Argentina is Latin America’s third-largest power market, and one of the most deregulated, with around three-quarters of generation capacity owned by private companies.
Its power comes mainly from natural gas (over 50%) and hydropower (about 40%).
Its electricity demand continues to grow; forecasts suggest an ongoing 6% annual increase, with an additional 1GW of new generation capacity a year necessary to satisfy this demand.
Law 26.190, passed in December 2006, states that 8% of electricity should be generated from renewables by 2016. It also introduced FITs for wind, biomass, small-scale hydro, tidal, geothermal and solar, with tariffs valid for 15 years.
The GENREN program, started in 2009, called for state utility Energía Argentina Sociedad Anónima to contract at least 1GW of renewable energy, to be sold into the grid at fixed rates for 15 years. In July 2010, the Government awarded PPAs to 17 wind farms, 4 biodiesel power plants, 5 small hydro plants and 6 solar PV projects.
Access to finance
Argentina defaulted on its bonds in 2001 and has since had trouble accessing international credit, and lack of support from financial institutions continues to hinder renewable energy development.
Argentina has two interconnected grid systems. The Argentine Interconnection System covers the upper three-quarters of the country, and the wind-rich Patagonia region is covered by the Interconnected Patagonian System.
Argentina has abundant unexploited wind resource, especially in the southern Patagonia region. Current installed capacity stands at 32MW, though the Government is targeting 1.2GW by 2016.
Some provinces have introduced local tax incentives. Chubut, in north Patagonia, has approved legislation removing 100% of taxes on gross income from wind power in the first 5 years of operation, reducing to 50% in years 6 to 10, to encourage the build-out of an estimated 2.2GW pipeline.
Parts of Argentina are ideal for solar PV development, but only 10MW has been installed to date, making it a huge untapped resource. The Government has set a target of generating 3.3GW by 2020.
Argentina has in the past focused on biofuel rather than biomass development. It is estimated that 80% of its annual 6m metric tonnes of forestry biomass could be used to generate electricity, however, and its planning ministry has received bids to build out 104MW.
Argentina has introduced the Small Hydroelectric Program to identify potential sites and promote small HPPs development. The majority of the 30MW of current installed capacity, which the Government expects to increase to 60MW by 2012, is in the southern Andes.
So far, geothermal has been used mainly for heat recovery not power generation. Research into Argentina’s geothermal potential is at an early stage, but the Government has set a target of 30MW of electricity generation by 2012.