- Published: December 2011
- Region: Argentina
Argentina Power Report Q2 2012
- Published: May 2012
- Region: Argentina
- 57 Pages
- Business Monitor International
BMI View: Energy subsidies were under the spotlight again in January 2012, with President Cristina Fernández taking the decision to automatically remove subsidies on water, gas and electricity bills for residents in selected neighbourhoods and public places. While BMI does not expect these cuts to affect demand in the short term, we do believe that they will have an effect on consumption patterns should they be implemented nationwide – although such a move would be highly unpopular.
Furthermore, plans have been announced for new wind farms, underlining the government’s commitment to renewable energy expansion: regulations call for 8% of electricity to be generated by renewable sources by 2016. That said, with most thermal power plants already running at capacity, and with cuts to domestic energy production making the headlines, the country risks being subject to growing import dependency. Until the authorities change their interventionist style, it will be difficult to attract international investors.
Between 2011 and 2016, Argentina’s overall power generation is expected to increase by an annual average of 2.0%, reaching 130 terawatt hours (TWh). Driving this growth is an annual 6.53% gain in coal-fired generation and a 3.59% rise gas-fired generation, accompanied by annual increases in renewables-based electricity supply. There is scope to expand Argentina’s hydroelectricity capacity: the winning bid for the Garabí and Panambí project on the Uruguay river (on the border with Brazil) was scheduled to be announced in March 2012, and plans for new wind power capacity have also been revealed.
Following estimated growth in real GDP of 7.0% in 2011, BMI forecasts average annual growth of 3.2% between 2011 and 2021. BMI calculates that net power consumption will increase from 113.3TWh to 128.0TWh by 2016. During 2011-2016, the average annual growth rate for electricity demand is forecast at 2.47%, but it will slow later in the decade to average 1.0% in 2016-2021.
Argentina’s power supply shortfall is likely to increase over the short term, but should fall appreciably later in the decade as new capacity comes online. The theoretical net import requirement by 2016 is forecast at 14.78TWh, but it should be no more than 12.02TWh by 2021. Key developments for Argentina’s power sector this quarter include:
- From January 1 2012, water, electricity and gas subsidies were automatically removed from the bills of users in selected neighbourhoods and public clubs. The government has issued a request for users to voluntarily renounce their right to these subsidies.
- In February and March 2010, oil firm YPF faced government accusations that it had reduced production, overcharged and had a pending tax bill. Local media speculated that some politicians were calling for parts of YPF to be renationalised.
- In March 2012, the government announced that Parques Eólicos Vientos del Sur plans to construct a 50 megawatts (MW) wind farm in Utracán.
Business Monitor International's Argentina Power Report provides industry professionals and strategists, corporate analysts, power associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Argentina's power industry. SHOW LESS READ MORE >
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Table: Argentina Electricity Generating Capacity Long-Term Forecasts, 2013-2021
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