Argentine renewables seek project deadline extensions amid turmoil

Financing by local and international banks has been suspended as the South American nation struggles with its economy

Argentina’s main renewable energy association, CADER, has formally asked the government to extend the two-year deadline for the start of commercial operations of 259MW of renewable energy projects contracted in a tender in August, because of the country’s ongoing financial troubles.

CADER said that banks have suspended financing and disbursement of approved loans following foreign exchange controls measures imposed by the government since September.

“Currently, local and international financial entities which are key for [the development of] the clean energy industry have decided to suspend all appraisals for new financing requests, including disbursement of values that had been approved previously,” CADER said in a statement.

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According to power purchase agreements (PPAs) signed after the tender, known as Round 3, most projects had to be built by 2022 or 2023. In August, the government had already granted a 30-day extension for some project winners to decide whether to sign the PPAs.

CADER says that $368m in new investments are being held up, including the construction of 129MW of wind and 97MW of solar PV projects contracted at the time.

CADER didn’t specify how long it wants the extension to be, but said that it would be necessary until the “current financial situation is overcome” and argues that the longer deadline would increase the probability that the projects are built.

Argentina’s government imposed controls over foreign exchange movements after the local currency, the Peso, tanked against the US dollar amid investor doubts over the country’s fiscal health, because of an uncontrolled budget deficit and runaway inflation. Although the International Monetary Fund (IMF) approved a $57bn stand-by loan, the country has still to stabilise its economy.

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Further bolstering investor’s concerns, the defeat of market-friendly Mauricio Macri at the end of October added to uncertainties about the country’s economic future.

The country’s third renewable energy tender, known as Ronda 3, is part of Argentina’s legally-binding RenovAr renewable energy programme which was launched in 2016 and which says that 20% of country’s power supply must come from non-large-hydro renewables by 2025, up from under 2%.

The government-organised tenders contracted a total of 2.5GW of wind and 1.7GW of solar PV capacity that had to be online in about two years after the award. Government projections said that 10GW of new renwables energy capacity needs to built to reach the target.

Up to October, renewable power supply accounts for 8%, with 1.4GW of wind and 433MW of solar are operational.

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Additionally, most of the projects in the first two RenovAr rounds have reached financial close, either through loans from development banks and ECAs or through international corporate debt issues by large local companies such as Genneia an YPF.

The round 3 projects, although smaller due to transmission line restrictions, were contracted August just before the country faced financial troubles. The winning projects signed 20-year, US-dollar denominated PPAs.

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