Argentine renewables player submits grid work proposal to deliver 1GW capacity boost

An Argentine transmission expression of interest call attracted 21 submissions, among them several from a state-owned renewables firm with a near-800MW project portfolio. 

That was among takeaways from renewable chamber Cader’s annual conference, where grid congestion and unfavorable financing conditions were identified as energy transition hurdles that need flattening.

The country’s energy department launched the call this year, to gauge interest in carrying out 500kV infrastructure work to support the incorporation of new power plants. 

As things stand, transmission expansion work is paid for by using public funds.

“We’ve received 21 expressions of interest [...] and we’re now carrying out evaluation rounds, in the analysis and electrical studies divisions, to correctly interpret the expressions of interest,” said Juan Luchilo, analysis and control manager at wholesale power market administrator Cammesa, which is leading the process.

“A report will emerge from this which we’ll take to the energy department, with recommendations but especially with the concerns and ideas of interested parties in order to carry out these projects they are proposing.”

A question mark hangs over whether projects would be advanced with or without a tendering process, said Luchilo, adding that legal certainty over recovering project outlay was identified as a central concern.  

An attempt was made during the administration of former president Mauricio Macri to get transmission projects built under the public-private partnership model, but a deterioration in financing conditions stymied plans.

CONGESTION, PRIVATE SECTOR

Transmission congestion, meanwhile, is hampering growth of the Mater term market, where project developers aiming to supply private offtakers seek transmission priority dispatch capacity. Nevertheless, around 2.5GW of new Mater capacity is expected to come online over the next three years. 

A lack of space along some transmission corridors has spurred interest in projects in other parts of the country where this is not such an issue.

Mater project developers can also present associated transmission expansion works for authorization, and several have already done so. 

In terms of transmission investment, the biggest Mater player by energy sold, state-controlled YPF Luz, has not ruled this out.

La Rioja province renewables company Parque Eolico Arauco Sapem is also among those interested in carrying out grid work to help incorporate its projects. 

The province-owned firm submitted three expressions of interest with an energy integration focus, director Emmanuel Rejal said. 

“The idea is to interconnect the province of La Rioja with the provinces of Catamarca, San Luis and San Juan,” said Rejal, whose company has over 200MW of operational wind capacity, 50MW of solar PV coming online, along with over 400MW wind and 367MW solar PV in the planning phase. The company was also awarded six projects in the RenMDI supply auction. 

“Simulations indicate that, with this [grid work], we could incorporate up to 1GW of renewables, working in partnership with these three provinces.”

Parque Eolico Arauco Sapem is also engaged in early-stage hydrogen and lithium studies work, Rejal said.

MACROECONOMIC STABILITY

The renewables sector, meanwhile, has underscored the importance of an improvement in macroeconomic conditions to help drive down the cost of financing and the removal of dollar access restrictions for imports. 

During the conference, industry officials said renewables projects should not be judged on price alone, citing their importance in emissions reduction, job creation and exporting-industry competitiveness.

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Renewables growth accelerated under the government of center-right Macri, who launched the RenovAr supply auctions. To help investment feasibility, Marci provided price assurances for generators. 

During a seminar this week hosted by US think-tank the Inter-American Dialogue, Córdoba city environment chief Guillermo Díaz, ruled out president-elect Javier Milei doing the same.

“You should forget about it,” said Díaz. “Macri’s renewable energy policy was heavily subsidized and a huge expense for the national government.”

Right-wing Milei supports a small state and market solutions. Shares in energy firms, including Argentina’s biggest power generator, Central Puerto, climbed on Wall Street on Monday following Sunday's presidential runoff vote, possibly reflecting the prospects for improved operating conditions.  

CADER’S PROPOSALS FOR THE INCOMING GOVERNMENT

Cader has a participative process underway to draft an energy transition legislative proposal.

The objective is to present the proposal to executive and legislative authorities in January. A key pillar involves creating a flexible framework that can adapt to new “resources, vectors and technologies” as they emerge.

Cader recently set out proposed pillars for state energy transition policy, with elements including the creation of a framework that holds steady through political cycles as well as an energy transition roadmap. The association also calls for hiking of the country’s non-conventional renewable energy penetration goal of 25% by 2025, to 30% by 2030. Spurring development of local supply chains, providing cast-iron contract guarantees and ramping up distributed generation capacity, where Argentina lags far behind neighbors Chile and Brazil, are also urged. 

Argentina, based on recent data, has 5.39GW of installed renewable energy capacity (wind, solar PV, mini-hydropower and bioenergy), with wind accounting for the biggest share: 3.41GW. Overall installed capacity stands at 43.4GW, with around 60% thermoelectric.

Argentina has a legally mandated goal of generating 20% of electricity from non-conventional renewable energy sources by end-2025. Currently, the proportion is around 14%.

The country’s biggest renewables generator, Genneia, told state news agency Télam recently that Argentina would fall short of the target, hitting 18% in 2025.

Click here to find out more about Cader’s sector development proposals