Shifts in China's Influence during Argentina's Energy Transformation

In recent years, China has made significant investments in electricity transmission infrastructure across neighbouring countries like Brazil and Chile. However, deficiencies in Argentina's electricity grid have limited growth opportunities in the South American nation, particularly in the renewable energy sector.

The expiration of the 2015 Renewable Energy Law at the end of this year may impact the future prospects of the renewable energy sector in Argentina. Efforts are underway to extend the law, maintaining the 20% target along with legal and fiscal protection for investments in the sector.

Between 2008 and 2024, China provided US$472 billion in public and publicly guaranteed finance to low- and middle-income countries worldwide, with levels far below the peaks reached between 2015 and 2017. However, Chinese foreign direct investment (FDI) is increasing, both in absolute terms and relative to development finance.

Chinese companies have played a key role in the expansion of Argentina's clean energy infrastructure over the past decade. Notable projects include the Cauchari solar park, with 312 MW of installed capacity and expected to be expanded to 500 MW, and the Loma Blanca wind parks in Chubut, built by PowerChina and operated by the Chinese firm Goldwind, with an installed wind capacity of 355 MW.

In recent years, significant Chinese companies involved in solar and wind projects in Argentina include China Three Gorges Corporation and other major Chinese energy firms. These companies have primarily focused on large-scale wind farms and solar power plants to support Argentina's renewable energy expansion. Key projects in focus are wind parks in Patagonia and solar initiatives in northern Argentina, aiming to leverage strong wind and solar resources there.

The weight of renewables in the electric sector stood at 13% in 2021, increased to 14.3% in 2023, and is currently averaging 17.2% in the first quarter of this year. By 2025, 70% of renewable energy generated is expected to come from the wind sector, followed by solar.

Argentina's first domestic factory for producing solar panels is set to begin production this year, a step towards reducing reliance on imported solar panels, mostly from China. However, the lack of public investment for infrastructure development in Argentina remains a challenge.

Recent geopolitical and economic changes have raised doubts about the continuation of this momentum. Argentina's current government has close alignment with the United States and has distanced from China. Chinese institutions' loans to Latin America and the Caribbean averaged only US$1.3 billion per year between 2019 and 2023.

Oriana Cherini, a researcher at the National Council of Scientific and Technical Research (CONICET) in International Relations, explains that Chinese investment in renewable energy in Argentina has shown sustained growth and technological and geographical diversification.

In May, the government presented a plan for the private sector to finance 16 priority transmission projects. The success of this plan could determine the future of renewable energy in Argentina.