SERGIO DRUCAROFF

Undersecretary of Public Procurement and Suppliers Development

RENEWABLE ENERGY IN

ARGENTINA: POWERING UP A

NEW GLOCAL VALUE CHAIN

02

ARGENTINA HIGH POTENTIAL IN RENEWABLES

2018

WIND

SMALL HYDRO

BIOMASS

BIOGAS

SOLAR AREA: 2,8 MIO. KM2

POPULATION: 44 MIO.

MAIN FIGURES

GDP: 580 BN

03

LEGAL FRAMEWORK TIMELINE

2018

1998 2006 2015 2016 2017

Ley 25.019

Oriented to

foster Solar PV

and Wind

Energy

LEY 27. 191 IMPLEMENTATION:

• E. Decision 531/16

• Resolution 72/16

• Joint Resolution 123/16

Ley 26.190

Renewable

Energy

Promotion

Act

Ley 27.191

Reformulation of

Renewable

Energy

Promotion Act

• E. Decision 814/217

• Joint Resolution 1E/17

ROUND 1 / 1.5

ROUND 2

PRIVATE MARKET

04

2018

+ 12.500 (*)

JOBS CREATION

USD 15.000 Mio. GROSS INVESTMENT

SHARE OF RENEWABLE ENERGY CONSUMPTION TO

REACH

OF TOTAL CONSUMPTION BY

2025

20%

10.000 MW

INCREASE LOCAL CONTENT IN RENEWABLE ENERGY

PROJECTS

AVG LOCAL CONTENT IN PROJECTS

42% MINIMUM LOCAL CONTENT FOR

WTG BY 2023

50%

TARGETS & PROJECTIONS LEY 27.191

OF NEW CAPACITY TO BE

INSTALED BY 2025

200 SUPPLIERS WIND, SOLAR, BIOMAS, BIOGAS AND

ELECTRIC PARTS & EQUIPMENT

(*) 9.500 in industrial activities + 3.000 in operation and maintenance

2018

5

MEASURES TO PROMOTE LOCALIZATION

0% TARRIF FOR NON

LOCALLY PRODUCED

PARTS AND COMPONENTS

14% TARIFF FOR WIND

TURBINES

REDEFINITION OF LC

RULES FOR GOODS, PARTS

AND COMPONENTS

WIND TURBINE LC RULE:

INTEGRATION TABLEAU

(TO REACH 50% IN 2023)

MANDATORY SUPPLIERS

REGISTRATION PROGRAM –

REPROER-

FISCAL CREDIT

AND SUPPLIERS

DEVELOPMENT

20% FISCAL CREDIT FOR

LOCAL EQUIPMENT

BICE BANK PRODEPRO

FUNDING FOR SUPPLIERS

BUSINESS ROUNDS WITH

SUPPLIERS

NEW LOCAL

CONTENT FRAME NEW TARIFF

SCHEME

0% FOR SOLAR PV

GENERATOR

$57/MW avg price

14% avg CND

$56 avg. wind price

11% avg CND for wind

$51/MW avg price

30% avg CND

$41 avg wind price

37% avg CND for wind

6 |

RESULTS ROUND 2

ROUND 1 / 1.5

ROUND 2

LOCAL

CONTENT

INCREASE

COUPLED WITH

PRICE

REDUCTION

07 LOCALIZATION PROJECTS SUPPLIERS CHAIN DEVELOPMENT

2018

WTG COMPONENTS %

BLADES 19,5

TOWERS AND INTERIORS 23

CONNECTION CABLE 2,5

PITCH SYSTEM 3,5

HUB MACHINING 2,5

BLADE BEARINGS 2

HUB ASSEMBLY 3

NACELLE MAIN FOUNDATION 3

NACELLE FRAMES AND SHELL 2

NACELLE ASSEMBLY 10

YAW SYSTEM 2,5

POWER CONVERTER 3

GENERATOR 5,5

GEARBOX 11

DRIVE SHAFT 3,5

HEAT EXCHANGER 1

SWITCH GEAR 1

TRANSFORMER 1,5

45% 50%

35% Up to Jun 2020

Jul 2020 – Dec 2021

Jan 2022 – Dec 2023

NEED TO DEVELOP SUPPLIERS CHAIN IN

ORDER TO COMPLY CONTENT RULE

POSSIBLE LOCAL PARTNERTSHIP IN MACHINING,

HYDRAULICS AND ELECTRIC COMPONENTS

COMBINED POTENTIAL WITH OTHERS STRATEGIC

INDUSTRIES: OIL & GAS + RAIL INDUSTRY

08 PRODEPRO

SUPPLIERS DEVELOPMENT PROGRAM

2018

OBJECTIVE

The program seeks productive

transformation in strategic sectors

through the improvement of the

capabilities and competitiveness of

companies

RAILWAY OIL & GAS

MINING

ENERGY SHIPBUILDING

WATER &

SANITATION ITC

HEALTH AEROSPACE

ELECTRONICS

NUCLEAR

USD7M APPROVED FINANCING

RENEWABLE ENERGY LOCAL

SUPPLIERS INVESTMENT

09 TOWARDS A GLOCAL RENEWABLE VALUE CHAIN

CONNECTED TO WORLD MARKETS

NACELLE STRUCTURE AND

ELECTRIC COMPONENT

TOWERS, FUNDATIONS AND

ANCHORS

HUB

WT MANUFACTURES

STRONGER LOCAL SUPPLY CHAIN WITH

INTERNATIONAL STANDARDS

010

RENEWABLE ENERGY ACCORD WE WANT THINGS TO HAPPEN FAST AND SMOOTH

CELEBRATED ON OCTOBER

27th 2017

Agreed between The President,

representatives of industrial chambers

and associations, unions leaders and

Provinces in order to:

• Increase local content

• Develop local supply chain

• Foster exportations

• Encourage labor productive

• Promote quality jobs

FIRST RENEWABLE ENERGY

ACCORD PLENARY 1/06/18 - SALTA

4 main topics:

• Logistics challenges

• Red-Tape reduction

• Financing for projects and suppliers

• Labor costs & productivity

SECOND RENEWABLE ENERGY

ACCORD PLENARY OCTOBER 2018

5 main topics

• Logistics challenges

• Red-Tape reduction

• Financing for projects and suppliers

• Labor costs & productivity

• Exports promotion

VIELEN DANK

ANEXOS

012 2018

13

0% TARIFF FOR NON LOCALLY PRODUCED PARTS AND COMPONENTES OF WT • Manufacturers shall follow local content rules but are able to import at 0% tariff the parts and

componentes that cannot be localized in the short run

TARIFF INCREASE FOR WIND TURBINES • As of July 2018 a 14% tariff was introduced for wind turbines.

I

II

III 20% FISCAL CREDIT • Renewable energy farms that reach 30% of CND(*) are eligible for fiscal credit equivalent to

20% of the value of all their local components.

As of January 2018 new tariff scheme was introduce in order to promote the wind turbine manufacturers

localization in Argentina and their suppliers:

Local wind turbines competitiveness is largely increased vs. imported options

II NEW TARIFF SCHEME TO PROMOTE LOCALIZATION

(*) Local Content Declared at the Renovar Auctions for any renewable energy Project

14

LOCAL CONTENT RULES FOR PARTS, COMPONENTS AND SUBCOMPONENTS

• 60% LOCAL ADDED VALUE

• To be considered local, no more that 40% of the ex-work value of the part, component or

subcomponent shall be imported (CIF value).

• CHANGE OF HS TARIFF CODE + 25% LOCAL ADDED VALUE

• Local last substantial transformation + 25% local added value

WIND TURBINES RULE

• Increasing local added value for WT following an integration tableau:

35% up to June 2020

45% up to December 2021

50% up to December 2023

• WT componentes listed in the tableau shall follow Content Rule for parts and componentes

I

II

14

SUPPLIERS REGISTRATION PROGRAM – REPROER-

• Mandatory registration for suppliers in order to verify the compliance of local content rule

• Helps developers to identify local suppliers that comply with regulation

III

Local rules promote suppliers chain development in Argentina

I NEW LOCAL COMPONENTS RULES

As of September 2017 new content rules were introduced in order to Foster local integration

015 ENERGÍAS RENOVABLES

LOCALIZATION PROJECTS HIGHLIGHTS

2018

16 MM USD

200 DIRECT INDUSTRIAL JOBS

450 INDIRECT JOBS

20 MM USD

350 JOBS

300 TOWERS PRODUCED A YEAR

ANOUNCEMENT IN PROGRESS…