Dino Barajas Quoted in Latin America Energy Advisor on U.S. Financing for Latin American Energy Projects

March 15, 2018

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Latin America Energy Advisor has quoted Akin Gump cross-border transactions partner Dino Barajas in an article titled, “How Important Is U.S. Financing for Latin Projects?” The article reports that the U.S.-run Overseas Private Investment Corporation (OPIC) doubled its investment in solar power projects in other countries last year, lending more than $600 million to solar, wind or other clean energy ventures. This included projects in Honduras and El Salvador, among other countries.

Barajas said OPIC’s support, as well as that of multilateral banks and development banks, “is essential for the further development of renewable energy, particularly solar, across Latin America.” Countries like Mexico and Argentina, he said, “are pushing the solar power sector to rely less on long-term government-sponsored power purchase agreements (PPAs),” opting instead for shorter-term PPAs “in hopes that developers and private-sector lenders become comfortable with the large-term merchant structure of the relevant jurisdiction.”

Barajas explained that the problem with this policy decision is that the markets will remain vulnerable to government intervention or manipulation, though some private lenders remain cautious. They are the ones, Barajas said, who can provide “shorter-term financing during the PPA-covered period.” Government-sponsored lenders, meanwhile, “will need to take the lead in providing long-term financing for new power projects.”

In the long term, Barajas noted, “further penetration of large-scale renewable-energy projects throughout Latin America will continue to permit hydrocarbon-constrained countries to become more energy independent.” As a result, “the industrial sector will also benefit from stable and predictable long-term electricity pricing.”

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