Argentina’s RenovAr program is ambitious in scope, endeavoring to grow renewables to 20% of the national energy matrix by 2025. RenovAr held two energy auctions which resulted in 59 auctioned projects totaling 2.4 GW of new renewable capacity valued at $4 billion. However, many companies who bid for these projects are still in search of financing.
“That’s the one missing link in Argentina’s program right now — the financing,” says one energy industry source familiar with RenovAr. “Of all the stakeholders you need to bring to the table to get the deals done, the bankers are still saying, ‘Let me think about it some more’.”
To make the projects alluring to investors, Argentina is offering power purchase agreements (PPAs) of up to 20 years. “That’s longer than in Chile or Mexico,” where PPAs are typically 15 years, the industry source says.
Argentina has also sought to make projects attractive by offering at least three layers of guarantees, including a national trust fund and the World Bank.
Earlier this year, the World Bank approved a $480 million guarantee to support private investments in the RenovAr program. The 20-year backstop is for Foder, an Argentine trust fund of around $12 billion pesos ($722 million) earmarked to help finance renewable energy projects.
“A challenge is to ensure that most projects will receive adequate long-term funding,” says Gabriel Goldschmidt, head of infrastructure for Latin America and the Caribbean at the International Finance Corporation (IFC), the World Bank’s private investment arm.
