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Q&A: Pablo Otin, 8minutenergy Renewables — Part II

In the second half of this exclusive interview, Pablo Otin, v.p, of emerging markets at 8minutenergy Renewables, talks to PFR managing editor Olivia Feld about the California-based sponsor’s plans to finance its expansion into Latin American and engage with local developers and financiers in the region.

PFR: You have a consistent equity relationship with D.E Shaw for your U.S. projects, how much are you looking to replicate your financing structures in Latin America?

Long-term finance and some equity sponsors for the projects are going be required. We are always looking for the best capital structure on all of our projects, and eventually that would be something we are looking for.

PFR: Are you planning to continue your relationship with D.E. Shaw in Latin America, or will you be looking for different equity partners?

Our relationship with D.E Shaw is very close, strong, and very successful. I can’t comment on their interest internationally though.

PFR: Your projects in the U.S. have been greenfield developments. Are you looking at acquiring any shovel-ready projects, or are you going to continue to focus on what you have been doing, getting projects online from the start of development to finish?

We like to do development and go through the development process, but we’re always open-mind to buying our projects rather than doing it ourselves. We certainly will consider opportunities as they arise.

PFR: In terms of your plans for financing, how much are you planning to raise for these emerging markets this year?

2016 is a transition year so we don’t have a specific amount. It would certainly depend on what kind of projects we gain and how our plans shape up, so I can’t share any numbers or specifics right now. I would note that we have a very strong financial team, and we feel very comfortable that if we need to raise the capital, we will be able to do it.  

PFR: How does the growth strategy for the emerging markets compare with the growth strategy for the U.S. in terms of volume?

Keep in mind that the U.S. is a market where we are active already, and we have a presence on many fronts. It is a market that we understand, and where we have been extremely successful in the past. So for one thing, the speed of growth in our emerging markets will be different, but we are well positioned. We believe that we can build significant amounts of gigawatts in the coming years.

PFR: With Brazil and Mexico, how would you describe the dynamic in terms of developers like yourself — based in the U.S. and moving into those markets — competing with shops that have been developing there for a number of years?

In these new markets we are going to have to create an ecosystem for the whole industry, since there isn’t a fully established one yet. It’s custom for local developers who take early environmental risks to join forces with established developers, and established developers to join forces with global lenders. That kind of ecosystem works out, and it has worked out before.

To put it in context, if the market is 20 MW and we’re 20 people chasing it, there is very little room for collaboration. But when the market is in the gigawatts, as is the case with Brazil and Mexico, there is space for all of us. We will just settle and the different interests will align, and we will eventually know what each one does to combine efforts. I’m not concerned about competition in either market currently. There is enough room for everyone who wants to create value to compete.

PFR: What about from the financing perspective? Are you expecting to work with U.S-based entities to secure financing for those projects or will you also be working with local, regional entities in Latin American countries?

We like to work with local communities or countries in Latin America as much as possible. Our level of investment depends solely on the interest of the local financial institutions in moving into solar and their financial terms. If we do turn to U.S. policy lending for LatAm projects, we are likely looking at a scenario where the U.S. kick-starts a project, and then works in tandem with local financiers in order to not compete with the emerging economies. I believe we will see a natural transition in overall financing mechanisms, especially when the different local forces are ready to engage.

PFR: Are you using advisers right now on any upcoming financings?

We’re always in the market talking to financial advisers, which is part of our day-to-day activities. We have a fantastic finance team and our cfo, Marc Atlas, is constantly in discussions with financial institutions.  I would say that we’re very capable and we have a fantastic team that knows how to strategically fulfill our financing needs.

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