The Argentine solar energy market is expected to register a CAGR of over 10% during the forecast period. Factors, such as the Public Private Partnership (PPP) law, efforts to regulate and encourage private investments in the critical sectors of the country's economy, along with more than 30 solar projects, which are expected to be implemented under the PPP model, primarily across major infrastructure and social sectors, including energy and transport, are expected to drive the solar energy market during the forecast period. However, due to fiscal deficit and lack of finance, the government could not invest sufficiently in the renewable sector. This, in turn, is expected to restrain the growth of the market studied.
- Solar Photovoltaic (PV) segment is expected to be the largest segment owing to a significant increase in a number of projects and being the largest solar power generation source in Argentina. It also has the largest installed capacity in comparison to solar thermal and other types as of 2019.
- 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 for 13 solar projects, which is expected to be distributed in 14 provinces, hence creating ample opportunities for the solar energy market players.
- RenovAr program was initiated by the Argentina government to improve the share of renewable energy in its energy mix to 20% by 2025. Under the RenovAr program, regular public bidding processes were held, in which different companies presented their investment plans. Hence, a major driver for the Argentina solar energy market is expected to be the RenovAr program during the forecast period.
Key Market Trends
Solar Photovoltaic (PV) to be the Largest Segment
- The cost of solar power has come down in recent years, majorly due to initiatives taken on an international level by governments and private organizations to promote research and development in this field. This cost reduction has made solar technology, especially solar PV technology, more accessible in Argentina, with a total solar PV installed capacity of 441 MW in 2019.
- Moreover, the growing demand for electricity is another major factor driving the growth of the market. Concerns regarding the high carbon footprint of conventional power plants are also expected to aid in increasing the demand for solar PV to meet the growing power demand in Argentina.
- More than half of Argentina's territory receives annual average sunlight over 3.5 kwh/m2, which makes Solar PV a technically viable option to match the higher electricity demand. In 2019, solar power accounted for more than 18.5% of total renewable power in Argentina, with the majority being generated through solar PV.
- Further, under RenovAr Program, the country plans to add 10,000 MW of renewable power to the grid by 2025. To realize this target, a total of 58 potential solar projects, with a combined capacity of 2,834 MW were submitted in the first renewable energy tender, further driving the solar PV market.
- Hence, there are a number of solar PV projects in the pipeline and planning stages in the country, which, in turn, are expected to promulgate the solar energy market in Argentina.
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 (Compania Administradora del Mercado Mayorista Electrico), 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 for solar energy projects and was more than seven times oversubscribed than Round 1.0.
- Moreover, in Round 1 and Round 1.5, solar PV projects of 400 MW and 516 MW respectively were awarded. 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, majorly wind and solar.
- Therefore, the government's focus on increasing the renewable energy share in the energy mix of the country to 20% by 2020 is further expected to drive the solar energy market in the country.
The Argentine solar energy market is moderately fragmented. Some of the major companies include Empresa Mendocina De Energias A.P.E.M, Canadian Solar, 360 Energy SA, Genneia SA, and Trina Solar Limited.
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