Over the passed year, enthusiasm for renewable energy in Argentina has been building, first with the passing of a new renewable energy law, then with the election of a new pro-renewables government, and all culminating in Octobers tender. Today, the government news agency Télam has announced that it expects outside investment of US$4 billion to US$5 billion in the countrys solar industry over the next five years.
Giving out a few additional details, it said that 60% of funds are likely to be invested in building PV generation facilities. This is good news for more than just the environment, as Télam reported that these facilities should also generate approximately 60,000 new jobs in the country.
Companies will invest between US$4 and US$5 billion and will generate some 2 GW of additional power to incorporate to the national electric grid, said Adrián Kolonski, head of Intermepro, a company specialized in renewable energy solutions. He went on to explain the benefits of adopting solar power; it is clean, it has a low failure rate and it almost doesnt require maintenance. The development of solar power will arrive in the country through photovoltaic plants and power generation distributed by companies and individuals.
All eyes on solar PV in Argentina
It is an exciting time for renewable energy in general, and solar energy specifically, in Argentina, as the first renewable energy auction since the approval of a new landmark renewable energy law is due on 12 October. There is 1 GW of electricity generation on the negotiating table, of which solar PV has been allotted 300 MW.
The new pro-renewables government is committed to reaching a target of 8% of Argentinas electricity generated by renewable sources by 2017, with an eventual goal of 20% by 2025. To help achieve this goal, a Fund for the Development of Renewable Energies (Fondo para el Desarrollo de las Energias Renovables) is being planned, with 12,000 million AR pesos (USD819 million) at its disposal.
These funds will be used to invest alongside developers for projects, as well as serving as a guarantee for PPAs that are signed for renewable projects. This is an important detail, as one of the major challenges to get utility-scale PV off the ground in Argentina is the financing of the projects.
Nobody wants to lend long-term debt to Argentine projects, Emily Hersh Managing Partner of DCDB Research, a consultancy company assisting renewable energy developers set up projects in Argentina, explained to pv magazine. What well see in this first auction is that the sponsor company will have to hold the debt of the project on their balance sheet for the first few years until Argentina becomes essentially debt-financeable from an international banking perspective.
What I have seen as a consultant is that I got a large number of inquiries from international developers, and that the majority of them have made the decision to watch this first auction with the idea of entering the auction the following year, Hersh added.
The September edition of pv magazine has a feature article on the upcoming tender in Argentina and the outlook for the Argentine PV market. You can subscribe here.