Market Trends of Argentina Power Industry
This section covers the major market trends shaping the Argentina Power Market according to our research experts:
Thermal Power to Dominate the Power Generation Market
- In 2018, electricity generation through conventional thermal power sources reached 87,725 GWh, representing a decline of almost 2.6%, compared to the 2016 levels. Despite this decline, thermal power generation remained as the main source to meet the electricity demand in Argentina.
- Oil, natural gas, and coal are the thermal power sources used for power generation in the country. However, the use of fossil oil and diesel in the power sector has reduced in recent years due to an increase in natural gas production in the Vaca Muerta shale play. Furthermore, in 2018, the supply of natural gas allocated to the electricity sector was higher than that of 2017. The energy sector of Argentina is expected to be gas-based in the future.
- In December 2018, the US and Argentinian officials signed an agreement to work together to strengthen the energy infrastructure in both countries. Both countries have agreed to expand electricity generation from natural gas and convert existing fossil fuel power plants to operate using combined-cycle natural gas technology.
- In March 2018, Argentina's state-run energy company, YPF commissioned a new thermal power plant in the famous Vaca Muerta Shale play. The Loma Campana power plant is powered by two GE turbines with 110 megawatts capacity each. It will supply electricity to roughly 380,000 households, using natural gas extracted from the unconventional formation in the Neuquén Province.
- Adding to this, there are around 9.5 GW of thermal power plants in the pipeline and planning stages in the country. These projects are worth around USD 9.92 billion and are expected to come online by 2025. The expansion of Vuelta de Obligado and Guillermo Brown thermal power, together with the construction of a new combined cycle power plant, is expected to be the major projects to be carried out in the mid-term.
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RenovAr Program to Drive the Market
- The RenovAr program has so far attracted strong investor interest, which led to significant oversubscription of the bidding rounds. Bidders compete to sign 20-year power purchase agreements (PPAs) with CAMMESA (Compañía Administradora del Mercado Mayorista Eléctrico), which acts as off-taker on behalf of distribution utilities and large, wholesale market users.
- Round 2.0 of the RenovAr program was launched in August 2017 with an objective to contract 1,200 MW, with quotas per region and technology. The tender drew strong investor interest and was more than seven times oversubscribed than Round 1.0.
- Moreover, 88 projects with a combined capacity of 2,043 MW were successful in the second round. In November 2018, Argentina launched the third round of its RenovAr renewable energy auction program, aiming at a total of 400 MW of new installed capacity.
- In June 2019, the Argentinian Finance Ministry's Energy Secretary received 56 bids for the MiniRen or Round 3 of the RenovAr program. These bids represent a total of USD 520 million worth of investment, which is expected to be distributed in 14 provinces, hence creating ample opportunities for the renewable energy market players.
- Therefore, the government's focus on increasing the renewable energy share in the energy mix of the country to 20% by 2020 is expected to be bolstered by RenovAr program, in turn driving the power market in the country.
