Immediately following the vote in the Argentine Congress to approve the settlement of Argentina’s foreign debt with the “holdouts”, the Ministry of Energy published the much awaited regulations to the new law to promote renewable energy in the country. The president of Argentina, Mauricio Macri, along with his energy minister, Juan José Aranguren, will be traveling to the U.S. to promote investments in the country at the “Future of Energy Summit”in New York organized by Bloomberg New Energy Finance next week.
This is a summary of the main points of Law 27191 and Decree 541/2016 (you can access the complete texts in Spanish here and here) that modify and expand on previous legislation to attract investment into renewable energy generation. The new legislation improves on previous policy both in providing more attractive fiscal and financial conditions, and in setting more competitive prices. All renewable technologies are eligible, though there is a maximum limit of 50MW in the case of hydro projects.
- Incentives decrease over time: Stage 1 ends December 31, 2017; and Stage 2 covers the 2018-2025 period;
- Accelerated depreciation on income and value added taxes.
- Extension of exemption on minimum income tax.
- Exemption on 10% tax on dividends.
- Tax credits for local content.
- Pass-through of future tax increases to prices.
- Duty-free imports of goods with no local substitute (through 2017)
- Max price for energy of 113 USD/MWh in contracts with large users (>300kW) for the first two years.
- Penalties to large users for not meeting renewable energy targets (8% in 2017, climbing to 20% by 2025).
- Renewables dispatched as pass-through hydro.
- No contribution to reserve capacity.
- Priority access to public financing (Fondo Fiduciario para el Desarrollo de Energías Renovables – FODER) for projects with local content.
While the Decree published today provides additional detail on the implementation of fiscal incentives and the participation of CAMMESA, the wholesale market dispatching agency, in the program, much remains to be decided ahead of the auctions announced by the government for June of this year. The government of Argentina has produced a battery of policy changes in the scarce 3 months it has been in office, so stay tuned for more news.0