Argentina has introduced a structural reform of its electricity market that is set to redefine investment signals, technology competition and revenue streams for renewable energy and energy storage projects.
According to Lucas Estrada, President of the state-owned utility Empresa Provincial Sociedad del Estado (EPSE) in San Juan Province, the country now effectively has a capacity market — a mechanism that did not exist until recently.
“Argentina has a capacity market that did not exist a year ago. For all grid users, having capacity available through batteries will become increasingly attractive,” Estrada said during a webinar jointly organised by Energía Estratégica and Gonvarri Solar Steel.
Storage gains full market recognition
Under Resolution SE No. 400/2025, battery energy storage systems (BESS) receive comprehensive regulatory recognition for the first time within Argentina’s Wholesale Electricity Market (MEM).
Centralised BESS projects will be able to operate both as demand (when charging) and as generation (when discharging). Revenues will be calculated based on hourly marginal costs adjusted by node, introducing locational price signals similar to those seen in more mature electricity markets.
In addition, the regulation establishes a specific remuneration mechanism known as Potencia Puesta a Disposición (PPAD), or “Available Capacity Payment”. This recognises the net discharge capacity effectively available, provided that the installation offers at least four validated hours of storage.
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≥ 4 hours validated storage: full PPAD payment
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< 4 hours: proportional remuneration
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< 1 hour: no payment
For Estrada, the formal inclusion of energy storage in the MEM does more than create a new business segment. It introduces tools to improve economic efficiency and grid integration.
“One of the roles of batteries is to absorb low-cost electricity during off-peak hours and inject it during demand peaks, reducing wholesale prices and benefiting consumers,” he explained.
This arbitrage mechanism — charging at low prices and discharging at peak demand — is central to global energy storage business models and supports higher penetration of solar PV and wind power.
A shift towards forward contracting and marginal pricing
Resolution 400/2025 fundamentally redesigns Argentina’s electricity procurement framework. It replaces the previous centralised model administered by the state-run market operator CAMMESA with a system based on direct contracting and technology competition.
The Forward Market (Mercado a Término) will now play a pivotal operational role. Electricity distributors must contract at least 75% of their seasonal demand through bilateral power purchase agreements (PPAs), reducing reliance on subsidies and transferring procurement decisions to market participants.
A key pillar of the reform is the implementation of hourly marginal cost-based pricing, enabling energy prices to reflect the real value of electricity at each grid node. To balance interactions between the spot market and the forward market, the regulation introduces an Adapted Marginal Spot Factor (FSA), designed to incentivise efficient market development.
Estrada stressed that further evolution is still required.
“Today our forward markets are monthly. We need to move towards an hourly market, as seen in mature power markets, including transmission capacity rights and more sophisticated contracting mechanisms. That will deepen liquidity, strengthen the business case and help reduce prices,” he said.
Estrada argued that technological coexistence is viable when market signals are clear and consistent.
“There is no need to look further than markets with renewable gas, such as Texas in the United States, where thermal generation competes fully with solar photovoltaic and wind energy,” he noted.
In markets like Texas, strong price signals and competitive structures have enabled solar PV, wind power and thermal assets to coexist while attracting substantial investment in renewables and grid-scale battery storage.
Key implications for investors
The reform of Argentina’s Wholesale Electricity Market introduces:
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A de facto capacity market through PPAD remuneration
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Full integration of battery energy storage into wholesale operations
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Mandatory forward contracting covering 75% of demand
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Hourly marginal price signals at the nodal level
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Reduced exposure to subsidy-driven dispatch
Together, these measures lay the groundwork for more efficient competition between technologies, improved grid integration of renewable energy and new opportunities in energy storage and flexible capacity.
For international investors, Argentina’s evolving regulatory framework signals a transition towards market-based mechanisms that align with global trends in renewable energy, capacity remuneration and power market liberalisation.
