Enel's Decision to Leave Argentina
Enel Green Power, one of the largest energy companies in the world, has announced their decision to exit both the Argentinian and Peruvian market. Enel’s plan is to de-invest their energy production in these two countries after they were classified by Enel as “non-strategic assets.” Enel’s disinvestment in these countries may reach over 21 billion USD, or 40% of their global investment reduction. With this in mind, Enel has sold their stake in the largest thermal generation plant in Argentina, Enel Argentina Costanera, capable of producing 2,305 MW in which Enel had a 75.7% stake. They have also sold their 41.2% stake in Central Doc Sud, a gas fired energy generation plant with an installed capacity of 870 MW. Both of these plants were sold to Central Puerto for a sum of over 100 million USD. However, Enel is expanding their investment in other South American countries, raising doubts about foreign investment in Argentina and their ability to reach their renewable transition goals.
Enel Green Power does have two hydroelectric plants that currently run in Argentina, with a total installed capacity of 1.33 GW. One of these projects is operating in Arroyito with an operating capacity of 128.00 MW, while another is operating in Chocon with a capacity of 1,200.00 MW. As of September 30, 2022, Enel Green Power produced no energy from solar, biomass, wind, or geothermal energy in Argentina. Enel also owns 2 transmission line companies, Mercosur Transmission Company and Transportadora de Energía, both of which have a 500 Kv transmission line. These are joined by ACYLEC, a company owned by Enel which transports clean energy from the Yacyretá Hydroelectric plant. When comparing these numbers to the countries in which Enel hopes to expand, it is clear that they are much more heavily invested in the energy production of other South American countries. In Chile, Enel Green Power has 57 plants that include hydroelectric, solar, wind, and geothermal with a combined capacity of 5.98 GW. Brazil boasts hydroelectric, solar, and wind energy totaling 93 plants and 5.01 GW of capacity. Enel Columbia operates 17 plants including solar, hydroelectric, and wind totaling 3.22 GW. These countries can expect further investment from Enel Green, who intends to produce 75% of their electricity from renewables by 2025.
This relative lack of green energy production in Argentina provides one explanation for Enel’s reason for leaving. If this is the case, it is encouraging to see industry leaders make decisions based on renewable energy investments. However, for a country that needs investment in both its energy transmission grid and renewable projects, Enel’s decision to exit Argentina may only encourage their growing oil production. Interestingly, the money that will be divested from Argentina will likely stay in South America. Enel’s renewable energy division, Enel Green Power, installed 1,364 MW of renewable energy in Latin America, but this was focused predominantly in Chile and Brazil. In a company release from 2022 Enel outlined six “core” countries in which they expect to produce 75% of their total energy generation from clean sources. These six countries include three in South America: Chile, Brazil, and Columbia.
Argentina possess vast tracts of land well suited for both solar and wind and renewable potential is not a concern. Rather, it is factors within Argentina that are halting renewable deployment. In conversation with Renewable Transition Specialist Agustín Lohigorry, he explained that a significant problem for large renewable projects in Argentina is the limited transport capacity of the current grid. Despite growing distributed generation and the declaration of an “electrical emergency” no new transmission lines were built during the Macri administration (2015-2019). Enel has recently faced problems with the Argentinian government due to large scale blackouts in populous areas. The government fined Enel’s distributor Edesur over 5 million USD for power outages in Buenos Aires, and has threatened to remove Enel’s concession.
Despite government disputes and fluctuating currency, Enel maintains that they are divesting in order to focus on countries with better clean energy options. This was reiterated in a statement by the Chief Executive of Enel Americas, Maurizio Bezzeccheri, who said “There are operations that are in line with our decarbonization strategy, with the goal of reaching zero emissions by 2040.” However, clear regulatory limitations and economic unrest in Argentina encourage companies such as Enel to focus on South American countries that have greater stability and more consistent clean energy policies. By building grid transmission lines that connect the renewable regions in the far north and south of the country, and encouraging a stable environment for outside investment, Argentina can reach the same level of renewable energy investment as its neighbors.