Central Puerto (CEPU) Q3 2025: Market Liberalization Drives 20%+ EBITDA Uplift and 205 MW Storage Award
Central Puerto’s Q3 marked an inflection point as Argentina’s power market liberalization unlocked a material margin uplift and new contracting options, while strategic wins in battery storage and renewables expanded growth visibility. The regulatory overhaul, Resolution 400, creates a more dollarized, flexible revenue base and opens the door for direct sales to large users and distributors. Investors face a fundamentally changed risk-reward as legacy assets gain pricing power and project pipeline execution accelerates into 2026.
Summary
- Regulatory Tailwind Emerges: Market liberalization is set to boost EBITDA by 20-25% with dollarized spot pricing.
- Growth Pipeline Accelerates: Battery storage wins and solar acquisitions expand capacity and future cash flow.
- Balance Sheet Strengthens: Net leverage at 0.5x and AA rating support capital deployment and dividend flexibility.
Performance Analysis
Central Puerto delivered a step-change in earnings power this quarter, propelled by regulatory reform and project delivery. Adjusted EBITDA surged quarter-on-quarter, with revenue up sharply on fuel cost pass-throughs and new renewable contributions. The revenue mix shifted to 53% spot and 47% contracted, and notably, 63% of revenues are now dollar-denominated, reflecting lower currency risk. Generation volumes rebounded 4% from Q2, though hydro output remained pressured by weak hydrology, highlighting the growing importance of thermal and renewable assets.
Renewable generation revenues rose 24% sequentially, underpinned by a 21% increase in volumes and the integration of the Cafayate solar plant. On the thermal side, both spot and contracted revenues benefited from the resumed operations at Central Costanera and the pass-through of higher fuel costs. Thermal units operated at a strong 88% availability, with combined cycles at 96%, demonstrating operational reliability as the market transitions. Capital expenditures reflected a pivot to growth, with $76 million deployed, including the Cafayate acquisition and progress on battery and solar projects nearing COD (commercial operation date).
- Revenue Mix Shifts to Dollarization: 63% of revenues now in dollars, reducing inflation and FX risk.
- Renewables Drive Growth: 24% sequential renewable revenue rise, led by wind and new solar plants.
- Thermal Fleet Delivers Margin: High availability and fuel cost pass-throughs underpin stable cash flow.
The combination of regulatory change and asset execution is resetting the company’s earnings baseline and risk profile for 2026.
Executive Commentary
"Central Puerto's business outlook has gained significant growth momentum. Driven by the Energy Secretariat's Resolution 400, this resolution formalizes the market liberalization roadmap, representing a pivotal step towards strengthening long-term value creation for us."
Fernando Bonet, CEO
"We are seeing that's dependent on the dispatch, on the use, consumer fuels, but we can expect around between 20 and 25 of increase in our EBITDA...it's very important for us to have the denominations of these new prices in dollars, set in dollars."
Henrique Terranio, CFO
Strategic Positioning
1. Regulatory Transformation and Dollarization
Resolution 400 marks a structural shift in Argentina’s electricity market, allowing generators to sell up to 20% of output directly to large users and the remainder to distributors or the spot market. Spot revenues now include a margin above variable costs and are dollar-denominated, mitigating inflation and currency volatility that previously eroded returns. This change is expected to lift EBITDA by 20-25%, with further upside if direct contracting scales up.
2. Battery Storage and Renewables Expansion
Central Puerto secured both bids in the Alma GBA battery storage tender, adding 205 MW in new capacity under 15-year contracts. The projects, with $130-140 million in capex, will be operational by mid-2027 and position the company for grid stability and ancillary service revenues. The Cafayate Solar Farm acquisition and progress on San Carlos and Brigadier López projects further expand the renewables base, supporting both contracted and spot market growth.
3. Capital Structure and Ratings Upgrade
Net leverage remains conservative at 0.5x EBITDA, with $292 million in cash and a successful $89 million bond issuance. Moody’s upgraded the company to AA, reflecting improved credit quality and financial flexibility. This enables continued investment in growth projects and supports potential dividend increases, subject to asset auction outcomes.
4. Commercial Flexibility and Contracting
The company is now able to negotiate directly with both large users and distribution companies, moving away from a centralized, regulated price regime. While initial contracting is slow as the market absorbs new rules, management expects to reach the 20% direct sales threshold this year, with further opportunities as distribution companies seek new supply contracts in 2026 and beyond.
Key Considerations
This quarter signals a new era for Central Puerto’s business model, as regulatory liberalization and project execution reshape both risk and opportunity.
Key Considerations:
- EBITDA Step-Change: Market reform delivers a 20-25% uplift, with further upside from new contracting flexibility.
- Battery Storage as Strategic Edge: 205 MW of awarded projects provide long-term contracted growth and grid support capability.
- Renewables Integration: Cafayate Solar and near-COD projects cement renewables as a core earnings growth engine.
- Commercial Optionality: Direct sales to large users and distributors diversify revenue and reduce regulatory dependency.
- Balance Sheet Readiness: Low leverage and AA rating position CEPU to fund growth and consider higher dividends if asset auctions succeed.
Risks
Transition risk remains as the market adapts to new contracting and pricing mechanisms, with initial uncertainty around spot market price formation and direct contracting uptake. Hydrology volatility continues to impact hydro output, and execution risk is present on battery and renewables project delivery. Regulatory stability and demand dynamics for new contracts will be key watchpoints into 2026.
Forward Outlook
For Q4 2025, Central Puerto expects:
- Partial revenue contribution from San Carlos Solar and Brigadier López Combined Cycle as they reach COD in November and December.
- Continued ramp of direct contracting with large users and distribution companies as market mechanisms mature.
For full-year 2026, management signaled:
- Full-year EBITDA uplift from market liberalization and new asset contributions.
- Capex of $130-140 million for battery storage projects, with completion targeted in 2026-2027.
Management highlighted that dividend decisions hinge on hydro auction outcomes, and that further earnings upside is possible as new contracts are signed and project pipeline matures.
- Contracting pace and spot market price evolution are key drivers for 2026.
- Battery and renewables execution will determine future cash flow trajectory.
Takeaways
Central Puerto is emerging as a structurally stronger, more flexible power generator, with regulatory, operational, and financial levers aligned for growth.
- Regulatory Change Is the Catalyst: Dollarized pricing and direct contracting materially improve margin and reduce macro risk.
- Project Pipeline Is Delivering: Battery storage and renewables are scaling, supporting long-term contracted and spot market earnings.
- Investors Should Monitor: Contracting velocity, spot market price stability, and project execution as key variables for 2026 performance.
Conclusion
Central Puerto’s Q3 results are a clear inflection point, with regulatory reform and asset execution driving a step-change in earnings power and risk profile. The company is now positioned to capitalize on Argentina’s market liberalization, with a robust growth pipeline and financial strength supporting future optionality.
Industry Read-Through
Argentina’s power sector is entering a new phase, with market liberalization offering generators improved pricing, commercial flexibility, and reduced regulatory risk. The shift to dollarized revenues and direct contracting is likely to re-rate the sector and attract capital for storage and renewables. Peers with legacy thermal and hydro assets may see similar margin uplift, while companies lacking scale or flexibility could face increased competition. The pace of storage adoption and renewables integration will be a key differentiator as the grid modernizes and demand evolves.