World Small Hydropower Development Report 2013 www.smallhydroworld.org ARGENTINA
Disclaimer Published in 2013 by United Nations Industrial Development Organization (UNIDO) and International Center on Small Hydro Power (ICSHP). 2013 UNIDO and ICSHP All rights reserved This report was jointly produced by United Nations Industrial Development Organization (UNIDO) and International Center on Small Hydro Power (ICSHP) to provide information about small hydropower. The document has been produced without formal United Nations editing. The designations employed and the presentations of the material in this document do not imply the expression of any opinion whatsoever on the part of the Secretariat of UNIDO and ICSHP concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries, or its economic system or degree of development. Designations such as developed, industrialized and developing are intended for statistical convenience and do not necessarily express a judgement about the stage reached by a particular country or area in the development process: Mention of firm names or commercial products does not constitute an endorsement by UNIDO or its partners. The opinions, statistical data and estimates contained in the articles are the responsibility of the author(s) and should not necessarily be considered as reflecting the views or bearing the endorsement of UNIDO and its partners. While every care has been taken to ensure that the content is useful and accurate, UNIDO and ICSHP and any contributing third parties shall have no legal liability or responsibility for the content or the accuracy of the information so provided, or for any loss or damage caused arising directly or indirectly in connection with reliance on the use of such information. Copyright: Material in this publication may be freely quoted or reprinted, but acknowledgement is requested, together with a copy of the publication containing the quotation or reprint. Recommended citation: Liu, H., Masera, D. and Esser, L., eds. (2013). World Small Hydropower Development Report 2013. United Nations Industrial Development Organization; International Center on Small Hydro Power. Available from www.smallhydroworld.org.
2 Americas 2.3 South America 2.3.1 Argentina Ariel R. Marchegiani, Universidad Nacional del Comahue, Argentina Key facts Population 42,192,494 1 Area 2,780,400 km 2 Climate Mostly temperate; arid in southeast; sub-antarctic in southwest 1 Topography Rich plains of the Pampas in northern half, flat to rolling plateau of Patagonia in south, rugged Andes along western border 1 (highest point: Aconcagua, 6,960 m) Rain pattern Variable, depending on location and elevation Electricity sector overview The state's role in Argentina's energy sector has experienced profound changes since 1992, when the restructuring of the sector began. The generation, transmission and distribution of electricity were opened to the private sector, but restricted to the ownership of no more than one property in the sector. The approved legal framework guaranteed access to the grid, creating a competitive environment and allowing the installation of generators to serve customers anywhere in the country. Argentina has a high rate of electrification (95 per cent), but much of its rural population lacks electricity. Electricity is generated mainly through combustion (thermal plants), 30 per cent by large hydropower plants, 6 per cent by nuclear and less than 2 per cent from renewable energy sources, according to the Energy Department (figure 1). Electricity imported from Brazil, Paraguay or Uruguay is not uncommon in the winter months. According to the Argentine Association for Renewable Energy and Environment, the electricity from renewable energy is generated from 553 MW of installed capacity, of which 427 MW are small hydropower plants, 65 MW wind farms, 58 MW biomass (wood) plants and only 1.2 MW are solar panels. Renewables Nuclear Hydro CCGT and steam 2% 6% 30% 62% 0% 20% 40% 60% 80% Figure 1 Electricity generation in Argentina Source: Compañía Administradora del Mercado Mayorista Eléctrico, South America 2 Note: GCGT combined cycle gas turbine Small hydropower sector overview and potential Argentina has a total installed power capacity of 28 GW (data from 2012) of which two per cent is derived from small hydropower plants (defined as capacities of up to 15 MW). 3 Figure 2 Map of the main small hydropower schemes in Argentina Source: Argentina, Ministerio de Planificación Federal, Inversión Pública y Servicios 4 Note: Small hydropower schemes shown are in operation or in study-phase 1
The upper limit of 15 MW is only a convention proposed by Law 26 190/06 according to the rules and context of the United Nations Framework Convention on Climate Change (UNFCCC). If so, and assuming a conservative 115,000 GWh/year of electricity consumption by 2013 (and counting the existing 180 MW), small hydropower could supply 22.7 per cent of the minimum contribution proposal, or about 1.81 per cent of the total. The convention adopted by the National Directorate of Promotion (Dirección Nacional de Promoción) for small hydropower classifies small hydropower plants by recognizing nominal installed capacity. There are three intervals: Micro (5-50 kw), Mini (50-500 kw), and Small (500 kw-15 MW). The total small hydropower potential per region of the Argentinean Electricity Interconnection System (Sistema Argentino de Interconexión Eléctrica) is given the table below. Small hydropower potential in Argentina (Megawatts) Potential category 5-50 kw 50-500 kw 500 kw-15 000 kw Total of region Central 0 0 36.25 36.25 Comahue 0.185 4.120 81.38 85.68 Cuyo 0.090 3.550 97.96 101.60 Northeast Argentina 0.040 0 1.28 1.32 Northwest Argentina 0.191 4.660 177.42 182.27 Patagonia 0.000 1.825 47.12 48.94 Total 0.506 14.155 441.411 456.06 In terms of renewable energy sources, the Government strategy first considers the development of small hydropower plants (up to 15 MW), because these projects represent an opportunity for Argentina s sustainable development in multiple geographic regions. The Energy Department has a national inventory of 116 small hydropower projects, with capacities lower than 15 MW and which represent an additional power supply of nearly 430 MW (figure 3). 5 While the main small hydropower potential has been estimated to be over 400 MW, a new installed capacity of 100 MW may be incorporated within 10 years time in different regions of the country. Small hydropower projects with a total capacity of 30 MW are currently under development. Argentina has turbine manufacturers who are part of the clean energy value chain of small hydropower within the country. 3 The results of the mentioned study favor, among others, the small hydropower in the southern region and, in general, isolated projects, thus, improving economic performance. However, the level of development of the studies is low. Of the 116 projects reviewed, only four have reached implementation stage and only 20 have reached the feasibility stage. The need to carry out a small hydropower development plan has been proposed, which will make further hydrological, geological, geotechnical and environmental impact studies necessary (done for only 12 small hydropower sites). It is also suggested to evaluate the additional environmental benefits, social cost of externalities, as well as the capability to supply potable drinking water. SHP installed capacity SHP potential 66 MW 430 MW 0 100 200 300 400 500 Figure 3 Small hydropower capacities in Argentina Note: National small hydropower definition up to 15 MW, information provided up to 10 MW. Renewable energy policy The importance of renewable resources (i.e. photovoltaic, wind, biomass and small hydropower plants) as alternative sources for generating electricity in rural areas has increased through various programmes that are being conducted by the Ministry of Public Works and Services at the National Bureau of Promotion, in order to achieve basic power provision and lighting and communications, although the main authority on energy is the Ministry of Planning. 3 Argentina has a national law on the promotion of renewable energy sources for the production of electricity (Law 26 190/06). It grants renewables the status of national interest and via a tax based incentive a non-binding renewable target of 8 per cent is set to be achieved by 2016, in addition to a 7 per cent biodiesel and a 5 per cent ethanol blending mandate. 3 Studies and maps have been made to determine the renewable energy potential in each province and in 2009, the law was regulated by presidential decree. That same year, the national Government, together with Energía Argentina Sociedad Anónima, the public power company, launched the GENREN programme, which offers to buy 1,000 MW of renewable energy 2
through fixed contracts for 15 years. The Undersecretary of Electricity under the Ministry of Energy's Office has established a programme to supply the dispersed rural population with power (Programa de Abastecimiento Eléctrico a la Población Rural dispersa de Argentina). It aims to collaborate with the provinces through provincial energy programmes to electrify rural areas, primarily using photovoltaic, wind, micro hydro turbines and diesel generators. The national context is important to highlight the development and implementation of a project funded by the Global Environment Facility and the World Bank. The project, El Proyecto de Energías Renovables en Mercados Rurales (PERMER, renewable energy in dispersed rural markets), aims, among other objectives, to provide power to isolated rural areas in a sustainable manner, using renewable sources. The most recent policy on renewable energy was established at the beginning of 2010, where Argentina had implemented feed-in tariffs granting power purchase agreements (PPA) for renewable energy. PPA s are obtainable from government-sponsored auctions. 3 Legislation on small hydropower The small hydropower action plan outlined by the National Directorate for Promotion (DNPROM) of the Ministry of Energy basically comprises: A survey of the facilities in operation and out of service, as well as those possible to be refurbished, and of public irrigation works that can be equipped with generating units. A search for new sites and to select a methodology for estimating total theoretical potential of regions and basins. Compilation, review, and proposal of a reformulation of the provincial legal regimes of water, environment and energy, in agreement and collaboration with governments and provincial agencies. An analysis of the profitability of small hydropower in isolated markets, the development of case studies and a roadmap of projects related (or not) to the Clean Development Mechanism (CDM). Identification and management of public and private financing lines for the execution of the technical and economically feasible works. The Energy Department's Office is currently bound to encourage the construction of the 116 micro-hydro plants mentioned above. The Government considers several possibilities to avoid an energy crisis to impact the economic growth. One strategy is designed to further develop the country's water resources through micro-hydro facilities, which individually have a generating capacity of up to 30 MW. Financial capacity is a key element to consider, particularly in the case of private investors looking for commercial opportunities in the small hydropower sector. Studies show that in order to encourage private initiatives, financial mechanisms are essential as they allow the collection of long-term loans at rates appropriate to the realities of such projects. Furthermore, it will be necessary to implement a system of guarantees that awards credits to private investors so that they are not inhibited by other commercial arrangements. At this point, the intervention of the federal, provincial and/or municipal state to facilitate and manage credit is needed. Complementary to this point, there is a need of an adequate remuneration system for the energy sold by small hydropower. When deciding the tariff structure of small hydropower, it will be convenient to take into account the environmental benefits and the social cost of externalities, both affecting the company but which are not incorporated yet by the generators. 6 Argentina, which has a weak penetration of renewables in the national electricity supply, opted for the regulatory mechanism of quotas for grid access. This system is advantageous for states with funding problems but does not ensure private investment. Barriers to small hydropower development Argentina has great small hydropower potential, however, a number of very diverse barriers hinder its realization, as in other countries. Hydropower is considered the most promising technology for national development, followed by wind, then solar and biomass. There are political constraints and structural limitations within the governmental agencies which are responsible for establishing policies that provide solutions to these problems. It is necessary to apply instruments that help formulate and implement an energy policy that includes renewable energy. At the moment the regulatory framework remains insufficient. Foreign investors perceive high risks and a lack of incentive based on the limited availability of local finance. Local finance is hindered by the limited number of local banks and the lack of liquidity experienced in commercial banks. Furthermore, the difficulty in securing capital at reasonable costs in the short term strongly hinders the volume of investment, despite the countries resource potential. 3 It is necessary to acknowledge that programmes like GENREN are being implemented, in which the generator is not paid a premium but a guaranteed price for the energy generated in order to provide a more reasonable rate of profit. There is a specific need to update the incentives posed by Law 26190. It is not easy to meet the target to 3
cover eight per cent of electric demand with emerging renewables, as established by the Law, without implementing the policies, instruments and specific promotional activities, particularly those aimed at financing. References 1. Central Intelligence Agency (2012). The World Factbook. Available from www.cia.gov/library/publications/the-world-factbook. 2. Compañía Administradora del Mercado Mayorista Eléctrico, S.A. (2011). Informe Anual 2011. Buenos Aires. Available from http://portalweb.cammesa.com/memnet1/document os%20compartidos/vanual11.pdf. 3. Bloomberg New Energy Finance and Multilateral Investment Fund (2012). Climatescope 2012: Assessing the Climate for Climate Investing in Latin America and the Caribbean. New York. Available from www5.iadb.org/mif/climatescope/2012/img/content/ pdfs/eng/climatescope2012-report.pdf. 4. Argentina, Ministerio de Planificación Federal, Inversión Pública y Servicios (2009). Energías Renovables. Diagnóstico, barreras y propuestas. Secretaría de Energía. Available from www.energia.gov.ar/contenidos/verpagina.php?idpagi na=3374. 5. Argentina, Ministerio de Planificación Federal, Inversión Pública y Servicios (2008). Energías Renovables 2008. Pequeños Aprovechamientos Hidroeléctricos. Secretaría de Energía. Available from www.energia.gov.ar/contenidos/archivos/publicacione s/libro_energia_hidrica.pdf. 6. Proyectos de Ingeniería S.A. (2006). Estudio para mejorar el conocimiento y la promoción de oferta hidroeléctrica en pequeños aprovechamientos. Préstamo BIRF Nº 4454-AR - 2006. Proyectos Hidroeléctricos en la República Argentina de potencias menores. 4
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