Affordable distributed solar energy for industrial and agricultural enterprises.
Affordable distributed solar energy for industrial and agricultural enterprises.
Business Model Description
A model that enables progressive energy transformation, incorporating photovoltaic systems in both industries and agricultural enterprises to supply clean energy at affordable prices and financing, as well as allowing users to feed the surpluses generated into the grid. This model includes both solar panel suppliers and the entire value chain.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- San Juan Province
- San Juan Province
Sector Classification
Renewable Resources and Alternative Energy
Development need
The growing energy demand of the world's population, the result of both demographic growth and current lifestyles, highlights an economic, ecological and social problem: the need to generate energy to meet everyone's needs without altering the environment and the future possibility of producing it. (1)
Policy priority
In San Juan, renewable energies are state policy and a fundamental strategy for economic progress. The province has been the most active player in solar energy in the country for more than a decade, being part of the six provinces that lead the National Renewable Cluster. San Juan built the first photovoltaic solar park in Latin America (2).
Gender inequalities and marginalisation issues
People from marginalised, poor and remote areas have limited access to solar energy sources due to high costs and lack of financing.
Investment opportunities
Between now and 2050, with the goal of achieving zero carbon emissions, the world's electricity needs will increase and will be covered mainly by renewable energies, with solar energy being the largest source of supply. (3)
Key bottlenecks
Rules and regulations which, although they have improved over time, need to be further improved to be in line with today's power generation needs. There are also procedures such as the bidirectional meter order that have delays of 6 to 9 months.
Alternative Energy
Development need
The growing energy demand of the world's population, the result of both demographic growth and current lifestyles, highlights an economic, ecological and social problem: the need to generate energy to meet everyone's needs without altering the environment and the future possibility of producing it. (1)
Policy priority
In San Juan, renewable energies are state policy and a fundamental strategy for economic progress. The province has been the most active player in solar energy in the country for more than a decade, being part of the six provinces that lead the National Renewable Cluster. San Juan built the first photovoltaic solar park in Latin America (2).
Gender inequalities and marginalisation issues
People from marginalised, poor and remote areas have limited access to solar energy sources due to high costs and lack of financing.
Investment opportunities
The province of San Juan has good quality quartz available to produce industrial silicon, high solar radiation and high average hours of sunshine per year: due to its latitude it has an average of nine hours of sunshine per day and a minimum of 300 days of clear sky per year, availability of desert and semi-desert land for large-scale projects (1).
Key bottlenecks
Rules and regulations which, although they have improved over time, need to be further improved to be in line with today's power generation needs. There are also procedures such as the bidirectional meter order that have delays of 6 to 9 months.
Solar Technology and Project Developers
Pipeline Opportunity
Affordable distributed solar energy for industrial and agricultural enterprises.
A model that enables progressive energy transformation, incorporating photovoltaic systems in both industries and agricultural enterprises to supply clean energy at affordable prices and financing, as well as allowing users to feed the surpluses generated into the grid. This model includes both solar panel suppliers and the entire value chain.
Business Case
Market Size and Environment
< USD 50 million
According to industry estimates and assuming a horizon of 200 user generators per year, at USD 8,000 to USD 10,000 per system, the market is between USD 1.8 and 2 million per year.
Indicative Return
5% - 10%
According to estimates by companies in the sector, the IRR of distributed generation projects is around 7%, but is strongly dependent on the price of energy. If the level of subsidy that the State applies to electricity goes up, the IRR goes down, if the level of subsidy goes down, the IRR goes up.
Investment Timeframe
Medium Term (5–10 years)
According to estimates by companies in the sector, projects have a payback period of between 7 and 10 years if current market conditions are maintained. With financing lines at subsidised rates, the investment could be recovered in up to 4 years.
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Capital - Limited Investor Interest
Market - Highly Regulated
Impact Case
Sustainable Development Need
There are currently 82 distributed generation supply installations in the Province, distributed among commercial and industrial 56%, agricultural irrigation 23% and residential 21%. They represent the generation of 3.2 MWp per million inhabitants.
Gender & Marginalisation
Small industries and agricultural enterprises do not have distributed generation supply facilities.
Expected Development Outcome
Distributed generation installations are expected to increase by more than 100% considering that since the last 14 months the growth was 88% (4) and further regulatory changes are expected to further stimulate the sector.
Gender & Marginalisation
It is expected to increase installations of distributed generation supplies in small industries and enterprises that do not currently have economically sound financing opportunities and access to convenient prices.
Primary SDGs addressed
7.2.1 Renewable energy share in the total final energy consumption
In 2022, 13.9% of the total electricity demand was supplied from renewable sources (5). In San Juan, 33.72% of the electricity demand was supplied by photovoltaic power plants. (6)
By 2040, an average of almost 50% of the energy consumed in Argentina is expected to come from renewable sources (7). At the provincial level, it is expected that around 60% of energy will be supplied by renewable sources.
Secondary SDGs addressed
Directly impacted stakeholders
Corporates
Gender inequality and/or marginalization
Indirectly impacted stakeholders
People
Planet
Outcome Risks
The biggest risk of negative outcome lies in the possible implementation of future energy subsidies, leading to a lower profitability of the business and a longer than expected payback period.
Impact Risks
External risk: External situations such as changes in rules, regulation, subsidies may lead to a decrease in the attractiveness of solar energy investments.
Risks of unexpected impacts: Adverse weather conditions that make it difficult to generate energy from natural sources.
Impact Classification
What
Significant positive impact will be generated by reducing greenhouse gas emissions while saving energy consumption.
Risk
The commitment to increase renewable energy sources to meet growing energy demand will not be met and the environmental consequences will be severe.
Enabling Environment
Policy Environment
The provincial government's "Solar San Juan" project consists of the construction of an integrated factory for solar silicon ingots, crystalline wafers and cells and photovoltaic solar panels.
The provincial government's project "Wind and solar map of the Province of San Juan" aims to identify and quantify the wind and solar resources of the province. Five meteorological towers have been installed in Barreal and Tocota.
Financial Environment
Financial incentives: Lines of credit at banks with reduced rates for investments that contribute to improving climate change. Credit lines with IDB funds and very competitive rates for green investments that are managed through the San Juan Investment Agency.
Financial incentives: Credit lines with a 50% rate subsidy for solar generation projects offered by the CFI (Federal Investment Council) (9).
Fiscal incentives: In capital investments for the installation of wind or solar power plants and/or equipment, the payment of the amounts to be paid as Value Added Tax is deferred for a period of 15 years. Law 27424 (8)
Fiscal incentives: Provincial tax exemptions through Law 1705-A for investments in electricity from renewable energy sources.
Regulatory Environment
Law 25019 National wind and solar energy regime and its regulatory decree Nº 562/2009.
Law 26190 "National promotion scheme for the use of renewable energy sources for the production of electricity.
Law 27424 Regime for the promotion of distributed generation of renewable energy integrated to the public electricity grid.
Law 27191 that regulates the National Promotion Regime for the use of renewable energy sources for the production of electricity.
Provincial Law 1878 - A and its Regulatory Decree 008/20 that declares the distributed generation of electricity to be of technical and social interest and adheres to National Law 27424.
Marketplace Participants
Private Sector
Companies in the renewable energy sector and electricity users.
Government
State bodies in charge of sector regulation and subsidy issuance.
Multilaterals
Multilaterals: Financial institutions, international organisations that encourage energy transformation, industrial chambers, among others.
Target Locations
San Juan Province
San Juan Province
References
- (1) Environmental Education Manual, Secretary of State for Environment and Sustainable Development - Province of San Juan.
- (2) "San Juan and its national impact on renewable energies" www.sisanjuan.gob.ar
- (3) World Meteorological Organization (UN) Multi-Agency Report - 2022
- (4) Publication Tiempo de San Juan Newspaper "Solar energy in San Juan: A long awaited change for SMEs is coming" 17/03/2023
- (5) Publication 31/01/2023. Renewable energies 2022: 13.9% of the demand was covered and 8 projects were inaugurated for more than 47 MW of installed capacity. www.argentina.gob.ar/economía/energía/energía-eléctrica/renovables.
- (6) EPSE Technical Report "Incidence of solar energy in San Juan. April 2023
- (7) Energy Scenarios Platform - Argentina 2040. Year 2018
- (8) Res. 83/19 Procedure for obtaining the tax credit certificate of the Regime for the Promotion of Distributed Generation of Renewable Energies.
- (9) www.cfi.org.ar