Unlocking Argentina’s leviathan offshore wind potential

Argentina has a wealth of renewable energy resources, still largely untapped.

Like elsewhere in the region, in Argentina solar PV and onshore wind have dominated the mix. 

But offshore wind is on the horizon. In South America, Brazil is in the vanguard and likely to install its first marine turbines by 2030. 

While political and economic risk today shrouds Argentina and investor appetite has waned while financing costs have climbed amid the uncertainty, the country could surprise the markets in the offshore wind stakes in the 2030s – by which time myriad changes are possible on the domestic political-economic front. 

All this will occur amid the energy transition, the likely implementation of carbon border taxes, the dawn of large-scale green hydrogen production and growing aversion, chiefly in the western hemisphere, to investment in fossil fuel projects.

To discuss Argentina’s potential as an offshore wind power generator, BNamericas spoke with Rikke Nørgaard, managing director of Copenhagen-headquartered consultancy Aegir Insights. 

BNamericas: Regarding South America’s offshore wind play, you say that Argentina could surprise the markets in the 2030s. Could you tell us a little more?

Nørgaard: Argentina has an unusually large technical potential for offshore wind for a single country. The country’s waters are not only windswept, but also relatively shallow. This is the golden combination that is also seen in the North Sea, which acted as a cradle for offshore wind. 

A large part of Argentina’s sea territory relatively close to the busy Buenos Aires region has water depths of less than 60m, which means that fixed-bottom turbines could be used to exploit the strong winds. Fixed-bottom is the tried-and-true technology for offshore wind farms as of now, making fixed-bottom build-out a safe bet and usually the preferred option, if the waters aren’t too deep. 

Where the Argentinian waters are too deep for fixed-bottom turbines, they still remain relatively shallow, only reaching depths of up to a couple of hundred meters for the most part. This gives Argentina an extraordinarily large technical potential for shallow floating wind development, a staggering 1,600GW. As floating wind concepts for waters of up to around 200m are expected to mature within the coming years, shallow floating is also a great option for Argentina. To sum up, Argentina has both a very large and a relatively accessible offshore wind resource. With such a great resource at its disposal, Argentina could surprise the markets by quite quickly becoming a major player, especially if green hydrogen enters the stage. However, as progress for renewables in general has stalled a bit currently, we don’t see Argentina making use of its great offshore wind resources before the 2030s. 

BNamericas: What conditions would need to be in place for this to occur?

Nørgaard: A stable policy environment would be conducive to kickstarting offshore wind development. While Argentina has shown great ambition for renewables in the past, the current policy environment seems less certain from an outsider’s perspective. To kickstart offshore wind development, Argentina needs to attract foreign investment and experienced industry players, and establishing a policy framework that indicates long-term commitment is an important step in that process. Setting capacity targets specifically for offshore wind development, identifying potential offshore wind development areas through maritime spatial planning and clarifying regulatory procedures for permitting eventual offshore wind farms, are examples of signals that could attract international interest. 

BNamericas: The RenovAr renewable energy auctions have stalled, and some projects with PPAs remain on hold. What needs to happen in Argentina for the wheels to start turning again?

Nørgaard: The RenovAr auctions need to be restarted and the policy environment should appear stable. Even if currency risks remain, a stable political outlook and regulatory framework, in combination with the scheme built into RenovAr auctions for minimizing financial risks, should enable renewable energy build-out to pick up again.

BNamericas: In that regard, do you think that the recent regulation that provides additional flexibility to delayed projects will have a positive impact?

Nørgaard: The new regulation signals to the industry that renewables have not been forgotten, which is positive. How well the regulation works will have to be seen. No matter what, restarting RenovAr auctions would have a positive impact on the perception of Argentina as a renewables market. 

BNamericas: Today, what is the state of play in South America in terms of offshore wind? Which country is leading the race and when could we see the first offshore turbines installed?

Nørgaard: In Aegir Insights, we see Brazil getting the first turbines in the water between 2028 and 2030, becoming the first South American country to do so. Brazilian authorities have had an eye on offshore wind possibilities for a while now and in 2020 published a roadmap and a national energy plan mentioning offshore wind. There is a local supply chain for onshore wind, and several projects are already in the process of applying for licenses in Brazil, making Brazil the most matured offshore wind market in South America. 

The runner-ups as we see it are Argentina and Colombia. Argentina has this enormous potential and could benefit a lot from the foreign investment and export opportunities its offshore wind resources represent, while Colombia has a strong need to diversify its energy mix, good wind resources along its northern coast and one announced offshore wind project, the only announced project in the region outside of Brazil. 

BNamericas: Apart from costs, are there other factors that have delayed the development of offshore wind farms in South America?

Nørgaard: In several South American countries, including Argentina, the extent to which offshore wind will be prioritized compared to other renewables is unclear, as for instance most countries haven’t defined targets for offshore wind development. Apart from that, infrastructure such as transmission grid and local or regional suppliers and know-how needed require both local investments and international imports, adding to the lead-time for the deployment of the first offshore wind project in South America.  

BNamericas: With its large wind turbine industry, Denmark must be monitoring South America closely?

Nørgaard: I can only speak for Aegir Insights, where we are definitely watching the South American market, along with other emerging offshore wind markets around the world. Naturally, any time a new market for offshore wind emerges, it represents an opportunity for Danish companies as well as other European companies that have years of experience with developing offshore wind.

BNamericas: Finally, there is a lot of talk of South America’s potential as a green hydrogen production hub. Do you see green hydrogen eventually becoming a driver of demand for additional installed – onshore and offshore – wind capacity in South America and, if so, when could this demand for turbines start growing?

Nørgaard: Yes, there is definitely a lot of potential in the South American region for using offshore wind energy for production of green hydrogen. Argentina leads in terms of sheer potential, but Chile also has a lot of technical potential for offshore wind and could benefit from domestic green hydrogen production to power its mining industries, players in Brazil are already looking into options for hydrogen production, the Colombian authorities recently published a hydrogen roadmap and several countries have organizations made by industry and other relevant players, advocating for developing hydrogen production. However, the techniques for green hydrogen production still need refining, which is why green hydrogen likely won’t drive offshore wind installations before mid-2030s.