Law 27.191 Program to Promote the Use of Renewable Energy in Electricity Generation

Source: JOIN IEA/IRENA Policy and Measures Database
Last updated: 1 March 2018

 The Decree 531 regulates and puts in to effect Law 27.191 that was adopted earlier in the Argentinian Parliament. Together they create a trust fund for renewables, define the incentives for renewable independent power producers and determine the framework for renewable energy auctions.

The Decree and Law create the Fund for the Development of Renewable Energies (Fondo para el Desarrollo de las Energias Renovables - FODER) that will provide payment guarantees and project finance.

  • The decree states that 12,000 million pesos (US$819 million) will be added to FODER in 2016.
  • The annual amount within the fund will never be less than 50% of the saving achieved on fossil fuels through renewable energies from the year before.

The Decree and Law introduce fiscal incentives to independent power producers, including:

  • Exception of Import Duties for all project starting construction prior to 12/31/2107
  • Accelerated fiscal depreciation of applicable assets
  • Anticipated Refund of VAT paid on pre-COD purchases
  • Exception of Minimum Deemed Income Tax and Dividend Tax (subject to re-investment)
  • Extension of Income Tax Loss Credits to 10 years (standard is 5)
  • Tax deduction of all financial expenses

The Decree and Law describe the power purchase agreements (PPAs) under renewable energy auctions:

  • PPA costs will be transferred to all consumers.
  • Pre-qualified projects awarded at tender will have automatic access to tax benefits and FODER project financing and guarantees.
  • Selection rules will be set based on price and non-price criteria including local content integration, time to delivery and amount of FODER financing requested.
  • PPA will be awarded for 15+ years.
  • Large unbundled power users (> 300 kW) may opt-out of roll out of tendered PPAs and source RE directly from IPPs, utilities, traders or self-consumption projects.

The Decree and Law introduce important market and financial incentives for local supply chain building, including:

  • Sector specific development credit lines will be provided through FODER for local suppliers and manufacturers.
  • Import duty exemption for equipment, parts and supplies for local suppliers and manufacturers.
  • 20% Tax Credit on locally supplied CAPEX for independent power producers that integrate 30% of local component in electromechanical installations (excluding civil works, cost of transport and assembly of equipment).
  • Priority Access to FODER project financing for independent power producers with significant integration of local content.

Want to know more about this policy ? Learn more