U.S. electricity demand adds each year a volume equivalent to everything Argentina consumes in twelve months. With that figure, Martín Genesio, president and CEO of AES Argentina, the Argentine unit of U.S. power company AES Corp., described the sector's moment at the digital chapter of the VIII Fórum Nacional de Energía.
"The United States grows by around 150 terawatt-hours a year, which is what Argentina consumes in a year," the executive said. In his reading, more than 80% of that growth comes from new demand from data centers, and the other source of pressure on the system is mining. The two activities, he argued, are pushing global electricity consumption "to never-before-seen ranges."
For Genesio, that leap is the opportunity. "What we are seeing is an opportunity like never before seen in our sector to be able to supply precisely that demand," he said. And he placed it in Argentina, which he described as the country with the greatest energy potential in the world, with wind in the south, sun in the north, oil and gas in Vaca Muerta, conventional hydrocarbons in the Golfo San Jorge Basin, rivers and an extensive coastline.
To the resource he added an attribute that, he said, has gained weight with the wars of recent years. "Not only do we have the resource, we also have a zone of peace and a zone that wants to develop by delivering to the world what the world is asking for," he said.
The data center conversation already has a local chapter. At Argentina Week in Paris, Pampa Energía said it has 800 MW of generation and land in Vaca Muerta to host a data center, and the government set specific rules for that industry's electricity consumption.
The Bottleneck Is Equipment
The flip side of demand growing this fast lies in the supply chain, which Genesio identified as the main obstacle for the sector. "Demand is so strong that it becomes practically infinite," he said. Because consumption is expanding faster than supply, supply chains come under stress and equipment delivery times keep getting longer, which makes it harder to cover the peak.
The effect, he explained, spills over into prices, costs and competition for resources. And it has a geographic consequence: "that means less risky countries take more investment than riskier countries." Genesio said there is a point of conflict there that must be resolved so that growth is as even as possible.
Lowering Risk to Attract Capital
The answer he proposed runs through financing. Genesio recalled that access to credit "was always complex" for companies operating in Argentina and said the country must keep working, "as it has been doing successfully," to lower country risk and simplify access to financing for this type of investment. The sovereign rating upgrade, which Moody's grounded in the performance of the energy sector, points in that direction.
The second front is regulatory. The executive called for structures that allow project returns to keep rising, so they can compete with the returns that projects in lower-risk countries are currently obtaining on the back of rising electricity demand.
On the role of the state, his assessment was favorable. "Basically what it does is mark the boundaries of the field and let private players play inside," he said, summing up the condition for accelerating development as setting the rules, keeping them fixed and complying with them. It is the same debate the sector has been having over the normalization of the electricity market.
As proof that the framework works, he cited the energy trade balance, which, he said, Argentina turned around in two years, "going from a big minus to a big plus." Between January and September, the sector's trade surplus reached $9.428 billion, up 76% from the same period last year.
Like Joining Ford in 1904
For the head of AES, the energy transition "stopped being a transition" and is now a factual reality. And on the next decade he was direct: "The energy Argentina of the next 10 years, I think, comes down to this: it is a once-in-a-lifetime opportunity."
The executive also spoke about leadership in a stage of accelerated expansion. He said growth tends to be disorderly, that disorder produces mistakes and that, in that scenario, the principle the sector's leaders most need is empathy, understood as the ability to understand the mistake and the context in which it occurs.
His image for the decade was industrial. "This is comparable to living in the year 1904 and going to work at Ford," he said, and he set himself the goal of rising to the process and conveying to the sector's professionals the message to enjoy a growth that, he anticipated, will drive the power sector to never-before-seen levels.