Argentina needs US$87bn in investment under 2030 energy transition plan

Adding 5,000km of new transmission lines, generating more than 50% of power from renewable sources and reaching the 1GW distributed generation milestone.

Those are among the quantitative goals in Argentina’s 2030 national energy transition plan, rubber stamped recently by the federal energy department.

The headline target is not exceeding net emissions of 349Mt of CO2 equivalent across the entire economy by end-2030.  

NATURAL GAS, BIOFUELS

The plan – published at the same time as a document containing 2050 guidelines and scenarios – also covers areas such as energy efficiency, low-emission hydrogen, sustainable mobility and natural gas, deemed “the key transition energy vector to reduce greenhouse gas emissions via a reliable, desirable and continuous supply, while taking advantage of the country’s resources.”

Gross gas production in 2030 is forecast to reach 174Mm3/d (million cubic meters per day), up from 133Mm3/d in 2022. For 2030, officials forecast zero imports and 20Mm3/d of exports. The commencement of LNG exports is envisioned, via US$10bn in investment in a project involving state-controlled oil company YPF. 

The proportion of bioethanol and biodiesel in the finished gasoline and diesel mixes in 2030 is pegged at 15% and 12.5%, respectively, up from 12% and 5% established in a 2021 law.

LEGISLATION, FINANCING

The plan lays out various action areas, including the updating and amending of legislation. 

Associated requisite investment is pegged at US$86.6bn, with energy efficiency accounting for US$27.8bn, generation and storage US$23.4bn, power distribution US$10.3bn, gas transport US$10.0bn, LNG US$10.0bn and transmission US$3.82bn. 

As in a previous document, access to financing at competitive rates is identified as a hurdle to achieving the goals. 

Another is a shortage of foreign reserves, needed to import decarbonization technology or components. “The 2030 energy transition is planned with this in mind, seeking to spur, when possible, the inclusion of new projects that minimize the needs to import, which in turn could help drive the creation of new industries,” according to the 2030 energy transition document. 

TRANSMISSION

In terms of transmission, cash-strapped Argentina has a major infrastructure gap, which is hampering the addition of new renewables capacity into the grid. Officials last week issued a call for expressions of interest from private players interested in financing or co-financing grid work, chiefly new lines and transformer station overhauls. 

RENEWABLES

Regarding the renewables generation target over 50%, this encompasses non-conventional renewables (NCRE) covered under law No. 27,191 as well as hydropower plants over 50MW in installed capacity. 

In May, thermal power plants accounted for 61% of the 10,722GWh generated, hydropower plants 19%, NCRE 14% and nuclear 6%, according to data from wholesale power market administrator Cammesa.  

The plan assumes a reduction in thermal power share to 35% in 2030 from 59% in 2022 and renewables hitting 57%, with NCRE’s accounting for 30 percentage points of this.

NEW GENERATION CAPACITY 

The 2030 scenario also envisions new capacity on the grid: 3.39GW thermal capacity, 700MW nuclear, 2.4GW of hydropower over 50MW, 7.55GW of NCRE (chiefly solar PV and wind), 140MW of energy storage and up to 30,000t of low-emissions hydrogen. 

Installed capacity currently stands at 43.4GW, with thermal plants accounting for 25.5GW, hydroelectric plants 10.8GW, renewables 5.32GW and nuclear 1.76GW. 

DISTRIBUTED GENERATION

The plan sets a target of reaching 1GW of installed distributed generation capacity by 2030.

Capacity installed under federal law No. 27,424, targeting homes and businesses, stands at 23.4MW, with 10.6MW more in the pipeline.

2050 SCENARIO

Under a baseline 2050 scenario, renewables take an 80% share of generation, requiring 54.4GW of new capacity. As much as 43.8GW more could be needed for electrification (switching from gas) and production of low-emission hydrogen.

Gas production is forecast to climb to 209Mm3/d and exports to 70Mm3/d (natural gas and LNG). Investment in LNG terminals is forecast to range from US$22.5bn to US$40.0bn.

Also under the baseline scenario, production of 700,000t/y and exports of 200,000t/y of low-emission hydrogen is envisioned. Required investment, considering renewables and electrolyzer capacity, would reach as much as US$32bn, under an optimistic scenario.

Overall outlay through 2050, considering other areas such as transmission, energy efficiency and distribution, is pegged at US$264bn. Under an optimistic scenario, the total climbs to US$368bn.