 19,552 provides that ENRE, by issuing the corresponding resolution, approves the project and plans of the work to be executed, declares the land affected by the AEPL, and authorises its registration in the corresponding property registry of the area where the land is located.

Once properties have been affected by the AEPL, the owners of those properties must be officially notified of the effect and the planned route within each affected property or area. The owner of the property affected by the servitude is entitled to compensation, which will be determined in an agreement between the owner and the company holding the AEPL. In the absence of an agreement, Law No 19,552 provides that compensation will be determined by a judicial court.

In summary, an AEPL is a legal right that allows a company involved in electrical transmission to use private or public lands to install and operate electrical transmission lines, thereby ensuring the supply of energy and the functioning of the electrical system.

Section 1 of Law No 24,065 establishes that the transportation of electrical energy is a public service, subject to a concession granted by the national government, under conditions of monopoly and exclusivity. For this reason, the concession contracts of the companies providing the public service stipulate that the national government grants them exclusivity for the provision of the public service. As defined in the concession contracts, this means that the national government will not grant the service to third parties or provide it itself, either through the existing transportation system or through the facilities constructed to expand the transportation capacity.

Law No 24,065 and the concession contracts only impose on the providers of the public transportation service the obligation to allow “open access” to the transportation system, facilitating it on equal terms to all users of the transportation system interested in connecting to it. This includes the generators, which produce the energy, as well as the distributors and large users, who consume it.

The tariff regime of the public electricity transportation service is regulated by Law No 24,065 and its regulatory decree (Decree No 1398/1992), as well as by Annex 16 to the Procedures and the respective concession contracts of the companies. Law No 24,065 establishes the principle of “fair and reasonable tariffs” for the public transportation (and distribution) of electrical energy.

The tariff approval processes require public hearings, which provide the opportunity for consumers, stakeholders and interested parties to express their opinions, concerns and feedback regarding proposed tariff changes or adjustments. However, ENRE must decide the tariff’s value depending on the economic and technical needs of the public service to guarantee the quality and continuity of the service.

The access request can be submitted by any direct user of the transportation system, including generators needing to transmit the energy they produce, such as large users or distributors intending to consume the generated electrical energy.

The request is submitted to the concessionaire carrier, which must assess the technical possibility of connecting the new user and submit its corresponding report to ENRE. Annex 16 to the Procedures specifies that the regulatory authority has a period of 30 days to determine whether the transport capacity can be expanded.

The only limitation to the general principle of open access is in cases where the power transmission line does not have the capacity to incorporate additional energy for transportation. This is to prevent line saturation and its effect on the quality of the public service.

As already mentioned in 1.1 Law Governing the Structure and Ownership of the Power Industry, the generation and transportation of electricity are subject to federal jurisdiction under Law No 15,336 and Law No 24,065, while the public service of distribution remains under the jurisdiction of each province, except for Edenor and Edesur.

Most provinces adhere to the regime established by Law No 24,065 or enact their own regulatory framework similar to the national one. The law governing distribution in all its aspects is the Regulatory Framework. EPC and supply contracts and other private agreements related to these facilities are governed by the Civil & Commercial Code.

Section 11 of Law No 24,065 establishes that no energy distribution company may begin the construction and/or operation of facilities of such magnitude without the approval of ENRE. The first step is to conduct preliminary studies to determine the feasibility and technical aspects of the project. This includes assessing the demand, identifying potential locations for the facilities, and conducting EIAs.

The companies must submit an application along with all the required documentation, including technical plans, environmental studies and financial information. The project will undergo technical evaluations by the regulatory authority to ensure compliance with technical standards and grid connection requirements. This involves assessing the capacity, reliability and safety of the proposed distribution facilities.

It is worth highlighting that Section 42 of the National Constitution requires that consumers and users of goods and services have the right, in consumer relationships, to protection of their health, safety and economic interests, as well as to adequate and truthful information. Therefore, the National Constitution demands that legislation and regulatory bases for public services include provisions to guarantee the necessary participation of consumer and user associations.

For this reason, Law No 24,065 also establishes that a public hearing must be held before authorising the project and including it in the tariff. This involves informing and engaging with the local community to gather their input, address concerns and ensure transparency in the decision-making process, especially when the construction and operation of electricity distribution facilities are included in the Investment Plan and are part of the rates and charges that will be applied to customers for the distribution services.

Furthermore, the project may require various permits and environmental approvals on federal provincial and municipal levels. These may include permits related to land use, construction, environmental impact and any other applicable regulations.

It is important to note that the timelines to obtain all approvals depend on the specific requirements and processes of each project, its location and any specific regulations or policies in place at the time of the application.

As stated in 5.2 Regulatory Process for Obtaining Approvals for the Construction and Operation of Electricity Distribution Facilities, companies must submit an application along with all the required documentation, including technical plans, environmental studies and financial information. The project will undergo technical evaluations by the regulatory authority to ensure compliance with technical standards and grid connection requirements. This involves assessing the capacity, reliability and safety of the proposed distribution facilities.

In order to obtain an amendment or relaxation of a term or condition of an approval, which is established by ENRE, it is necessary to make a presentation indicating the arguments that justify the petition. If this is expressly rejected, an appeal can be filed at administrative headquarters and, if rejected again, a presentation can be made before a judge in order to obtain the said amendment.

Argentine legislation introduced the concept of Administrative Easement of Power Line (AEPL) as a right granted by a competent authority to a company or entity responsible for the distribution of electrical energy to use and access certain private or public properties for the purpose of constructing, operating and maintaining electrical transmission lines.

The AEPL is established through a legal and regulatory process that involves obtaining permits and authorisations from the relevant authorities. Additionally, conditions and economic compensations are established for the owners of the lands affected by the installations dedicated to the public service of distribution.

The AEPL is regulated by Law No 19,552, which states in Section 1 that an AEPL will be granted to the concessionaire of electrical substations, power transmission lines, and electricity distributors. This servitude grants the legal right to occupy and use lands where electrical transmission system facilities are installed.

The AEPL affects the land and includes restrictions and limitations on the landowner so that the concessionaire can construct, maintain, repair, supervise and dispose of all the system installations required for energy transmission. Law No 19,552 provides that ENRE, by issuing the corresponding resolution, approves the project and plans of the work to be executed, declares the land affected by the AEPL, and authorises its registration in the corresponding property registry of the area where the land is located.

Once properties are affected by the AEPL, the owners of those properties must be officially notified of the effect and the planned route within each affected property or area. The owner of the property affected by the servitude is entitled to compensation, which will be determined in an agreement between the owner and the company holding the AEPL. In the absence of an agreement, Law No 19,552 provides that compensation will be determined by a judicial court.

In summary, an AEPL is a legal right that allows a company involved in electrical distribution to use private or public lands to install and operate electrical transmission lines, thereby ensuring the supply of energy and the functioning of the electrical system.

Section 1 of Law No 24,065 establishes that the distribution of electrical energy is a public service, subject to a concession granted by the national government, under conditions of monopoly and exclusivity. For this reason, the concession contracts of Edenor and Edesur stipulate that the national government grants them exclusivity for the provision of the public service. As defined in the concession contracts, this means that the national government will not grant the service to third parties or provide it itself, nor will any other national, provincial or municipal authority.

The tariff of the public distribution service under federal jurisdiction is governed by the principles and criteria of Law No 24,065, and the tariff regime provided in the concession contracts. Section 40 of the law stipulates that the public service will be offered at fair and reasonable tariffs that cover reasonable operating costs applicable to the service, taxes, amortisations and a reasonable return.

Law No 24,065 also provides that tariffs are determined by ENRE and set at a maximum price (price cap system) for a period of five years. Therefore, Section 42 (d) of Law No 24,065 establishes that tariffs will be subject to periodic adjustments (usually semi-annual) to reflect any changes in the concessionaire’s costs that are beyond its control. Consequently, the regulatory framework requires that the tariff must cover all the costs incurred by the distribution company and the purchases of energy in the wholesale market to provide the public service.

In conclusion, the tariffs must provide the companies with income that allows them to cover all operating costs, pay taxes, amortise assets, comply with the Investment Plan, and generate a profit similar to other comparable risk activities, in relation to the level of efficiency in the provision of the service.

If tariff adjustments are not approved for reasons of public or social interest, the national government and ENRE must implement measures to maintain the income equivalence with the tariff concepts in order to comply with the tariff principles and provide a quality service to users. However, this has unfortunately not happened on several occasions since the early 2000s. Therefore, when authorities approve tariffs that are lower than those legally and contractually required, companies have the right to appeal the resolutions approving insufficient tariffs.

According to Law No 24,065, ENRE resolutions may be appealed, at the company’s choice, in administrative proceedings before ENRE or the Secretariat of Energy, or directly in judicial proceedings by filing a direct appeal before the Court of Appeals.