CEPU Utilities · Argentina · Power generation · Energy transition · Thesis updated July 17, 2026

Dollar pricing lowers risk, Vaca Muerta raises it

Resolution 400 moves spot power revenue into US dollars and opens more room for private contracts.
In Q1 2026, 44% of revenue came from contracted sales, and the full 20% private-user allowance was already sold.
Piedra del Aguila is no longer a near-term concession cliff after a 30-year extension through 2056.
Growth now includes Brigadier Lopez, solar additions, and 205 MW of battery storage expected by mid-2027.
The $50 million PESA deal adds Vaca Muerta upside, but also puts Central Puerto into a business it has not run before.

01 Running thesis

Cleaner power rules, messier oil risk

The bull case is that Argentina’s new power rules make Central Puerto easier to own. Resolution 400 lets more sales move into contracts and prices spot market revenue in US dollars. That matters because the old model was exposed to peso inflation, payment delays, and changing government rules.

The shift is already visible. In Q1 2026, 44% of revenue came from contracted sales. Management also said the full 20% allowance for direct sales to private users is already contracted. The next step is signing distribution company PPAs for the rest of the capacity that used to sit in the legacy spot market.

Several growth pieces are now real instead of hoped for. Brigadier Lopez entered operation in January 2026, adding 140 MW. Piedra del Aguila received a 30-year concession extension through 2056. The company also has 205 MW of battery storage projects tied to Edenor and Edesur.

The bear case is that Central Puerto is moving into a harder mix of risks. Distribution company contracts can be slowed by local regulators. Winter gas transport can squeeze thermal margins. The PESA acquisition gives exposure to Vaca Muerta, but oil and gas exploration is new for the company and may need years of capital before it proves itself.

May 2026▲Q1 2026 showed fast progress under Resolution 400, with 44% of revenue from contracted sales and the full 20% private-user allowance already sold. The $50 million PESA deal added Vaca Muerta upside, but also added new execution risk.

Apr 2026▲The 2025 Form 20-F confirmed the move to a US dollar functional currency from January 1, 2026. It also detailed 205 MW of battery storage projects tied to Edenor and Edesur.

Mar 2026▲Piedra del Aguila received a 30-year extension, removing a major hydro concession risk. Brigadier Lopez and San Carlos also reached operation, improving 2026 growth visibility.

Nov 2025▲Resolution 400 changed the power market by opening more contract sales and putting spot revenue in US dollars. Management also pointed to a meaningful EBITDA uplift from the new framework.

Aug 2025→Brigadier Lopez and San Carlos stayed on track, and Central Puerto bid for 205 MW of battery storage. The offset was another Piedra del Aguila delay and an unexpected Costanera boiler maintenance charge.

May 2025→San Carlos moved back on track after earlier delays, while the hydro concession process slipped again. Management also framed power market reform as gradual rather than immediate.

Apr 2025→The annual filing confirmed mining investments and corporate simplification steps. Argentina’s new IMF program helped the macro backdrop, but did not remove country risk.

Mar 2025▲Resolution 21 allowed new thermal units to sign private PPAs and let generators manage fuel from March 2025. The same update added mining exposure and noted delays at San Carlos and the hydro auction.

02 Business model

Selling power as rules reset

Central Puerto makes money by generating electricity from thermal plants, hydro assets, wind, and solar. It sells power in the spot market, under contracts, and through steam supply deals with industrial customers. It also has smaller forestry and gas transport resale revenue lines.

The key change is the route to market. Under Resolution 400, generators that were mainly stuck in the spot market can sell up to 20% of output to large users and up to 100% to distribution companies. Spot market components are now US dollar-denominated, which reduces one of the biggest old risks for an Argentine utility.

Contracts usually give better visibility than spot sales. In 2025, the filed revenue mix was still led by spot sales at 50.00% of revenue, with sales under contracts at 41.04%. By Q1 2026, management said contracted sales had reached 44% of revenue, so the mix is moving in the right direction.

Where it breaks is execution. Central Puerto needs buyers, regulators, gas transport, and fuel management to line up at the same time. The company also changed its functional currency to US dollars from January 1, 2026, which helps reporting quality, but it does not remove Argentina country risk.

03 Product portfolio

Assets that now carry the story

Cash cow

Thermal power plants

Thermal generation remains a major source of dispatch and spot revenue. The upside is better dollar pricing, while the risk is fuel cost and gas transport during winter peaks.

Steady

Piedra del Aguila hydro

This hydro asset is a long-lived anchor after its concession was extended for 30 years through 2056. That removed a major binary risk from the story.

Growth engine

Brigadier Lopez combined cycle

The combined cycle conversion reached commercial operation in January 2026 and added 140 MW. Management has framed it as a clear 2026 earnings contributor.

Steady

Wind and solar portfolio

The renewable base includes wind farms, the 80 MW Cafayate solar farm, and the 15 MW San Carlos solar project. These assets support more contracted revenue.

Growth engine

Battery energy storage

Central Puerto is developing 205 MW of battery storage, with projects linked to Edenor and Edesur under long-term contract structures. The expected timing is around mid-2027.

Option

PESA and Vaca Muerta oil

The $50 million PESA acquisition added more than 27,000 acres in Vaca Muerta and a 1,900 bpd oil treatment plant. This could be valuable, but it is outside Central Puerto’s proven operating base.

Option

Mining investments

Central Puerto holds investments tied to the Tres Cruces lithium project and AbraSilver. These are financial and strategic options, not the core power business.

04 Business segments

Revenue mix before the shift

Spot sales50%declining

Sales under contracts41%growing fast

Steam sales5%flat

Forestry segment2%declining

CVO thermal plant management2%declining

Gas transport and distribution capacity resale1%flat

The mix below uses 2025 Form 20-F ordinary revenue lines. Q1 2026 already looks more contracted, with management reporting 44% of revenue from contracted sales.

05 Risk factors

What could still go wrong

Slow distribution company PPAs

High impact · Medium odds

Central Puerto has already filled the 20% private-user allowance. The larger prize is the remaining capacity that can be sold to distribution companies. Management has said local regulators can slow this process, so the migration from spot sales may take longer than bulls expect.

We watchNew DisCo PPA announcements and management comments on provincial regulator approvals.

Winter gas transport shortage

Medium impact · Medium odds

Thermal plants need fuel and transport capacity to earn strong margins. In the recent TGS auction, Central Puerto received about 400,000 cubic meters after asking for 1.6 million. If winter bottlenecks continue, the company may need higher-cost alternatives or lose margin.

We watchThe next TGS auction result and whether Central Puerto secures the missing 1.2 million cubic meters.

Vaca Muerta learning curve

High impact · Medium odds

PESA gives Central Puerto oil upside, but the company has no long record as an oil and gas operator. Pilot wells may require capital before the asset is proven. A poor drilling result could turn the $50 million entry ticket into a larger cash drain.

We watchTiming, cost, and results of the first 2 to 3 Vaca Muerta pilot wells.

Argentina policy risk

High impact · Medium odds

Resolution 400 is helpful, but the business still depends on Argentine power rules, CAMMESA, and local counterparties. A future policy reversal or payment stress could reduce the value of dollar pricing and private contracting. The US dollar functional currency helps reporting, not legal or political risk.

We watchAny changes to Resolution 400, CAMMESA payment delays, and new federal energy rules.

Project execution and impairments

Medium impact · Medium odds

Central Puerto is adding solar, batteries, and new business lines while also managing older thermal assets. The 2025 filing noted an impairment for the San Carlos Solar Park, which shows that growth projects can miss cost or return targets. Battery delivery delays would weaken the medium-term growth case.

We watchBESS construction updates, San Carlos performance, and future impairment charges.

06 Quick answers

In one breath

What does Central Puerto do?

Central Puerto generates electricity in Argentina using thermal, hydro, wind, and solar assets. It also sells steam to industrial customers and is now entering oil and gas through PESA.

Why does Resolution 400 matter for CEPU?

Resolution 400 lets Central Puerto sell more power through direct contracts and prices spot revenue in US dollars. That can make cash flow less exposed to inflation and peso moves.

Is the PESA acquisition good or bad?

It is both an opportunity and a risk. The deal gives Central Puerto exposure to more than 27,000 acres in Vaca Muerta, but oil exploration is new for the company and may need more capital before it pays off.

What is the main thing to watch next?

Watch whether Central Puerto signs the first wave of distribution company PPAs by year-end. Also watch the next TGS gas transport auction and the start of the Vaca Muerta pilot wells.