Wind Energy Country Analysis Argentina
The Argentinean electricity market was liberalized in 1992, dividing the market into generation, transmission and distribution. In Entities at the national and provincial levels regulate the transmission and distribution sectors, while CAMMESA (Compañía Administradora del Mercado Mayorista Eléctrico) regulate the wholesale electricity market.
In 2012, the historic maximum energy consumption was reached, when the summer energy peak consumption in February climbed up to 455 GWh with a daily registered peak demand of nearly 22,000 MW. Energy demand growth in 2012 was a little bit slower than in 2011, but again close to 5%.
Since 2002, the country has faced a large increase in fossil fuels consumption for electricity generation. As a proportion of fossil fuels, the utilization of natural gas for electricity generation dropped from nearly 100% to 70% in 2011/2012. The bulk of the new energy resources came from imported fuel oil, accounting for 16% and imported gas oil for nearly 11% of the total electricity production, together with a slight increase in mineral coal carbon use from 1 to 3%.
At the end of 2012, Argentina completed two 500 KV high voltage transmission lines in order to complete the Argentinean Interconnected System (“SADI” from the Spanish Sistema Argentino de Interconexión) in Western and Northern Argentina. This gave the relatively basic radial grid system a more complex, mesh-style network. In the future a new grid enforcement is also planned for the southwest of the province of Buenos Aires in order to import additional wind power and hydropower from southern Patagonia.
Wind Energy Sector Overview
Installed capacity of wind energy: 141.9 MW (end of 2012)
Although the wind sector in Argentina saw a 115 % growth compare to 2011, the technical wind energy potential (estimated at 500 GW) of the country is largely untapped. Nevertheless Argentina's $95 billion debt default in 2001 still plagues the country´s attempts to borrow money especially from western economies. Since 2010/2011, new bank credits are arising in the Argentinean wind power sector. The most important credit guarantees were offered by China, the Andean Development Corporation (CAF) and the Inter-American Development Bank (IDB). The wind sector saw a large turnaround in September 2011, when the first phase of the 77 MW Rawson Wind Power Plant I & II, the biggest in Argentina at that time, was inaugurated by Emgasud, the owner of the power plant and one of the main local investors in renewable and conventional energy projects in Argentina.
In southern Patagonia (Chubut and Santa Cruz), average wind speeds range between 9.0 and 11.2 m/s, whereas in the north (Neuquén and Río Negro) wind speeds range from 7.2 to 7.8 m/s. The general average capacity factor for Argentina is 30% and in the Patagonia region it even reaches 40% to 44%. Especially in Northwest Patagonia, locally known as the Comahue region, hydro and wind may seasonally complement each other and benefit both technologies.
One of the other promising regions for wind power development is the Atlantic sea coast. It comprises the Province of Buenos Aires with 15 million inhabitants (39 % of the total population), between San Clemente del Tuyú in the east and Bahía Blanca in the south. Here wind speeds between 7.2 and 8.3 m/s at 80 meter hub height are the average. Although the potential power yield is less than in Patagonia, it is much easier to hook up to transmission or distribution grids. Compared to other Argentinean provinces, one burden for independent wind power developers in this Province is that project developers are obliged to pay for a building permit many years in advance of the installation of the turbines. The amount of this payment is based on the total initial investment costs. This barrier could be one of the reasons why one of the most promising province ranks third in the national position of provinces with regard to wind power installed capacity.
Wind Energy Potential
According to the last report elaborated by the Cara Argentina de Energias Renovables (CADER) on the status of the wind industry in Argentina, 70 % of Argentina’s territory is suitable for wind energy utilization with an annual average wind speed of 6 m/s (measured at 50 meter height). Best sites are located in the southern part of the country, particularly in the middle and southern Patagonia where average wind speeds reach values of 9 m/s and 12 m/s respectively. One of the main problems detected for the development of wind farms is the fact that generation points are far away from densely populated areas and industrial centres, and thus grid problems arise (grid connections, grid capacity, high costs for transmission lines, large energy losses etc.). Wind maps are currently also available for two provinces in the southern part of the country (Chubut and La Pampa). The compilation of a comprehensive wind atlas for the entire country constitutes an essential component of the national wind energy plan. Aiming at improving the planning of wind power projects, the Regional Centre for Wind Energy (CREE) in Chubut province was called upon in 2005 to compile the atlas which was finished in 2006. The atlas can be accessed via their homepage (www.eeolica.com.ar). Argentina’s government estimates that 300 MW of wind energy capacity can be implemented by 2012.
Framework Conditions for Wind Energy
The precarious economic situation in 2001 – 2002 seriously compromised the development of the wind energy industry in the country and paralysed a lot of studies and projects. To reactivate the sector, the government has established an integral plan to develop the wind industry (National Wind Energy Strategic Plan, PENEE) at national level aiming not only at an increase of installed capacity but also to reactivate the wind industry within the nation (being an economic niche almost unexplored up to that moment by national investment).
The PENEE contains the official development programme of wind parks and shall lead to the construction of at least 300 MW of wind energy projects. Initial actions of this development involve the creation of the wind atlas and the project Vientos de la Patagonia 1 and 2. Both wind farms are financed by the government with additional funding from the provinces where they are located. The wind farm Vientos de la Patagonia 1 is 80 % property of ENARSA and 20 % of the Chubut province and is structured in two phases. Phase 1, already in construction and foreseen to be finished by 2009, aims at the installation and certification of two prototype turbines from local manufacturers, one from the company IMPSA Wind and the other from NRG Patagonia. Phase 2 considers the installation of a 60 MW wind farm in Chubut using the certified turbines in Phase 1. Wind farm Vientos de Patagonia 233 with a capacity of 20 MW is located in the province of Santa Cruz. Studies regarding prospection and analysis of the wind resources are currently being carried out.
Wind Energy Legislation
- National Law No. 26 190: as stated before, this law grants economical support to energy generated through renewable sources. In the case of wind energy, it specifies some small subsidies (0.26 €cent/kWh for wind) and tax benefits (such as the accelerated amortization or exemption of VAT payment) for the wind projects.
- Provincial Law of Chubut (Ley Provincial no 4 389): this regulation specifies additional subsidies and tax benefits and also establishes the percentage34 of wind turbine components that must be manufactured or assembled within the province. The subsidies amount to 0.089 €cent/kWh, on top of the national subsidy.
- Provincial Law of Buenos Aires (Ley Provincial no 12 603) specifies additional subsidies for wind energy. The subsidies amount to 0.089 €cent / kWh, on top of national subsidy.
- Provincial Law of Santa Cruz (Ley Provincial no 2 796): as stated in the previous chapter this regulation provides for tax exemptions (50 – 100 % depending on local content) and small subsidies (0.18 – 0.54 €cent, also depending on local content) for renewable energy projects.
Current Use of Wind Energy and Project Pipeline
By the end of 2012, a total of 141.9 MW of wind energy capacity had been installed in Argentina. In 2011/2012, more than 80 MW was installed in the coastal zone of Patagonia, near Puerto Madryn and near Comodoro Rivadavia in the same province.
There are 15 wind farms in the country, mainly in the province of Buenos Aires, La Pampa, La Rioja and on the coastal region of Patagonia.
Recently installed wind farms are:
- Rawson I & II (77.4 MW): The wind park consists of Vestas V90 1.8 MW wind turbines in two independent but contiguous wind parks of 28.8 MW and 48.6 MW installed capacity. - Ichico (6.3 MW): This new project involved the installation of 7 wind turbines of 900 kW, from ENERCON E-44/900, class S, with 45 m hub height. It is located near Diadema town, close to the city of Comodoro Rivadavia. The wind farm is expected to generate 24,660 MWh per year, assuming a total capacity factor of 44.7%. - Arauco Wind Farm (2x 25.2 MW): The first phase (25.2 MW) of the new wind farm provided by IMPSA has been finished. It includes 12 new IMPSA IWP-83 wind generators of 2.1 MW built in the company’s plants in Mendoza. Commercial operation started in April 2011. For the second phase 12 more turbines of the same characteristics will be installed.
Apart from the national tender GENREN I, which by the end of 2012 had only accomplished 10% of the negotiated 754 MW, there are more than 460 MW wind power projects already with authorization from CAMMESA and 547.5 MW still pending authorisation. Most of the future wind projects, in various stages of development, are located in Patagonia and in the south of the Buenos Aires Province. New unknown windy areas for wind power deployment were recently discovered in the Northern Province of Santiago del Estero, as well as in the central province of Cordoba and San Luis. Most wind parks listed below are almost at financial closure or are just under construction.
- Loma Blanca IV: The 50 MW wind farm Loma Blanca IV is part of the much larger wind complex of Loma Blanca with nearly 200 MW of total capacity. This first phase of the wind farm is being developed near the municipality of Trelew, located south of Rawson I & II in the Patagonian province of Chubut. Loma Blanca wind complex was successfully developed by Spain's Isolux Corsán. At the end of 2012, the proposed project was already under construction. In the beginning, Phase IV will comprise only 17.3 MW of wind capacity, using turbnes from France's Alstom. Isolux Corsan will receive € 200 million for financing the construction of the wind farm. Isolux Corsan raised financing through a bond issue and has completed a financial restructuring that envisages financing another 50 MW. The 50 MW Loma Blanca III will be supported by the Andean Development Corporation (CAF). - Gastre: The project developer, GEASE, is apparently closed a loan deal with the Beijing Construction Engineering Group International to finance the 1,350 MW wind park in the central part of Chubut province with Chinese technology. It should be completed in 300 MW stages within more than 5 years. - Koluel Kayke I & II: These two wind parks, developed by IMPSA Wind and part of GENREN I, comprise the installation of two wind farms with a combined capacity of 75.6 MW.
Active Local Companies
In 2011/2012 the leading manufacturers of wind turbines in the market were VESTAS and the national company IMPSA Wind (see pie chart). VESTAS grew strongly due mainly to the newly inaugurated Rawson I & II wind park. ALSTOM could be the next global wind power manufacturer entering the scene in 2013. Another local company, NRG Patagonia, installed its first turbine in the southern province of Chubut in 2011. Their technology is a mix of long gained own experience, enriched with an international design license and the purchase of some imported components.
IMPSA Wind: Of particular importance for the development of the local wind turbine market is the involvement of IMPSA Wind, originally from the Argentinean Province of Mendoza. The Company formerly known only within the hydropower sector has now more than 300 MW installed capacity abroad and an international wind power development portfolio of nearly 650 MW. In Argentina IMPSA designed its own turbines in the range of 1.5-2.1 MW. IMPSA Wind & IMPSA Energy plays also a unique role in wind energy sector development in the provinces of La Rioja and Santiago del Estero, in the north-west of Argentina.
Another player in the wind power sector is the newly created Argentinean Wind Energy Cluster. This association undertakes lobbying and support activities to encourage national providers, manufactures and wind power owners to accelerate and put more pressure on the political agenda. The “Cluster Eolico Argentino” already has 52 local companies as members, including Impsa-Industria Metalurgicas Pescarmona, Invap and NRG Patagonia. The Cluster, whose principal aim is to support local manufacturers of wind power equipment want to strengthen the national market to supply equipment with a capacity of 1,000 MW a year by 2020. The “Cluster Eólico Argentino”, is part of the Chamber of Industrial and Engineering Projects and Capital Expenditures of Argentina and has strong support from the Ministry of Industry. This new player could add more value to the emerging national wind power sector and take the lead to create a – currently non-existent - vocational education and training programme for wind power technicians. Its long-term objectives, to be achieved by 2020, are to create 10,000 renewable energy jobs, contributed to achieve 1,000 MW installed capacity per year, as well as support 500 local supply companies.