Peru's electricity procurement regulations have once again become the subject of debate before their approval. The Peruvian Renewable Energy Association has asked the government and the Ministry of Energy and Mines to modify the proposal so that long-term tenders effectively promote new generation capacity.
The issue directly concerns the design of the contracts. According to the private sector, existing power plants have an advantage over new projects because they already have operational assets, many of which are significantly depreciated, allowing them to submit more competitive bids.
Therefore, the association argues that long-term contracts should be reserved for new plants , while existing plants could naturally compete in short- and medium-term processes.
“ Long-term tenders should make it possible to implement new generation plants ,” the entity said in its statement.
The organization believes that the regulations must be adapted before their publication to comply with the objective of Law No. 32249 and with article 4.1 of Law 28832, aimed at generating conditions to promote new investments in generation.
The bottom line is financial.
For developers, access to long-term contracts is a key condition for securing future revenue and facilitating the financing of new projects.
The association warns that if new power plants have to compete on a formal level playing field with existing, depreciated assets, they could be systematically excluded from the bidding process.
“ When we encounter regulations that do not favor real competition on equal terms, new projects will not be able to win long-term contracts for the sale of their energy, which prevents their financing and construction ,” he argued.
The private sector directly links this discussion to the need to incorporate new efficient capacity into the Peruvian electricity system.
According to their diagnosis, if new projects capable of being supported by long-term contracts do not come in, the system could continue to rely more heavily on diesel generation.
The consequence, he warns, would be a higher cost of electricity production and additional pressure on the market.
“ This will only worsen the current crisis, as diesel generation will continue to increase, leading to a rise in electricity costs not seen in many years ,” the association said.
New generation versus existing power plants
The debate brings back to the table one of the most sensitive issues of the new contracting scheme: what type of power plants should compete for long-term products .
The Peruvian Renewable Energy Association argues that these contracts should be used as a tool to enable new capacity and diversify the energy mix, while plants currently in operation should focus their efforts on shorter timeframes.
The entity questions whether the project, in its current form, guarantees that differentiation.
In their view, maintaining an open scheme without distinguishing between new and existing assets could end up consolidating the position of already amortized power plants and reducing the bankability possibilities for new developments.
“The country’s electrical future cannot be subordinated to maintaining the status quo and failing to achieve the objective of Law No. 32249, which has been to guarantee a safe, reliable and efficient supply, diversifying the energy matrix,” he stated.
Therefore, the private sector's final request is concrete: to review the regulations before their approval and ensure that long-term tenders function as an effective signal for new investments .
The discussion is thus left open at a key moment for the Peruvian electricity market, where the final design of the contracts will define not only which agents will be able to compete, but also which projects will have a real capacity to reach financing and construction.
By Energía Estratégica
By Emilia Lardizabal
By Matías Medinilla
