Dino Barajas Quoted by Energy Advisor on El Niño and LatAm Hydropower

Energy Advisor, published by The Inter-American Dialogue think tank, quoted Akin Gump partner Dino Barajas for its Q&A “Will El Niño Cripple Hydropower in South America?” The publication notes that the El Niño weather pattern can potentially cause severe weather in South America, including droughts that lead to a decline in hydropower generation.

Barajas, whose practice emphasizes Latin American energy sector infrastructure project financings, debt financings and M&A, said, “Given the build-out, in the late 1990s and early 2000s, of numerous natural gas-fueled power plants throughout South America, including in Colombia and Brazil, central energy planners within these jurisdictions will be in a better position to react to drastic weather changes than they were during the 1997-98 El Niño. There may even be an opportunity to attract new power developers to the region in an effort to further diversify the power generation portfolios of countries experiencing radical swings in their hydrology patterns as they adapt to the ‘new normal’ of climate change.”

On the topic of energy production diversification, he continued, “A further diversification of power generation assets would not only assist these countries in addressing their own energy needs in the near term. Diversification would also position them to become energy exporters to neighboring countries during periods of over supply of electricity, once the rains return.”

Barajas said that South American countries need to inspire investor confidence if they wish to attract private-sector developers, adding a word of caution regarding “its history of central planners in Colombia and Brazil having promoted new generation projects during the region’s last severe drought, only to have projects canceled or power purchase agreements renegotiated once the rains returned and hydropower again became more plentiful and cost-effective.”

He closed by noting that, “Lessons learned from past mistakes should help guide a more thoughtful power plant build-out program which considers long-term market dynamics rather than just solving today’s issue with an expedient political solution, only to have policies reversed once political winds change.”