Cactus landscape in Argentina, near Salta

By Jason Deign

Fernando Ezequiel 'Pino' Solanas, an Argentinean filmmaker and politician, has a somewhat unusual dream for CSP. He hopes it will one day help his countrymen to buy and sell their properties in US dollars.

Solanas’ vision is a consequence of an ongoing energy crisis that has seen Argentina racking up a hydrocarbon imports bill which by 2012 had grown to US$9.8 billion and is expected to balloon by a further $6.4 billion in the current year, according to published figures.

The need to keep up energy payments has led the Argentine administration to commandeer hard currencies such as dollars and euros, which were formerly favoured by consumers for big-ticket purchases such as properties.

At the heart of Argentina’s energy problems is an outsize reliance on fossil fuels. “It is sad; 90% of our energy matrix comes from fossil fuels,” said Rubén Giustiniani, a socialist senator, at a public hearing on renewable energies in Argentina this month.

Solanas, a congressman with the progressive party Proyecto Sur, organised the hearing to raise awareness of renewable energy subsidies as an alternative to throwing money at fossil fuel imports.

The amount of money spent on gas and fuel oil subsidies last year was enough to “have installed 1,600 wind energy generators of 2MW each,” Marcos Zancini, a member of the Argentinean Wind Energy Association, told the hearing.

And foremost among the renewable energy sources that could supplant fossil fuels is CSP, a technology that has hitherto gone practically unnoticed in the country.

Argentina’s current renewable energy support programme, Genren, offers a $120 per MW/hr feed-in tariff (FiT) for wind power and $550 per MW/hr for solar PV, but contains no incentives whatsoever for CSP.

Solar thermal market

However, a proposal being tabled by Pino Solanas this month would see the introduction of a $200 per MW/hr FiT for CSP, aimed at helping to develop a solar thermal market covering around 10% of the country’s energy needs within the next 10 years.

Taking into account the potential growth in Argentina’s current 30GW energy demand, this could represent a 4GW market by the early 2020s.

The detail of the proposal as it currently stands is that parabolic trough, linear Fresnel and power tower technologies would all be covered; dish Stirling designs, however, would not be supported as they are seen to offer an inferior performance.

There is no doubt it would make a lot of sense for Argentina to embrace CSP. With a large part of the Atacama Desert falling within its borders, the country has plenty of high-irradiation land. Plus the high cost of traditional fuel imports could mean CSP is not too far off grid parity.

Furthermore, although Argentina has little home grown expertise there are plenty of potential CSP developers circling the region.

Spain’s Grupo Ibereólica and Abengoa are both active in neighbouring Chile, and the French developer Areva is already working with the Argentinean administration on nuclear power plants.

Having said that, it is also clear that Argentina still has a long way to go before the conditions are right for CSP.

Fossil fuel exploitation

For a start, Solanas, Giustiniani and the other politicians present at this month’s hearing only form a tiny portion of a political class that is either completely ignorant of CSP or strongly in favour of further fossil fuel exploitation, particularly given recent shale reserve discoveries.

And even if the CSP proposals manage to weather political scrutiny without excessive changes, it remains to be seen how long it could take for them to become law. The legislation for Genren was supposed to have been finalised within 90 days but ended up taking three years.

These challenges are not insurmountable. Fabián Lugarini, an analyst with the financial research firm Epsilon, which has helped develop Solanas’ CSP proposal, says: “The public is receptive; it is just that there is much ignorance about the potential.”

But even if Argentina’s politicians believe CSP could be a vote winner and get behind it in earnest, there is still one critical constituency that will be hard to win over: investors.

Lugarini concedes that there are currently few state-backed funding bodies that could stump up development cash, and, says Salvador Escobedo, of the Latin American solar industry consulting firm Solam, outside backers are wary of investing in Argentina.

“$200 per MW/hr is a good number,” he says. “It’s not too good to be true. It sounds like a good price, not excessive and not too low. The problem is what sort of guarantees they are going to offer. That is super, super important, especially in the context of Argentina.”

He adds: “Argentina has many country-risk problems and it is very possible nobody would want to build a plant, even with a good FiT, if the guarantees are not appropriate. They almost have to be sovereign guarantees. Unfortunately Argentina has lost an awful lot of credibility.”

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