What’s Holding Back Solar in Argentina Op-Ed Explainer

For a country with the abundant solar resources of Argentina, the lack of PV adoption is cause for concern. The north of Argentina experiences high levels of solar radiation and has the capacity to produce electricity and jobs for rural and underserved communities in the country.

Unfortunately, there are several factors limiting the total deployment of renewable energy in Argentina. The outdated transmission network fails to bring energy from production locations to consumption centers. Rural communities in the north are not able to see the job growth and consistent energy access that solar could provide. Lastly, the subsidies provided for fossil fuels help to maintain the stranglehold they have on the energy market.

As of 2019, Argentina’s energy mix included 85.81% fossil fuels.¹ This is why it took Argentina until 2020 to finally reach 1000 GWh of electricity generated from PV projects.²

Argentina is by no means the only country to be stuck in a difficult situation with PV adoption. But with the amount of land well-suited to PV use, it is disappointing to see this degree of underutilization.

A report titled “Solar Energy in Argentina” by authors from the National University of Technology, SOLARMATE, and the National Scientific and Technical Research Council 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.”³

If Argentina were able to stabilize its economy and provide better incentives for solar, investors would be more apt to support renewable energy projects.

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.⁴

Unfortunately, it is often these residential areas in the far north and far south of the country that are most in need of electricity, as the Argentinian power grid struggles to support the vast country.

This concern about grid infrastructure to support renewables projects was echoed in a conversation with Mariano Maiola, a renewable energy manager for the Cale Group. When asked about the biggest problems facing the renewable energy market, Maiola said, “Limitations in the transmission network have very little capacity to admit new energy injection points.”

By promoting the use of residential solar, Argentina could take advantage of land in rural areas that receive a significant level of radiation and bring jobs and economic development to poorer areas of the country.

The PERMER (Rural Electrification) project, led by the Energy Division of Argentina’s Ministry of Economy, 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.

Diego Ramilo, the director of the INTA’s (National Agricultural Technology Institute) Center for Research and Technological Development for Family Agriculture, said in a statement that “renewable energies are increasingly important because they ensure the well-being of rural communities.”⁵

Part of the problem is that Argentina is almost wholly reliant on imports of PV products. There is, as of March 2022, no large-scale module manufacturing in Argentina.⁶ 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 NewClimate Institute found that “recurring economic crises and high political uncertainty increase the cost of capital and deter foreign investors.”⁷ If Argentina were able to attract PV panel manufacturing, that would inevitably lead to PV adoption.

However, the fluctuating currency in Argentina and the government’s continued commitment to fossil fuels deter renewable energy investment.

The vast subsidies given to fossil fuels in Argentina are quashing any possibility the country has of reaching its climate promises under the Paris Agreement. Both Argentina’s targets and its policies and actions are rated as “insufficient” in reducing emissions by the Climate Action Tracker. In 2019, fossil fuel subsidies represented 5% of the total budget.⁸ It is no wonder that the Climate Action Tracker ranks Argentina’s climate and target policies as “highly insufficient.”⁹

While 5% of the budget being dedicated to fossil fuels is troubling, it does represent a decrease from 2018. While Argentina may be decreasing subsidies for fossil fuels, it is important that it promote subsidies for PV development.

It is predictable that Argentina is so reliant on oil and gas; it possesses the second-largest reserve of shale gas and the fourth-largest reserve of shale oil in the world.¹⁰

This has promoted the idea within Argentina that these resources could be used as a “bridging energy” to provide stability to the national economy during the transition to renewables. Unfortunately, the result has been record levels of oil production in 2022.¹¹

Argentina needs to double down on successful solar policies and reduce its reliance on oil and natural gas if its citizens want any chance of achieving their Nationally Determined Contribution target.

By increasing transmission access, continuing projects such as PERMER to promote renewable energy in rural communities, and shifting subsidies from fossil fuels to solar, Argentina can take advantage of its vast resources and reach its emission goals.

This is a version of a story that previously was published on https://www.globalenergystories.com/. It was reprinted and edited with permission from the author.

Sources

1. https://tinyurl.com/3sfycfw7
2. https://tinyurl.com/yc4v2uhp
3. Ibid.
4. https://tinyurl.com/5vxbby3y
5. https://tinyurl.com/yc4v2uhp
6. https://tinyurl.com/nadv4but
7. https://tinyurl.com/4eenpzkw
8. https://tinyurl.com/4c4jascx
9. https://tinyurl.com/2p95rjmf
10. https://tinyurl.com/dbu9a3ka

About the Author

Otto Gunderson graduated from the University of Virginia in May 2022 with a degree in history. Having noticed a considerable lack of journalism on the renewable energy transitions in South America and Africa, Otto decided to spend 2023 traveling these continents and reporting on this subject.