Latin America renewables: Going global
Copyright © DELINIAN (IJGLOBAL) LIMITED, Company number 15236229, 4 Bouverie Street, London, EC4Y 8AX. Part of the Delinian group. All rights reserved

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Latin America renewables: Going global

Wind turbines and solar panels at sunset. renewable energy concept.

Continued interest from global energy players drove activity this year with large M&A transactions having a moment in the renewables sector across Latin America. A variety of reasons for the renewed enthusiasm – from foreign sponsors with capital to put to work, political changes ushering in deals, new regulation incentivizing investments – created another competitive year for the M&A market in Latin America. Energy giants, including many European players, led the trend this year with major platforms exchanging hands all around the region.

“Unlike in Europe, in Brazil, and to a certain extent in Chile, the unit of account used in the sector is the GW. A lot of players have set energy transition goals with massive targets, and they can develop hundreds of MWs at a time. We saw TotalEnergies close a deal with Casa dos Ventos, following major deals in India and the US because volumes are large here,” said Cyrille Brunotte, managing director at Credit Agricole based in Sao Paulo.

The French energy giant entered a joint venture with Brazilian renewables developer Casa dos Ventos. The JV, split 34% TotalEnergies and 66% Casa dos Ventos, comprises a 12GW portfolio of wind and solar assets in operation, construction, and development. TotalEnergies bought into the operation for $550 million in cash and an additional $30 million with the option to purchase an extra 15% equity stake in the partnership after 5 years.

Exterior view of the tower housing the headquarters of the oil company TotalEnergies, formerly known as Total

“Large traditional energy companies are selling their older projects, especially the conventional assets, to be able to develop or buy newer renewable projects instead,” said Juan Carlos Valdivieso, a partner at Morales & Besa, based in Santiago.

In Chile, the market remained competitive despite a few regulatory hurdles felt in the last quarter of the year. “In each M&A process, for either the purchase of a renewable company or asset, it’s not uncommon to see up to 10 bidders,” added Valdivieso

Private equity funds and investment managers were also active in the space in 2022, successfully exiting or acquiring platforms across the region. In Chile, Texas-based Arroyo Investors realized its investment in Arco, a leading renewable power producer in Chile that the investment manager sold to UK-based independent power producer Sonnedix. The platform includes 290MW of wind and solar assets across the country.

London-headquartered Actis sold Aela Energia, a 332MW renewable platform owned by the private equity fund (60%) and Mainstream Renewable Power (40%) to Canada’s Innergex. The platform, acquired for $686 million, comprises 3 projects for a combined capacity of 332MW spread across Chile.

Another stand-out deal involving Actis was the sale of the private equity’s renewable platform Atlas Renewable Energy, the second largest independent renewables developer in Latin America, to Global Infrastructure Partners (GIP) in a $2 billion transaction. The platform includes 2.3GW of installed capacity, spread across Brazil, Chile, Mexico and Uruguay.

In Brazil, Spanish investment manager Exus Management Partners acquired Riacho da Serra Energia,

a 20-project complex exceeding 1GW from Italian renewable developer Decal Renewables and London-based renewable developer Upside Value. The complex is ready to begin construction and represents a total investment of more than R$3.5 billion ($650 million).

Interest in the Brazilian renewable sector is not new but changes in regulations this year increased enthusiasm in the market. Among the noticeable regulations passed this year, the government allowed for more freedom in energy trading with a greater number of agents able to migrate to the free market from the regulated market.

Solar panels to generate energy on the terrace of the building

“Brazil is in this transition era. There is a stream of regulation changes resulting in a more liberal market that tends to attract greater investment. Private players are more interested in investing in projects that can commercialize energy in the free market because it offers better conditions of negotiation for the sale and purchase of energy and more flexibility if there’s any shift in the economy,” said Diogo Nebias, partner at Mello Torres in São Paulo.

“Private parties can initiate the process themselves. They don’t have to wait for the government to launch a public bidding for a concession. When you can trade energy in the free market and what you need is just an authorization to develop your asset, it’s a much simpler project,” added Nebias.

While Chile and Brazil make up the majority of transactions, smaller jurisdictions in the region also shared the enthusiasm. By the end of December, Colombia’s Mines and Energy Planning Unit (UPME) is set to issue new connection permits creating an uptick in interest from developers and investors alike.

“In the second half of the year, we’ve had a lot more movement, sponsors looking for new investments or looking for partners in order to be able to get projects at a ready-to-build stage by the end of the year,” said Fabio Ardila senior associate at Cuatrecasas in Bogota.

With 2022 coming to a close, sources are looking at a promising new year ahead with some major activity already expected in 2023. Brookfield’s renewable platform Elera Renováveis will be hitting the market in the new year while Enel announced the divestment of its activities in Argentina and Peru to focus on renewable generation expansion in its core countries in Latin America.

But headwinds might hit ahead forcing the market to reckon with certain realities including a much slower-paced transmission market across the board, power purchase agreement prices imbalances in Brazil or regulatory shortcomings in Chile.

Gift this article