Argentina has significant potential for renewable energy but currently relies heavily on fossil fuel imports for its energy needs. A new regulatory framework is being drafted to promote renewable energy development. Luft Energia aims to play a leading role in developing Argentina's wind and solar resources through securing attractive long-term power contracts and financing. It hopes to replicate its success in developing Argentina's shale gas potential by managing stakeholder relationships and partnering with government, financial institutions, and international players.

1. Renewable Energy in Argentina
2016

2. Table of Contents
Introduction
Argentine Energy Overview
Renewable Energy Opportunity
LUFT ENERGIA: Business Model

3. Introduction
After the COP21, in Paris last month, we are convinced that Argentina must play a
leading role to prevent global warming, as our country has an enormous potential, both
in solar and wind resources.
Our country is facing at this moment a critical situation in the energy sector and, thus, a
new regulation of the law to promote the renewable energy industry is being drafted.
We are a group of professionals, not only with reverence for environmental and social
sustainability, but also with the conviction that there is a great business opportunity.
We want to play a proactive role in helping the country develop its strength in sun and
wind resource, in a tangible way, converting it to consumable energy.
It is time to unlock the renewable energy potential in an economically sustainable way.
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4. Table of contents
Introduction
Argentine Energy Overview
Argentina: Renewable Energy Opportunity
Luft Energia: Business Model

5. Energy matrix & electricity generation
Primary Energy Supply Total Electricity Generation Capacity
5%
Hydro
2%
Wind &
Solar
2%
Nuclear
5%
Nuclear50%
Natural Gas
34%
Crude Oil
31%
Hydro
Coal
29%
Fossil Fuels 60.9%
Others 1
11% Argentina World
Source: MINEM – National Energy Balance and SESCO
(1) In Argentina, mainly composed by oils and alcohols for biofuels 5
0.6%
3.2%
35.3%
21%
2%
7%

6. Natural gas
Natural Gas production has been declining since 2008 and, on the other hand, demand
kept growing. This need was fulfilled with imports of LNG and natural gas from Bolivia.
Natural Gas Supply Natural Gas Proved Reserves
Mm3
60.000
1.15
1.1050.000
1.05
40.000
1.00
30.000
0.95
20.000
0.90
10.000
0.85
0.800
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20142003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Proved Reserves (Mm3)
Reserves Replacement Ratio
Source: UPSTREAM SESCO and ENARSA 6
Imports
612,496
332,164

7. s t
r
po
mI
Crude oil
Crude oil production declined at a rate of approximately 2.4% per year, creating the
need of imported liquids.
Crude Oil Production Crude Oil Proved ReservesKm3
45.000
1.15 425,213
40.000
1.10
35.000
1.0530.000
25.000 1.00
20.000
0.95
15.000
0.90
10.000
0.855.000
- 0.80
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
AUSTRAL CUYANA GOLFO SAN JORGE NEUQUINA NOROESTE
Proved Reserves (Km3)
Reserves Replacement Ratio
Source: UPSTREAM SESCO 7
378,343

8. Imported liquids replaced natural gas
The reduction in the domestic production of both primary sources of energy in the
country, natural gas and crude oil, led to extra liquids needs for the industry and power
plants.
Diesel Consumptionm3
Natural Gas Demand 3,000,000
Mm3/d
2,500,000
8180
2,000,000
160
1,500,000
140
1,000,000
Cuts - Power Plants120
500,000
Cuts - Industry
Industry
Power Plants
Residential
100 -
80
60
Fuel Oil ConsumptionTn
3,500,000
40 CNG
Commercial 4
20 3,000,000
2,500,000-
2,000,000
1,500,000
1,000,000
500,000
105,465
-
Source: CAMMESA and ENARGAS 8
3,032,07
Power Pants
and Industry
unsatisfied
demand
2,219,48
17,507

9. Consequence 1: Deficit in energy trade balance
Exports and Imports: Natural Gas, Oil and Fuels
(USD Billions)
7.87.8
7.2 7.06.9
6.2
5.4
-2.2
-3.2
-5.0-1.5 -1.7 -6.0 -6.5
-9.8
Balance
-11.5-11.6
2003
Source: INDEC
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
9Note: 2015 anual values were estimated based on real data up to October 2015
6.5 6.5 6.6
5.6
5.0
6.15.2 5.64.9
2.3
4.1 3.83.5
1.8
- -
- -6
-
-0.5 -1.0
-2.8 -2.6
-4.3 -4.8
Exports FOB
Imports CIF
-7.3
-9.1

10. Consequence 2: Higher base energy production costs
Power plants operating with imported natural gas or diesel have a higher cost per
MWh. Also, stoppage times multiply and machines deteriorate faster.
Estimated Cost of Fossil Fuels Based Energy in Argentina
USD/MWh
500
400
300
200
Renewable
Energy
100
0
Domestic Bolivia
Nat. Gas Nat. Gas
LNG Diesel Domestic
Nat. Gas
Bolivia
Nat. Gas
LNG Diesel Domestic
Nat. Gas
Bolivia
Nat. Gas
LNG Fuel Oil Diesel
Motors
Combined Cycle
Source: Estimated market reference figures
Gas Turbine Steam Turbine
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11. Meanwhile…. In the rest of the World
The world started to develop renewable energy. In the last decade wind energy
installed capacity multiplied by 10x and solar energy did so by 50x.
World Wind Energy Installed Capacity (GWh)
Latin America Wind Energy
Installed Capacity
(MWh, end of 2014)
370
283
Brazil 5,939
Chile 836
Uruguay 4641997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Solar Wind Energy Installed Capacity (GWh) Argentina 187
177 Costa Rica 198
Nicaragua 186
Honduras 152
231697 Peru 1485.13.7
2004
Source: GWEC
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
11
138
100
70
40
319
238
198
159
121
48 59 74
8 10 14 17 24 31 39
94

12. The process led to competitive energy pricing
Government focus, fiscal stability, investment, access to capital markets and smart
regulation led renewals energy to be cost competitive through out the World.
Recent announced long-term remuneration contract prices for renewable power
Source: IEA 12

13. Table of contents
Introduction
Argentine Energy Overview
Argentina: Renewable Energy Opportunity
Luft Energia: Business Model

14. Resource potential: wind speed
Global Mean Wind Speed at 80m
Top tier resource
15Source: 3Tier

15. Resource potential: wind speed in Argentina
Unique wind speed in more than half of the country’s territory, with over 8 m/s, thus
generating beneficial wind power generation capacity factors.
Wind Speed Areas of Capacity Factor >35%
m/s
Source: CADER 16

16. Resource potential: solar irradiance
Global Mean Solar Irradiance
World’s best solar irradiance
17Source: 3Tier

17. Table of contents
Introduction
Argentine Energy Overview
Argentina: Renewable Energy Opportunity
Luft Energia: Business Model

18. Getting there first
The Federal Government is convinced that it needs to stimulate the investment through
a new legal framework and regulatory pro-market measures.
‰ Pricing: The opportunity to achieve attractive long term pricing contracts
‰ Preferential connection to the grid
‰ First to access limited local and international markets
™ The national and local banks will take a leading role (Banco Nación, Banco
Provincia, Banco de la Provincia de Mendoza, etc.)
™ Multilateral organism financing
‰ A unique opportunity to enter into different projects in early stage and a lower entry
cost
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19. A unique track record: shale development in Argentina
Argentina is the only country outside US that has developed shale.
The case of “Vaca Muerta” has shown the correct connection between public and private
sector, creating the scenario for large investments.
Luft’s team was key to this success by:
‰ Managing the relation with the Federal and Provincial Governments and Congress to
promote a New Hydrocarbon Law (fiscal stability and investment incentives)
‰ Social license:
™ Managed relationship with stakeholders (environmental activist, landowners, etc.)
™ Strong presence in the communities to shown the “benefit from the oil industry”
‰ Accessing domestic and international financial markets
‰ Strategic partnership with international players
‰ Preferential relation and coverage from both local and international media
WE CAN MAKE THE RENEWABLES A REALITY IN ARGENTINA
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