According to the Argentine Wind Energy Association, winds in excess of 6m/s in 70% of Argentina’s territory, combined with a direction and constant speed that allow capacity factors of more than 35%, equates to high efficiency and profitability for the country’s wind operators.

In the case of photovoltaic (PV) solar generation, according to the Argentine Solar Energy Atlas, more than half of the national territory receives annual average sunlight of more than 3.5kWhper square metre.

“The solar and wind resources combined show a development potential for the immediate future, particularly limited by the current capacity of the transmission networks, which will have to be expanded to face the higher demand of energy,” says Marcelo Iezzi, associate partner in sustainability, PwC Argentina.

“Apart from the wind and solar energies mentioned, Argentina also has favourable conditions for the development of biogas, biomass, biofuel and small water projects. However, given the growth of the first two and their better conditions for technological offers and locations for their installation, both the authorities and the private sector focus their activities and attention on them.”

This is borne out by the results of Argentina’s inaugural renewable energy auction, known as RenovAr (‘renovate’ in Spanish), which took place at the end of 2016. A total of 22 wind projects were awarded for 1,473MW of power, as well as 24 solar PV projects for 916MW.

However, the country is limited by the current capacity of its transmission networks, as well as an historical focus on run-of-the-river power generation facilities and fossil fuel electricity generation.

What Argentina lacked until recently was the political will to push through legislation required to create a private sector energy market aimed at diversifying the country’s energy mix.

Other priorities include boosting its energy security by easing its reliance on imported fossil fuels (from which 60% of Argentina’s electricity is still generated) and reducing greenhouse gas (GHG) emissions to 37% by 2030, in line with its United Nations nationally determined contributions (NDC) goal.

This period of relative stasis appeared to be coming to an end in 2017, when the Argentine administration under President Mauricio Macri declared 2017 the year of renewable energy.

In fact, the seeds of Argentina’s clean energy revolution were sown in 2015 when the government announced a new legal framework for renewable energy, a renewable energy fund (FODER) backed by a $480m guarantee from the International Bank for Reconstruction and Development (IBRD), and fiscal incentives and competitive, transparent market rules aimed at attracting foreign investment.

RenovAr was launched a year later. Renewable energy companies were invited to bid for investment projects, publically stating the price at which they are willing to sell their capacity. The contracts awarded by CAMMESA, the company that manages Argentina’s electricity wholesale market, take the form of long-term power purchase agreements (PPAs) in US dollars, allowing companies to ensure their sales without exposing themselves to potential devaluations of the peso.

The first bidding round was an unqualified success. The total amount of offers received stood at 6,200MW (nearly two-thirds of them from local investors), more than six times the requested capacity. Current installed capacity for the generation of energy in Argentina is approximately 31,000MW, meaning the allocations altogether represent an almost 8% increase of that capacity.

This is good news for both the government and consumers in Argentina, where in recent years demand for electricity has outstripped growth in installed generation capacity.

“The auction conveyed a success beyond the already mentioned historical difficulties to accompany the demand growth rate with new investments in electricity generation assets,” explains Carlos Fernandez Landa, deals partner at PwC España.

“In this regard, deploying the new renewable capacity awarded at the auction is the first milestone in the development of an energy policy that can combine the three major guidelines in renewable energies: security of supply, economic competitiveness and environmental sustainability.”

This policy leverages private sector investment and eschews public debt, creating a new renewable energy market characterised by innovation, transparency and competitive electricity pricing.

In October 2018, CAMMESA announced that it had signed contracts with three projects – the La Pirka, Ullum X and Verano Capital Solar One PV schemes, each with an installed capacity of 100MW – selected in round two of the RenovAr renewable energy auction programme in October 2017.

The following month, Argentina launched the third round of public auctions, with wind and solar again accounting for the majority of the 400MW of new installed capacity on offer. Successful bidders will be revealed on 17 May, and PPAs will be signed between 20 May and 8 November 2019.

The potential economic and environmental benefits are huge. PwC reports that investment in renewables in Latin America exceeded $16bn in 2015. Argentina aims to attract around $35bn in investments in energy in the coming years, about half of that for renewable power, while RenovAr is expected to reduce GHG emissions by 79.64 million tonnes (Mt) of CO₂ over 20 years, or 4Mt of CO₂ per year.

Historically, Argentina may have lagged behind its neighbours when it comes to renewable energy, but policy changes, private foreign investment and cheaper technologies mean it may not be playing catch-up for much longer.