ANDREA ROCCA: ACHIEVEMENTS AND CHALLENGES AHEAD FOR THE ENERGY TRANSITION UNIT
Head of Tecpetrol’s Energy Transition division, he shares the progress the team has made in helping to decarbonize the Techint Group industrial activities and the many opportunities and challenges he foresees for the next steps.
In northwestern Argentina, a race is on to produce lithium to feed the growing global demand for electric car batteries and energy storage systems, a key for electrification and decarbonization as part of the energy transition. Tecpetrol is testing ways to produce the silvery-white metal at Olacapato, Salta, one of the highest towns in Argentina. It’s not been easy. In the Puna region, at 4,100 meters above sea level, the conditions at the pilot plant are extreme. Despite the hardships, the tests have yielded a wealth of knowledge to build the business case for the project.
“We feel confident enough today to recommend going forward with the development of the brine project, to scale up this technology,” says Andrea Rocca, who runs Tecpetrol’s Energy Transition Unit. “We are looking at some relevant opportunities.”
The price of lithium, while down from a peak in 2022, is high, and electric car sales are expected to grow steadily as more governments promote the switch. In the United States alone, new electric vehicle sales are forecast to surge to over 9 million units, or nearly 50% of all new car sales in 2030, from ~650,000, or 4.5% of sales, in 2021, according to BloombergNEF.
A challenge for expanding in lithium will be to negotiate reasonable prices for acquiring mineral rights, which are now running as high as their altitudes.
But Andrea Rocca says he is confident that Tecpetrol will be able to enter into new projects with its technology and know-how to help take them from “promise to reality.”
These advances in lithium are important for the Energy Transition Unit, as it shows how much has been achieved since it was launched in October 2020.
“Many things have been done and many things remain to be done,” says Andrea Rocca.
This drive to do more comes even as the pace of the energy transition has slowed somewhat. High inflation and disruptions in the global supply chain, first from the pandemic and then from the Ukraine war, have pushed up energy prices and revived the need for oil and natural gas to keep everybody supplied.
This has raised questions about how to make sure that energy is clean, reliable, and affordable. “Clean is one aspect,” Andrea Rocca says. “But the other aspects are very relevant in this world that is so divided with these conflicts.”
The demand for energy security likely will keep oil and gas prices high for some time even if renewable energies grow faster than fossil fuels.
The expansion of renewables faces several challenges, however. One is location. Load factor varies substancially across geographies: the sun shines in the deserts of Argentina far more often than in a European city, where more people live. Another is how to supply round-the-clock energy when the wind is not blowing or at night. This is where oil and gas will continue to play a role, Rocca says.
Incentives really help
While energy security has gained importance over the past few years, the energy transition is picking up pace once again, fueled by new and lavish incentives like those provided by the US Inflation Reduction Act, which took effect in August 2022. These incentives are reducing the cost of developing projects, such as carbon capture and storage.
“Despite being the largest oil and gas producer in the world, the United States has taken the leadership role in pushing the energy transition with this gigantic incentives package, and the Techint Group is going to accelerate very large investments there,” Andrea Rocca says. “Europe is discussing a similar package so as not to be left behind.”
China will also play a big role in the energy transition, given that it produces most of the lithium-ion batteries for the world, as well as solar panels.
“It is a world full of challenges and opportunities,” he adds.
The Techint Group has plenty of prospects for energy transition projects. Rocca’s team is working on initiatives to help decarbonize the group’s operations, such as by feeding wind power to its steel plants. Nearly 170 MW capacity is under construction in building wind parks in Argentina.
Important progress has been made in investing in start-ups that are developing technologies for the energy transition through TechEnergy Ventures. In one year, the fund made five investments. And in this quarter, at least five more should be closed. "The challenge now is to 'walk the talk' by supporting these technologies scaling up," Andrea Rocca says.
TechEnergy Ventures is also analyzing investing in nature-based solutions, or conservation and land management to capture carbon. “Nature can also be a complementary solution to decarbonize,” Andrea Rocca explains. Current estimates are that investing in nature-based projects could cost as little as $10 to $30 per metric ton of CO2.
He expects that his team’s main focus will continue to be on lithium, carbon capture and storage, and clean power, with green hydrogen facing more challenges to become competitive in the short term.
The Energy Transition Unit is still in the early stage of its growth agenda, but the challenge is clear. “We all want to go faster. A lot has already been done and we will continue to work to generate more growth opportunities,” concludes Andrea Rocca.