Argentine renewables drive loses steam as problems pile up
After contracting 6GW of new capacity over the past three years, Argentina’s renewable energy programme is losing momentum as grid connection and macroeconomic problems pile up.
Although the government last week launched the process for securing contracts in Argentina’s unregulated market for the first quarter of 2019, the energy ministry is expected to later this month announce changes to its renewables programme to adapt it to new market realities.
The government had already decided to reduce contracting in regulated market tenders this year – it will contract up to 350MW of new wind and solar capacity from sub-10MW projects – while in the non-regulated market, no new projects were authorised in the final quarter of 2018.
By comparison, in 2016 and 2017 regulated market tenders contracted between 700MW and 1GW, while the number of non-regulated market contracts approved by the government has topped ten every quarter since the programme started in the fourth quarter of 2017.
Both regulated and non-regulated contracting are important for the country to reach its 20% renewable energy supply target by 2015. A total of 10GW in new renewable capacity is said to be needed to meet that goal.
But latest events confirm a slowing down of renewable energy investments in the country.
Last week grid operator Cammesa said that requests for connection priority for two non-regulated market developments were annulled, as the projects’ sponsors had decided not to go ahead.
At the same time, local press reported that some bid winners in the regulated market are waiting for the government to decide whether to extend the commercial operation start date for projects contracted under the last tender of 2017, known as round 2.
Holding back new investments is the lack of new transmission lines – needed to link distant solar and wind districts to the country’s industrialised central region. At the same time, the foreign exchange crisis of mid-2018 has increased financing and construction costs, as the Argentine peso has devalued significantly from the last tender in 2017.
While the contracting of new transmission lines is behind schedule, Argentina is currently facing deep macro-economic problems such as rising inflation and unemployment, as budget cuts and a huge support programme from the Internatational Monetary Fund have yet to have any effect on the economy.
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Although construction of the first projects tendered in 2016 should continue to increase the country’s renewable energy capacity in the coming months, no new contracts have been signed in the regulated market since mid-2017.
Of the 2.5GW of wind contracted in the regulated market tender programme known as RenovAr, 329MW was operational in February. Of the 1.7GW of solar PV contracted, 148MW is up and running.
In the non-regulated market, known as Mater, of the 1.1GW of solar and wind projects which obtained priority to connect to the grid, only 280MW has been built since late 2017.
The government says that around 80 projects – adding up to 3GW in capacity – are currently being built in the regulated and unregulated sectors.
Most of the rest are stalled by lack of grid connection and lack of financing.