Energy - NOVEMBER 9, 2016

The next frontiers

by Patrick Eble

While China has been grabbing the attention of the Asia Pacific market, and Mexico and Peru have been making headlines in Latin America with record low auction prices, developers looking to further expand in those markets should look to two countries: India and Argentina.

The Indian government released big news for renewable energy developers in July as the Ministry of New and Renewable Energy (MNRE) announced its plan to double the large-scale solar target from 20 gigawatts to 40 gigawatts by 2020. Argentina is also prepared for increased growth in renewable energy capacity as the country plans its first renewable energy auction program. Savvy project developers and investors who can navigate the political landscape of these countries will find new and unprecedented opportunities for growth and return on investment.

India: With a population of more than 1.2 billion and several of the most polluted cities in the world, India stands to be the focal point for reducing global carbon emissions and meeting the targets established in the Paris Agreement. In terms of air pollution, India has two of the top five and four of the top 10 most polluted cities in the world for particle pollution. These statistics come from a country that produces nearly 70 percent of its electricity from coal, oil and natural gas, and which is expected to substantially increase its energy demand over the next 25 years, accounting for a quarter of global energy demand by 2040. To meet the growing demand, Prime Minister Narendra Modi has called for a massive boost in renewable energy capacity to 40 percent of the country’s energy mix by 2030. To achieve this goal, India will add 175 gigawatts of renewable energy capacity by 2022, including 100 gigawatts of solar and 60 gigawatts of wind. The country will also require an astounding $1 trillion of new investment.

Prime Minister Modi’s ambitious renewable energy goals, the increasing power demand, and the growing opportunities for off-grid and micro-grid solutions in rural areas mean that investors should be bullish about the Indian renewables market. There is still uncertainty about the national grid and Indian distribution companies’ ability to safely and effectively distribute clean energy to a country that has largely received free electricity for years. But the current government’s commitment to transmission lines, rural electrification and other energy infrastructure improvements presents a tremendous upside for investment.

Argentina: Withits windswept Patagonian highlands to the south and unrelenting horizontal irradiation to the sunny northwest, Argentina likely has the greatest renewable energy potential in the world. Yet Argentina has been unable to meet peak energy demand, resulting in blackouts across the nation. In a country historically reliant on natural gas for the bulk of its electricity generation, solar only accounts for 0.1 percent of generation. However, these figures are about to change as renewables are set to

take center stage under Argentina’s new leadership. President Mauricio Macri is preparing to capitalize on his country’s vast wind and solar resources through his RenovAR program, aimed at increasing renewable energy deployment to 20 percent by 2025. For developers looking to enter the Latin American renewables market, Argentina provides unmatched opportunities and the political backing of a leader determined to bolster the country’s efforts in the fight against climate change.

To establish the Argentine renewable energy market and encourage investors and project developers seeking to enter the market, the RenovAR program created a “trust fund for renewable energy,” or FODER. This fund will provide $850 million in financial guarantees for renewable energy projects. Through the RenovAR program, President Macri promises to usher in a new age where blackouts no longer occur and solar accounts for a larger share of the nation’s energy mix.

With some of the best renewable resources in the world, Argentina could provide an unparalleled opportunity for smart developers.

Patrick Eble is a former intern at the American Council on Renewable Energy.

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