A law meant to increase renewable energy in Argentina will expire at the end of 2025 without meeting its target and with little hope of renewal, but other incentives may still bolster the sector.
Law 27191, passed in 2015 to extend earlier legislation, called for renewable sources to reach at least 20pc of Argentina's energy mix by the end of its 2025 expiry. The legislation covers biogas, biomass, solar, wind and hydroelectric plants under 50MW of capacity.
Renewables have expanded more than other technologies, increasing to 6,672MW of installed capacity at the end of last year from 381MW in 2003, but still far from the goal.
Renewable sources accounted for 15pc of installed capacity at the end of 2024 and covered 16pc of demand, according to the state-owned energy wholesale company, Cammesa.
New capacity is being added and renewables should come close to meeting the demand target — renewables covered 21pc of demand in April, according to Cammesa, and 572MW in new solar and wind capacity came online in June alone. But it is unclear what comes next as the government deregulates the economy and pulls back from market intervention.
Marcelo Alvarez, head of the solar power committee for Cader, Argentina's renewable energy association, said that there is no indication six months before the law's expiration that it will be extended.
"I do not think they are going to extend Law 27191," he said. "The government is not interested in anything that conditions or interferes with the free-market dynamic and [Law] 27191, with its model of quotas with fiscal incentives, goes against its ideological thinking."
But the government's change in policy approach could help address some of the main infrastructure and economic problems that hampered the installation of more renewable sources.
Argentina has some of the world's best solar and wind potential, according to Alvarez, but it does not have the transmission lines to get power from new plants into the grid.
"The system is basically saturated and we are really going to hit a wall if we do not start to build new lines now," said Alvarez.
President Javier Milei's government announced in late May a plan for new transmission lines, but the private sector would need to do the work. The plan includes 15 500kV lines that would cover 5,610km and increase the existing grid's scope by 38pc at a cost of $6.6bn.
The government is also moving forward with a tender started by the previous administration for a battery energy storage system (BESS) for 500MW, one of the largest in Latin America. The winning bids should be announced in August, according to the most recent timeline.
The critical point for any project is financing, which Alvarez said remains difficult and expensive in Argentina despite recent changes.
He said that interest rates for a 100MW project in Argentina are around 8pc, while in neighboring Chile they can be as low as 3pc.
The Milei government has started to tackle major issues, bringing inflation down to 47.4pc annualized through April from nearly 300pc in 2024, eliminating regulations on financing and exports and reducing currency controls.
It also has in place an investment and legal stability mechanism, known as Rigi, to attract large-scale investment for projects over $200mn. It has awarded one power project so far, the 305MW El Quemado solar park planned by state-owned YPF.
"The cost and length of financing are major obstacles," Alvarez said. "It is going to take time to lower the cost of capital."
| Argentina's renewable power capacity | MW | |
| Technology | End 2024 | Apr 25 |
| Wind | 4,319 | 4,342 |
| Solar | 1,673 | 1,909 |
| Small hydro | 524 | 524 |
| Biogas/biomass | 155 | 192 |
| — Cammesa | ||
