Argentina's energy transition looks forward to financial support

Argentina's Guañizuil IIA solar farm can meet the electricity needs of 80,000 households each year and help reduce carbon emissions by about 98,000 tons.

In recent years, Argentina's energy crisis has become increasingly apparent. Under this circumstance, Argentina has placed its hopes on the country's abundant shale gas resources, hoping to "kill two birds with one stone" by developing the oil and gas industry to solve the dual problems of energy security and economic development.

At the same time, under the global trend of responding to climate change, Argentina has also set a target for renewable energy power generation. However, due to insufficient grid access capacity, a large number of renewable energy projects in Argentina are either under construction or waiting for priority dispatch rights, and at present, they have not been able to change Argentina's energy structure.

In the view of industry insiders, funds are the key to solving Argentina's current energy problems. Horatio Marin, CEO of YPF, Argentina's largest state-owned oil and gas drilling company, said bluntly: "Argentina's energy industry needs a lot of funds, which not only requires the efforts of local companies, but we also hope to attract foreign investment."

■■Demand for green electricity emerges

It is understood that Argentina's energy supply and economic development mainly rely on the oil and gas industry. At present, 84% of Argentina's energy consumption comes from oil and natural gas. In July this year, Argentina passed a new policy to provide incentives for new large-scale oil and gas projects, hoping to increase domestic supply and export of shale gas. As of now, Argentina is planning to implement three liquefied natural gas (LNG) production projects with a total annual production capacity of 36.7 million tons.

The German think tank Wuppertal Institute pointed out that Argentina is facing an energy crisis and its national budget and foreign exchange reserves are insufficient, but the country is rich in renewable energy resources, and making full use of renewable energy will be the key to solving its energy problems. In the future, the renewable energy industry is expected to provide new opportunities for Argentina's economic development.

According to the current plan, by 2025, Argentina's renewable energy power generation will account for 20%; by 2030, Argentina's renewable energy power generation will account for more than 50%, and the installed capacity of renewable energy power generation will exceed the gigawatt mark.

Carlos Eugenio, chief financial officer of Genneia, Argentina's largest renewable energy power generation company, believes that in the context of energy transformation, Argentina's renewable energy development momentum will gradually increase in the future. According to optimistic expectations, market demand will drive Argentina's renewable energy power generation installed capacity to grow at a rate of 20% per year.

According to data from the Argentine Ministry of Energy, in the first half of this year, Argentina put into operation a total of two photovoltaic power stations, two biogas power stations and one wind farm, with an additional installed capacity of 65.1 MW. As of the end of June, Argentina had 220 operating renewable energy power stations with a total installed capacity of 5,961 MW. Among them, centralized renewable energy power stations are the main path for the development of Argentina's renewable energy industry, contributing greatly to the growth of Argentina's renewable energy power generation installed capacity.

■■Weak power grid foundation

Currently, Argentina's renewable energy power generation installed capacity accounts for 16% to 18%. However, in terms of power generation, renewable energy accounts for a low proportion and has not played a big role.

In September, YPF announced a photovoltaic power station project with a total installed capacity of 200 MW. It is expected that after the completion of the project, it will be able to supply "green electricity" to 150,000 Argentine households and reduce carbon emissions by 250,000 tons per year. However, this project requires an 18-month construction period and will begin operations in the first quarter of 2026.

Martin Mandarino, the relevant person in charge of YPF, said: "This project once again shows the company's determination to use efficient and sustainable energy. We hope to continuously deploy renewable energy power generation projects to promote the diversification of Argentina's energy matrix."

Data shows that YPF has 497 megawatts of renewable energy power stations, of which 418 megawatts are under construction. At the same time, Argentina also has wind farms with an installed capacity of hundreds of megawatts under construction.

It is worth noting that the current complicated procedures for Argentina's energy projects to access the grid have affected the advancement of renewable energy power generation projects. It is understood that the Argentine Ministry of Energy organizes a priority dispatch project auction every quarter, and companies need to participate in the bidding. Only the winning projects can obtain the priority dispatch right for the generated electricity. In the second quarter of this year, 39 projects bid, a decrease from 48 in the first quarter. Among them, 13 are renewable energy projects.

Carlos Eugenio said that the lack of lines to connect green electricity to the grid is an important factor hindering the development of Argentina's renewable energy industry. Against this background, Argentina's renewable energy power generation installed capacity still has a lot of room for improvement. At present, Argentina's annual renewable energy power generation installed capacity is about 200 megawatts.

■■Promote investment attraction

In the view of industry insiders, funds are an important driving force for Argentina's current energy transformation. Eduardo Rodríguez Chirillo, former Minister of Energy of Argentina, pointed out that in order to ease the fiscal deficit, Argentina has cut subsidies of 2.7 billion US dollars in the first seven months of this year. "This is effective and has promoted investment in Argentina's energy sector. In the first seven months of this year, Argentina achieved a trade surplus of 2.9 billion US dollars in energy, changing the deficit trend in previous years."

Rolando Figueroa, governor of Neuquén Province in western Argentina, supports the development of the oil and gas industry in accordance with local conditions. "Argentina has great potential for shale gas development, and oil and gas production can increase six times compared to the current level. We should further attract oil and gas investment." He said.

Carlos Eugenio said that to solve the grid connection dilemma of Argentina's renewable energy, we must also rely on investment. The renewable energy industry expects relevant investment to promote grid construction and provide more development space for the renewable energy industry.

According to estimates, Argentina needs to invest more than 86 billion US dollars to achieve its energy transformation goals in 2030, of which 50% needs to rely on foreign investment.

Gustavo Castagnino, director of corporate affairs and sustainability at Genneia, said: "China's renewable energy industry leads the world. The Argentine renewable energy market has shown demand, and Chinese companies have investment capabilities and rich experience. Chinese companies' layout in the Argentine market will promote Argentina's energy transformation."

In fact, Chinese companies are already major players in Argentina's renewable energy sector. Chinese wind power company Goldwind Technology has a 250-megawatt wind farm in Chubut Province in southern Argentina. At the same time, there are also Chinese companies in the Argentine photovoltaic market. In the future, as Argentina's demand for renewable energy continues to emerge, it will promote Chinese companies to accelerate their layout and contribute to Argentina's energy transformation.

*Quoted from People's Daily