23 February 2017


Distributed Generation: the Next Step in Argentina’s Renewables Drive

Author: Adam Critchley, Solarplaza

In order to guarantee the success of Argentina’s RenovAr program, the country needs to move towards policy change to make the renewable energy sector more attractive to investment, as well as raising awareness among the population of the benefits of switching to clean power sources.
Rounds 1 and 1.5 of the RenovAr program resulted in a total of 2.42 gigawatts of clean energy projects being awarded, requiring $4 billion of investment, while average prices for power-purchase agreements came in at $57.40 per megawatt-hour.

In 2015, Argentina was the first Latin American country to enact a law that mandates an 8-percent contribution by renewables to total energy generation, rising to 20 percent by 2025. The country currently generates around 2 percent, or 200 megawatts, of its power from renewables.
Said law also stipulates that large-scale energy consumers, those requiring available generation capacity of 300 kilowatts or more to meet their needs, must obtain at least 1% of their energy from renewable sources once the law takes effect.

Developing distributed generation policy

The next step is the development of distributed generation (DG) in the country, with a new bill expected to be approved by the lower house in the first half of this year, and coming into effect in early 2018.
The law will have a wide-ranging impact, given that 80 percent of consumption in Argentina is by users of less than 300 kilowatts, according to Maximiliano Morrone, head of the energy and mining ministry’s office of renewable energy promotion. 

“The law was drawn up based on similar legislation in Europe, the US and Chile, and we are advancing on a net metering model, taking into account that DG requires a medium and long-term model, and with fixed distribution costs,” he added.

“It’s a process we are just beginning, and we have seen that in other countries the learning curve has been very slow, particularly in the creation of regulations, and we are therefore looking to take advantage of what has been learned in other markets in order to implement the best model in Argentina,” he said.

To support the implementation of a DG system, Morrone’s office has set up 25 information centres across the country, aimed at providing training and support to interested parties, given the importance of DG as a driver of small-scale solar growth. 
If we want renewable development we have to start with high power, and that development will then drip down to smaller scale and create awareness among the population, and into distributed generation, he added.

“In terms of solar, Argentina is the eighth country in terms of territorial extension with more than 2,700 kilowatts of power generation capacity per square metre per year, which is around 70 percent higher than in Europe, which is the cradle of renewable energy development, and there is much interest in the country to develop renewables.”

The provinces of Mendoza, Salta and Santa Fe have already implemented regulations to facilitate DG, establishing technical conditions for operation and maintenance, metering and billing, allowing self-supply users to inject surplus energy into the grid 

Establishing a local PV industry

Like Mexico, Argentina applies a 15-percent tax on imported solar panels, and therefore there exists the potential for the creation of a local manufacturing base once solar takes off.

“Argentina is an industrialised country, and there is hunger to create a solar component industry, and while China currently accounts for 80 or 90 percent of solar panel manufacturing, growth of the sector in Argentina will dictate whether this country can become a solar component manufacturing base,” Morrone said.

“We have the grey matter and the industrial potential to develop such a base,” he added.

He said his office’s most important task is creating the regulatory framework for the development of renewable energy, and which will then take place through technological exchange.

Argentina also plans a geothermal development law, which will also foster the participation of local industry, and is launching a national renewable energy centre to bring together technology and know-how, and promoting the use of solar panels on public buildings and educational institutions.

“We are an industrious country,” he said. 

Maximiliano Morrone, as well as the ministers of energy from Salta, Jujuy and Santa Fe, will be sharing their vision and explain policies during the El Futuro Solar Argentina conference, taking place in Buenos Aires on 29 and 30 March. This conference is preceded by an exclusive optional in-depth Finance & Regulatory workshop on the 28th with local banks and international financiers.

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