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What's Holding Back Solar in Argentina

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For a country with the abundant resources of Argentina, the lack of PV adoption across the country is cause for concern. As of 2019, Argentina’s energy matrix consisted of 89% fossil fuels, 3.9% hydroelectric, 2.8% nuclear, and the remaining 4.3% from all other sources, including solar. In 2020, Argentina finally reached the 1000GWh of electricity generated from PV projects. Argentina is by no means the only country to be behind the eight ball on PV adoption, but with the amount of land well suited to PV use, it is disappointing to see this degree of underutilization. However, there is reason to believe that new projects and investment will propel PV adoption. By providing a more stable climate for investment and improving grid capabilities Argentina’s northern provinces could propel clean energy adoption across the country.


A report done titled “Solar Energy in Argentina” by faculty at Argentine Universities as well as experts in the field, found that “there is a measure of agreement that Argentina’s solar resource is ideal for photovoltaic (PV) and solar thermal (ST) development, both for large- and small-scale (distributed) installations.” Land in rural areas that receives a significant level of radiation could supply energy for major Argentine cities, as well as bring jobs and economic development to poorer areas of the country. However, the lack of residential distributed generation projects is hindering mainstream solar adoption. Of the 8.6 MW of distributed generation projects across Argentina, only 1.5 MW are residential. Possible reasons for this are the net billing scheme and the low subsidized electrical tariffs that are beneficial to conventional electrical generation sources and large hydroelectric plants. However, the PERMER project is doing a significant amount of good as a system of off-grid clean energy adoption aimed at supporting rural communities in the center of Argentina. More initiatives like this could encourage small scale solar adoption and improve the opinion of clean energy across the country.


Part of the problem is that Argentina is almost wholly reliant on the importation of PV products. The Solar Journal report found “Imported manufactured products cover a large part of the value chain: PV modules, converters, batteries, and in many cases module support structures.” There is, as of March 2022, no large-scale module manufacturing in Argentina. This is unsurprising since the political and economic uncertainty that has faced Argentina over the past decade does little to attract foreign investment in PV manufacturing. A report from the New Climate Institute found that “recurring economic crises and high political uncertainty increase the cost of capital and deter foreign investors.” If Argentina were able to attract PV panel manufacturing, that would inevitably lead to PV adoption.


Despite these challenges, the share of electricity that is produced by renewable energies has been growing steadily. In 2019 renewables contributed 6% to the electricity demand, which grew to 9% in 2020. This is a big jump from the 0.0014% total electricity contribution in 2011. RenovAr, created to promote the Law 27.191 has been a success, between 2016-2019 RenovAr has awarded contracts for 4.5 GW of new non-conventional renewable energy capacity. This Law also calls for 20% of electricity to come from non-conventional renewable energy generation such as PV by the end of 2025. This could increase to 25% by 2030 given additional support. This Law also decreased investor risk by making the Federal Government the trustor and residual beneficiary, the Bank of Investment and Foreign Trade (BICE) as trustee, and project owner and investor as beneficiary. There is promising growth from 2015-2020 to support this plan. The non-conventional renewable energy share of the electricity consumption grew from less than 1% of total installed capacity to 7.6% in 2020. A further promising statistic is that the sector of solar found within this non-conventional capacity grew from 3.8% to 14.2%. The RenovAr program has created a significant increase in Large Scale PV capacity, and both generated and installed PV have seen significant increases since 2016. The government has announced the addition of 2.35 GW of large scale PV and 1 GW distributed PV by 2030. The Argentinian Congress has also passed Law 27424 to allow distributed generation of Renewable energy to enter the public electricity grid. This allows generators of Renewable Energy to receive an injection rate price. 


A study done in the Solar Journal found the significant factors obstructing the deployment of renewable energy technologies to be “lack of sufficient financial and human capital resources.” On the financial resources this means a high level of consumer side subsidies. By shifting subsidies from natural gas to non-conventional renewable energy, Argentina could keep the energy price low for poor families while increasing the appeal for outside investment. In the case of capital resources “there exists a knowledge gap between the many well-trained scientists and technologists and the players in the upper strata of the political decision-making system.” This report found “regarding the future of PV in Argentina, tackling the electric tariff subsidy issue will be key to PV growth.” Argentina will also need to change the public’s view on clean energy to get consistent support. A report found “feedback from Argentinian stakeholders and experts in the climate and energy sectors was consistent in the statement that renewable energy technologies are still perceived as high cost alternatives for the future of the energy sector, even though there is awareness that costs are decreasing.” Part of this high cost is the result of the belief that grid expansion costs are the result of clean energy expansion. In order to support solar energy projects in the far north of the country, grid expansion is required. However, these costs should not be seen as the result of clean energy projects but rather a solution to the grid limitations. If Argentina hopes to attract investors for clean energy projects, updating their grid is of paramount importance. 

It is unsurprising that Argentina is so reliant on oil and gas, they possess the second largest reserve of shale gas and 4th largest reserve of shale oil in the world. There is the possibility that when Argentina’s economy recovers there will be increased subsidies that provide super cheap natural gas. There is also the idea of gas as “transition technology” which can create economic stability in Argentina and lay the groundwork for a renewable transition. However, this can create a stagnation in renewable energy, as the push to develop projects and find investors becomes less immediate. However, with current federal policies and more support from the general population, Argentine PV projects could receive higher levels of investment and increased PV generation.

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