Big year for renewables in Latin America – Argentina

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Source: IADB (2015) Lights On? Energy Needs in Latin America and the Caribbean to 2040.

Source: IADB (2015) Lights On? Energy Needs in Latin America and the Caribbean to 2040.

Electricity generation from renewable sources is nothing new to Latin America. For the last 50 years, Latin America has generated 45-50% of its electricity from hydro sources (though this number is strongly influenced by Brazil). In the last decade, many countries in the region have taken important steps to incorporate other renewable sources of electricity, such as wind and solar, and diversify their energy matrices. While the presence of these technologies is still relatively small, their growth has been exponential (as the charts above show) with ample opportunity for future investment. In 2016 Peru, Chile, Mexico and Argentina carried out very successful renewable energy auctions.

In a series of posts I will look more closely at the latest developments in renewable energy in the region, beginning here with Argentina.

 

2016: RenovAr launches with great success

Following the approval of new legislation on renewable energy at the beginning of 2016, the government of Argentina launched its first renewable energy auction in May of this year. Round 1 awarded a total of 1100 MW distributed across 17 projects (700 wind and 400 solar), plus another 35 MW distributed across 12 mini-hydro, biomass and biogas projects. Due to the high level of participation in the auction, the government created a complementary auction, Round 1.5, to award an additional 1200 MW. The results of these auctions appear in the tables below.

 

Highlights:

  • The highest winning bid price of 60U$S/MWh is well below the system’s average price of electricity of 76U$S/MWh in August. Considering the price of financing for Argentina, the auction prices were very competitive.
  • Biggest winners: Chinese companies garnered the largest share via direct participation and through partnerships with local companies, followed by Spanish and Argentine firms. US companies had a minor presence.
  • Among the Argentine firms that participated and won, the provincial state-owned enterprises of Jujuy and Mendoza played a leading role. This is an actor to watch. Public enterprises in other energy-rich provinces, such as Neuquén and Chubut, are already participating in conventional and non-conventional fossil energy projects, and are looking for partners to participate in renewables as well.
  • The national oil company, YPF, participated but did not win. Smaller local oil companies, however, were successful.

Next posts:

  • The partnership of Chinese companies and the provincial state-owned JEMSE and the role of local partners.
  • The financing hurdle
  • Upcoming renewable energy events and investment opportunities.

For more information on the results of the auctions and local market intelligence, please contact Sylvia Gaylord at gaylord@codex-consulting.net.

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1 Comment
  • Edgar Bonilla
    December 17, 2016

    Very interesting article. Colombia is experiencing the same process as well. A new legislation on renewable energy projects was approved on 2014, and it has been amended during the past two years. Supposedly it’s already in effect; however, I believe that there’s still some more issues to consider to make such new law more attractive to foreign investors…

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