Small and Distributed Wind Energy in Argentina: Barriers and Development Strategies

Abstract: This study aims to identify barriers to small wind energy in Argentina, and provide recommendations for Argentine stakeholders and policymakers for promoting the development of small wind. Argentina faces a serious energy challenge with its high dependence on fossil fuels (especially natural gas) in the face of rising global prices and decreasing reserves, challenges in domestic production and expected rate of economic growth. Argentina, with over 70% of its territory suitable for wind energy generation, has taken steps in recent years to diversify its energy mix and incentivize investment in wind energy. Significant amounts of wind energy have been contracted through renewable energy auctions, but progress has been slow due to a number of barriers. Small and distributed wind can complement large-scale wind development and help Argentina move towards a more sustainable energy system. Analysis of literature and stakeholder interviews in Argentina identifies key barriers to small wind, related to a lack of an adequate regulatory framework for small wind, lack of demand, lack of financing, federal electricity/energy subsidies and macroeconomic considerations, high manufacturing costs, and the existence of competing or imported products/alternatives. Analysis of external case studies and best practices from the US, Spain, Uruguay and Thailand brings in insights and information related to overcoming barriers and promoting small wind development. Based on a discussion of the applicability of these strategies to Argentina, and comparative analysis of literature and stakeholder interviews, recommendations are made. These suggest that to promote small wind Argentina should enact small wind legislation that enables grid interconnection and exchange of electricity (net metering), explore the possibility of market instruments such as credits or tax incentives to help cover investment costs, strengthen access to finance and existing government loan programs, create an industry association/platform, improve marketing structures with networking and communication strategies, encourage industry development through joint demonstration projects and university partnerships, reform electricity/energy subsidies, and develop common certification and regional testing projects.