Interview : Maurizio Bezzeccheri
What are the challenges facing the construction of the power transmission network?
MAURIZIO BEZZECCHERI: It is necessary to promote investment in the construction of power transmission lines to close existing gaps and to make the system more efficient. Although the growth in renewable energy generation represents a remarkable success for this administration, it is this same growth that makes the task even more urgent. A bottleneck exists in the system because the most powerful radiation for solar plants is in the north of the country and the best winds are in the south, while 60% of the demand is located in the Greater Buenos Aires area in the north-east. To transport energy from its source to where it is needed, new transmission lines are required. Although there have been successful tendering rounds, prices are still far from global levels, though they are moving in that direction.
How would you define the opportunities to develop electric mobility in the country?
BEZZECCHERI: Electric mobility has evolved at a faster rate globally than in Argentina. However, this is not necessarily negative, as Argentina will be able to benefit from advanced technologies and innovation s that are already in place in leading countries. It is thus possible to leapfrog, recovering from years of lesser investments and development in this arena.
As the world population continues towards urbanisation – it is estimated that by 2050 approximately 60% of the global population will live in cities – we are provided with a unique opportunity to apply greater electric mobility. In the UK, for example, about 4% of transportation is in the form of electric vehicles. With intelligent and efficient investments, Buenos Aires could become a centre for the development of electric mobility at the regional level. The government will be launching bids to carry out pilot tests for electric buses that can compile data, allowing for experimentation and advancement based on a city’s requirements.
What measures can be taken to ensure greater activity from private players in the electric market?
BEZZECCHERI: Since its creation in 1992, the Wholesale Electricity Market Management Company ( Compañía Administradora del Mercado Mayorista Eléctrico, CAMMESA) has been a state-owned enterprise, in charge of managing the wholesale electricity market. During the last decade, however, it has become the sole buyer of energy in Argentina, as existing contracts with power generators were converted into tolling contracts. In order for Argentina to return to free market dynamics, companies must be able to choose their energy supplier. This would entail a change in CAMMESA’s role, with the entity taking a step back from purchasing and instead focusing on guaranteeing the establishment of a stable and transparent market.
How is project financing contributing to the evolution of Argentina’s energy sector?
BEZZECCHERI: The Argentine government recently issued a 100-year bond that was oversubscribed by almost three times in general terms. This demonstrates the international community’s confidence in Argentina’s future. That said, the investments needed in this field require greater returns on investment, with the appropriate fiscal and legal treatments applied. Another element that would help build confidence in investors would be the establishment of a better dispute resolution system. In any case, more needs to be done to alleviate the concerns of investors. For the energy sector, the challenge is to develop viable projects, and it is here that the country’s risk factors come into play. As long as there are only a few solid, bankable projects capable of generating cash flow to pay interest, Argentina will continue to have a limited volume of project financing. It is necessary to raise awareness on the importance of delivery on time and on budget as meeting these requirements has at times been difficult in the past for a number of reasons.
