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Beyond Oil & Gas: Renewable Energies Opportunities in Argentina MBA CARLOS VILLAR ARGENTINA BIRKENFELD 06.12.2011 RENEWABLE ENERGIES Argentina: General Information • Capital: Buenos Aires • Population: 40MM – 35% lives in BA and suburbs • Surface Area: 2.8 Mio Km² • Currency: ARPeso • Exchange Rate: AR$ 6/ €1 • Income Tax Rate: 35% • GDP: 350 Billion US$ • Inflation Rate: 20% - 30% • Unemployment: ~10% • International Reserves: US$ 50 Billion • Public Debt: US$ 150 Billion Political and Economic Brief • Country governed by Peronist Party since 2003. Re-elected for 4 additional years • Good signals sent to private sector, indicating institutional and legal stability for long term investments • International crisis impact cushioned due to low level of debt exposure after 2002 default • Inflation in the range of 20% - 30% is the most important weakness • Excessive claims from unions of last years are being tempered in order to control inflation and grant business environment • Economy health is highly dependent on commodity exports (grains) • It is expected a return to financial markets, given the migration of funding to Latin America • Support of Brazilian position as region´s driving economic force despite some bilateral commercial differences MSW Current Situation • Increasing population and boom of consumption. Uncontrolled increase in waste generation. • Only BA and suburbs generate 17,000 tons/day of MSW • Role of informal sector in manual sorting is relevant. Today the concept is “recycling for surviving” before “recycling for the planet” • Lack of MSW quantity and quality database. Something at municipal level • Municipalities assign more than 20% of budget to MSW (90% collection and disposal). Low level of primary segregation and treatment • Only now The National Secretary of Environment is creating a coordinated strategy for waste management • Need to break the paradigm of magic technological solutions MSW Disposal 1. 3. 2. 1. Open Dumps 2. Controlled Dumps 3. Landfills MSW disposal in Bs.As. Landfill Variación en la cantidad de toneladas de RSU dispuestas en RS ddddddddddddddddddddddddddddddddddddd Fuente - CEAMSE d 7.000.000,00 6.000.000,00 5.000.000,00 4. 5 9. 49 0 ,1 26 7 6 .6 ,0 61 5.33 8 4. 81 4. 3 ,1 36 5. 82 4, 01 . 1 54 5 ,4 68 7 6. 50 5. 5 2. 33 5. 8 ,1 11 63 8, 49 4, 77 . 6 4 0 25 7. 4. 4. 31 4. 8 ,0 93 7 8 ,7 6. 61 39 01 .6 3, 5. 1 7 3 76 5. 4. 55 9 ,1 2 72 5. 0 8. 58 . 9 5 1 5. 1 ,1 6 ,9 .5 06 2 4 25 .3 62 6.1 6 5. 1 ,9 09 4.000.000,00 3.000.000,00 2.000.000,00 1.000.000,00 0,00 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Año Source: CEAMSE 2010 MSW – The goal Energy Industry • Energy Matrix highly dependent on Gas (49%) and Oil (41%) • Dramatic drop of O&G reserves in the last years forced to import gas at extremely high prices • A complex structure of subsides to energy tariffs that discouraged investment is now being reverted by government. Tariffs prices are slowly recovering • Government implemented a series of plans to encourage investment by guaranteeing higher prices for oil, gas and electricity • Firm intention to compensate the energy matrix encouraging generation from renewable sources • A solid long term plan and price regulation framework is the big debt • Renewable Energies will lead investment in the coming years. Financial instruments are slowly appearing Legal and Regulatory Framework • Biofuels regimen (National Law 26.093) • Promotion of Renewable Energies for electricity generation (National Law 26.190) • Permission for municipalities to deliver and sell electricity generated from wind or solar sources (Res. 280/2008) • National project to finance Renewable Energies in rural markets (PERMER) • National plan of wind energy • National tender from ENARSA to acquire electricity generated from wind, solar, biomass and biofuel (GENREN programs) • Implementation of different regulations and tax incentives in provinces with good conditions for wind and solar generation (Chubut, Neuquen, San Juan, Mendoza, etc.) • Promotion programs for new technologies development Solar Radiation Wind Energy Potential Key Improvements • Regulatory framework • Long term institutional and legal stability. Clear rules • Financial structures • Strong investment in electricity distribution network (mainly in Patagonia) • Promote decentralization of energy generation • Coordination between Federal Government, Provinces and Municipalities • Long term Strategy definition and implementation of programs to encourage investment in renewable energies • Cooperation agreements , transfer of technology and know-how • Change of mind. Not only fossil fuels Electricity Distribution Network Public Tenders ENARSA executed 15 years PPA´s under GENREN programs. Wind 754 MW (121/134 usd/MWh), biofuel 110 Mw, solar 20 MW (547/598 usd/MWh). Renewable Energy Finance Why Argentina? - MSW • Most landfills capacity is exceeded • Strong position from authorities regarding dumps closing • Municipalities: Mayors are realizing it´s their problem!! • National Secretary of Environment is financing new technological solutions and campaigns oriented to waste recycling and reduction • Huge diversity for project development. Big urban locations and small rural towns • Regionalization is under consideration for project economic viability • Circular Economy concepts are being incorporated by authorities and industries Why Argentina? Renewable Energies • 70% of territory offers winds with an annual average of 6 m/s, exceeding 10 m/s in La Patagonia • Cuyo area and northwest offer the best conditions for solar energy • Government is strongly promoting renewable energies • Argentina is at first stages of this kind of generation: higher prices, tax incentives, local investors interest and increasing funds for financing (IDB, UN, BNDES, Government loans) • Unique Diversified geography that benefits implementation of different concepts and combination of technologies • Human resources: Argentina counts with reputed professionals and qualified manpower • Last but not least: Argentina is a wonderful place either for living or tourism IfaS / Hinsilblon: Projects • Advisors for La Matanza, CARE project phase I: sorting facility for 1500 t/d • Developing CARE Phase II: public tender for acquiring technology to generate energy (2012) • Project “Argentina Recycles”: National Secretary of Environment and United Nations will finance a program to develop waste management for 40 municipalities, including the acquisition of 9 facilities. IfaS and Hinsilblon will lead the project • Proposals of Zero Emission concepts for different municipalities under negotiations • Negotiations with different provinces for development of Energy Parks including Wind, Solar, Biogas and Biomass • Conversations with private investors for development of wind farms and solar parks Vielen Dank für ihre Aufmerksamkeit !