The average cost of electricity generation projected for this year it would be reduced by almost 8% compared to 2022, with a marked decrease during the winter, around 12 dollars per megawatt-hour (US$/MWh). A series of factors would play in favor during 2023 that pose a less harmful scenario than what was seen last year, although it would still be high. What is the projection for this year?
The monomic cost of average generation that is projected for this year is around 82 US$/MWh. If so, it would mean an rreduction of almost 8% compared to to the 89 US$/MWh registered during 2022.
For the winter period, which in the industry is considered between May and September, a monomic cost of 97 US$/MWh was estimated. If fulfilled, it would be 11% less than in the same period last year.
- US$ 97
- per megawatt hour is the projected monomic cost for the winter period in 2023.
The projection was made by the consulting firm Economía y Energía based on the estimate of demand, volumes and market prices.
Despite lower prices anticipated this year, they are still above what was seen in 2021. The average for that year was US$72/MWhwhile in the winter it increased to US$83/MWh, almost the same as the average for all of 2023.
The factors of the decline
The aforementioned reduction is mainly due to the lower import price of Liquefied Natural Gas (LNG), the increase in the availability of natural gas and the better hydraulic generation that remains low, but has rebounded compared to 2022.
It also responds to level of import of electrical energy from neighboring countrieswhich allows you to spend less than if you buy liquid fuels such as diesel and fuel oil to burn them in the country’s thermal power plants.
According to the latest Seasonal Programming report of the Wholesale Electricity Market Administration Company (Cammesa), Until August, the import of some 1,100 average MW is expected of electric power.
From September, the purchase of electrical energy is estimated at around 300 average MW. Cammesa estimated a price of US$90/MWh as of last month, but taking into account that the February price is likely to be lower going forward, which will have a positive impact on the cost of supply.
Official decisions and their impact on cost
In February of this year, the state company Energía Argentina (Enarsa), led by Agustín Gerez, made the decision to move forward with the purchase of the first batch of Liquefied Natural Gas vessels that were to be used this year. The official argument was that international prices were lower (US$ 20 per million BTU) than the unprecedented values of last year, something that was actually the case.
However, and with the newspaper on Monday, prices continued to drop and even for the second batch lower prices are estimated than those of February. With which, if the government had waited a couple of months, lower import cost could have been secured than the one that was finally achieved.
In a highly volatile market, such as the energy market, it is risky to project forward, even in the short term. However, what was stated above serves to understand the impact of official decisions on the cost of energy.
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