Currently the regulation of Law 27,191 and Renewing Plan favor the development of clean sources. Bringing as a result, new challenges and opportunities for Small And Medium Enterprises.

The Renewable Energy Law 27,191 was approved unanimously in 2015 and was regulated in March. In 2006 the Law 26.190 emerged as a preliminary attempt to drive these developments. Currently, the incidence of renewable sources (wind, solar, biomass and tidal energy, among others) in the national energy matrix is very low, less than 2%.

That ratio seeks to reach 8% for December 31, 2017 (with tax control planned for the following year) and 20% for 2025. In this context, on last May 18th, the national government announced a Renewing Plan for the construction of new sources of renewable energy. This year, a public tender will also be installed for incorporating 1,000 megawatts (MW) of power, which will add to the electricity supply in the country within 24 months, with an estimated investment of between u$s1,500 and u$s2,000 million.

Argentina is located among the countries with greater chances to exploit renewable energy because of the type of strong and constant winds that exist in most parts of the south. “We are among the leading countries in the world to generate it,” the president Mauricio Macri said.

We must emphasize the high level of commitment that the new government is showing with the matter. This is essential to carry out the projects that began to take shape in recent years. “It is strongly becoming a state policy” says Omar Diaz, KPMG partner responsible for renewable energy, while he explains that to reach the initial target of 8%, about 2,000 Mw of additional power is needed, which means roughly u$s 4,500 million of investment.

“The new law overcomes the previous scheme.  There is a huge difference in the financing and guarantees structures. The other law created a fund that was never materialized and did not served to get finance. The current business climate is ideal to promote these investments and achieve new goals. The Renewable Energy Trust Fund (Foder), has an account for loans and guarantees, and it had already been allocated $12,000 million to establish it” deepens Diaz. He also highlights the wide range of tax benefits for companies in the sector that sets the new standard, such as the ability to access accelerated depreciation in the income tax and early return of VAT, the extension of the period provided for compensation of tax loss carry forwards to 10 years, and the waiver of additional tax of 10% on the distribution of dividends to companies, among others.

“The most important thing is Foder” says Mathias Thamhain (academic coordinator of the Project Management Renewable Energy at the University of San Andrés and managing partner of South EAPC), which provides funds and payment guarantees to projects. If international support for this guarantee fund is achieved, -which is not established by law, but it seems feasible during Macri management- this will attract investors to the previous law failed to captivate. Nevertheless, the expert warns that some technical challenges remain, but none impossible to overcome. He highlights, as well, the current commitment of the government to create conditions to facilitate foreign investment.

The SME entrepreneurs are expressing a similar approach when describing the current context, emphasizing the importance of the achieving of funding, for example, with more credit access. “The law 26,190 had everything to gain, but economic and political conditions did not helped. Foreign investors could not take their dividends. The investment was completely frozen” he says.

Law 27,191 establishes that by the end of 2017, at least 8% of energy supply of the major Argentine consumers (those with higher contracted power to 300 kW) must come from renewable sources. This obligation leads to the appearance of a new actor, the large user, who has the option of hiring this energy directly from source. “It thus creates a new market similar to what happened in other countries like Mexico and Chile”, explains Thamhain. The expectations generated by the new context are also evident in the increased demand for training on a topic that most of those involved seem to be engaged in a process of learning and experimentation. An example is the program Project Management Renewable Energy Center Executive Education at the University of San Andrés, coordinated by Thamhain.

If the project is properly defined and their variables controlled, it is possible to obtain an Energy sales contract for 15 or 20 years, so you do not need to worry about to who and how much the Energy it’s sold.

Source: The New // Cronista