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REGIONAL?BRIEFING:?RENEWABLE?ENERGY?IN?LATIN?AMERICA?AND?THE?CARIBBEAN?

APRIL?2014?

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REGIONAL BRIEFING: RENEWABLE ENERGY IN LATIN AMERICA AND THE CARIBBEAN<

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APRIL 2014?
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AMERICAN COUNCIL ON RENEWABLE ENERGY (ACORE)??
ACORE,?a?501(c)(3)?non‐profit?membership?organization,?is?dedicated?to?building?a?secure?and?prosperous?America? with?clean,?renewable?energy.?ACORE?seeks?to?advance?renewable?energy?through?finance,?policy,?technology,?and? market?development?and?is?concentrating?its?member?focus?in?2014?on?National?Defense?&?Security,?Power? Generation?&?Infrastructure,?and?Transportation.?Additional?information?is?available?at:?www.acore.org? INTERATIONAL PROGRAMS To?build?a?secure,?prosperous?America?with?clean,?renewable?energy,?we?must?cultivate?global?partnerships?as? technological?advancements?and?innovative?investment?strategies?emanate?from?all?corners?of?the?world.?ACORE’s? International?Programs?provide?a?platform?for?members?to?build?these?partnerships?with?government,?industry,? and?non‐profit?entities?across?the?globe.?ACORE’s?International?Programs?also?facilitate?opportunities?for?sharing? knowledge?on?policy?and?finance?to?create?an?environment?conducive?to?advancing?renewable?energy?growth?both? in?the?U.S.?and?abroad.?With?a?multi‐tiered?strategy?focused?both?on?tracking?global?trends?and?building? partnerships?with?specific?countries?on?six?continents,?ACORE’s?International?Programs?work?to?place?U.S.? leadership?at?the?forefront?of?global?renewable?energy?policy?and?finance.?Additional?information?is?available?at:? www.acore.org/programs/acore‐international‐programs? POWER GENERATION AND INFRASTRUCTURE INITIATIVE The?Power?Generation?and?Infrastructure?Initiative?brings?together?leaders?from?the?utility,?business,?investment,? regulatory,?public,?and?non‐profit?sectors?to:?(1)?examine?the?challenges,?opportunities,?and?appropriate?strategies? related?to?the?expanded?use?and?effective?integration?of?renewable?energy?in?the?power?generation?sector;?and?(2)? explore?21st?century?business?models?that?will?allow?for?this?renewable?energy?scale‐up.?Additional?information?is? available?at:?www.acore.org/programs/member‐initiatives/power‐generation?

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American?Council?On?Renewable?Energy?(ACORE)?

REGIONAL?BRIEFING:?RENEWABLE?ENERGY?IN?LATIN?AMERICA?AND?THE?CARIBBEAN?

APRIL?2014?

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AUTHORS

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ACORE?
Michael?Brower,?Risa? Edelman,?James?Hewett,?and? Lesley?Hunter?

Akin?Gump?Strauss?Hauer? &?Feld?LLP?
Dino?Barajas?

Clean?Energy?Latin? America?
Camila?Ramos?

Dentons? Juan?Carlos?Iturregui?and? Sydney?McNiff?Johnson??

SPONSORS

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COPYRIGHT
??2014?ACORE?? All?Rights?Reserved?under?U.S.?and?foreign?law,?treaties,?and?conventions.?This?work?cannot?be?reproduced,? downloaded,?disseminated,?published,?or?transferred?in?any?form?or?by?any?means?without?the?prior?written? permission?of?the?copyright?owner?or?pursuant?to?the?License?below:? Published?by:?? American?Council?On?Renewable?Energy?(ACORE)? 1600?K?St.?NW,?Suite?650? Washington,?DC?20006? 202.393.0001? Questions?or?Comments:?info@acore.org?

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American?Council?On?Renewable?Energy?(ACORE)?

REGIONAL?BRIEFING:?RENEWABLE?ENERGY?IN?LATIN?AMERICA?AND?THE?CARIBBEAN? ??

APRIL?2014?

TABLE OF CONTENTS
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Introduction .................................................................................................................................................... 4 Executive Summary ........................................................................................................................................ 5 The Renewable Energy Sector’s New Frontier: Latin America and the Caribbean..................................... 7 Game-Changing Energy Strategies: The Imperatives of Incorporating Significant Renewable Power in Latin America and the Caribbean’s Generation Fuels Mix & Grid Upgrades ......................................... 10

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American?Council?On?Renewable?Energy?(ACORE)??

REGIONAL?BRIEFING:?RENEWABLE?ENERGY?IN?LATIN?AMERICA?AND?THE?CARIBBEAN?

APRIL?2014?

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INTRODUCTION
? ? ACORE?is?pleased?to?present?“Renewable?Energy?in?Latin?America?and?the?Caribbean,”?a?white?paper?on? issues?and?opportunities?in?the?Latin?American?and?the?Caribbean?(LAC)?region?renewable?energy? markets.?? This?regional?briefing?ties?directly?to?two?of?ACORE’s?key?focus?areas:?our?International?Programs?and?our? Power?Generation?&?Infrastructure?Initiative.?The?former?cultivates?partnerships?with?international? businesses?and?governments?to?foster?the?sharing?of?information?on?the?best?of?global?renewable? finance,?policy,?and?technology,?while?the?latter?examines?strategies?for?integrating?renewable?energy? into?utility?business?models?and?the?evolving?electric?power?generation?industry.? As?you?will?read?in?the?following?articles,?common?characteristics?of?the?LAC?energy?market?make?it?a? natural?area?of?focus?for?ACORE’s?international?and?power?generation?efforts.?Present?energy?issues?in? the?region?include?high?electricity?prices,?outdated?or?burgeoning?infrastructure,?and?water?and?energy? access?concerns.?Renewable?energy?has?the?potential?to?address?these?problems.?? ACORE?invites?our?members,?who?are?focused?on?power?generation?models,?global?business? opportunities,?and?infrastructure?modernization,?to?play?an?active?role?in?creating?the?financial,?policy,? and?market?solutions?needed?to?facilitate?renewable?energy?growth?in?the?LAC?region.?We?thank?the? authors?for?the?articles?they?have?contributed?on?these?critically?important?topics?and?look?forward?to? your?engagement?in?this?dialogue.?? ?

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American?Council?On?Renewable?Energy?(ACORE)??

REGIONAL?BRIEFING:?RENEWABLE?ENERGY?IN?LATIN?AMERICA?AND?THE?CARIBBEAN?

APRIL?2014?

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EXECUTIVE SUMMARY
Camila?Ramos? Clean?Energy?Latin?America?(CELA)???

The?growing?economies?of?the?Latin?American?and? the?Caribbean?(LAC)?region?are?ripe?for?renewable? energy?development.?The?LAC?region’s?population?of? 600?million?is?growing?at?1%?per?year,?and?its?GDP? more?than?doubled?between?1990?and?2013.?More? than?50?million?people?have?worked?their?way?up?the? social?and?income?ladder?to?join?the?region’s?middle? class?in?the?last?decade,?and?this?trend?is?expected?to? continue.?Nonetheless,?per‐capita?electricity?usage?in? the?region,?at?1,987?kWh,?is?still?a?third?below?the? world?average,?and?29?million?households?do?not? have?access?to?residential?electricity.? As?a?result?of?ongoing?demographic?and?socio‐ economic?structural?changes,?the?demand?for? electricity?in?the?LAC?region?will?double?by?2030?and? triple?by?2050,?according?to?the?Economic? Commission?for?Latin?America?and?the?Caribbean? (ECLAC).?Consequently,?countries?in?the?LAC?region? will?require?more?than?$350?billion?of?investment?in? new?power?generation?assets?between?2013?and? 2030?to?meet?this?demand.? The?present?scenario?of?strong?electricity?demand? growth,?decreasing?costs?for?renewable?energy,? increasing?prices?of?fossil?fuels,?the?desire?for?energy? security,?and?concerns?about?climate?change?in?the? LAC?region?presents?interesting?opportunities?for?the? expansion?of?renewable?energy.?And?there?is? significant?potential?for?expanding?the?use?of? renewable?energy?sources,?ranging?from?extensive? solar?and?wind?resources?from?Mexico?to?Argentina,? to?geothermal?resources?along?the?tectonically?active? Pacific?Rim,?to?biomass?resources?throughout?the? region.?These?energy?sources?can?help?diversify?the? overall?electricity?supply?mix?beyond?conventional? options?such?as?fossil?fuels.?

According?to?Bloomberg?New?Energy?Finance?(BNEF),? the?private?sector?invested?$92?billion?in?renewable? energy?in?the?LAC?region?between?2008?and?2013,? including?$9.3?billion?in?2013.?In?total,?37%?of?all? regional?investments?in?2013?were?made?in?Brazil,? followed?by?Chile?(17%),?Mexico?(16%),?and?Uruguay? (12%).?The?bulk?of?investment?was?for?wind?energy,? which?accounted?for?60%?of?renewable?energy? investment?in?the?region?in?2013.?However,?solar? power?is?also?becoming?more?common?in?the?region,? responsible?for?$1.3?billion?of?investment?in?2013.?? This?investment?led?to?the?installation?of?1?GW?of? new?wind?energy?capacity?in?2013?and?200?MW?of? new?solar?photovoltaic?(PV)?capacity,?with?the?first? megawatt‐scale?solar?projects?being?deployed?in? Chile,?Peru,?and?Mexico.? Policymakers?have?been?compelled?to?set?national? carbon?reduction?and/or?clean?energy?installation? goals?and?to?hold?auctions?for?renewable?power?and? biofuels?supply?contracts?to?attract?additional? investment?to?the?region.?Bottlenecks?and?difficulties? in?terms?of?legislation,?market?maturity,?and?supply? chain?constraints?are?present.?However,?these?issues? are?being?tackled?gradually?as?the?renewable?energy? industry?advances.?New?sources?of?funding?are? increasingly?available,?including?from?local?and? multinational?development?banks?such?as?the?Inter‐ American?Development?Bank?(IDB),?Brazilian? Development?Bank?(BNDES),?and?Overseas?Private? Investment?Corporation?(OPIC),?as?well?as?foreign? and?local?private?investors.?These?positive?signals? indicate?that?the?LAC?region?will?continue?to?be?an? important?location?for?renewable?energy?investment? and?deployment?in?the?years?to?come.?

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American?Council?On?Renewable?Energy?(ACORE)??

REGIONAL?BRIEFING:?RENEWABLE?ENERGY?IN?LATIN?AMERICA?AND?THE?CARIBBEAN?

APRIL?2014?

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ABOUT?THE?AUTHOR?
Camila?Ramos?is?Managing?Director?at?CELA?‐?Clean? Energy?Latin?America,?a?S?o?Paulo‐based?consulting? and?advisory?firm?supporting?clients?to?explore? opportunities?in?the?Latin?American?renewable? energy?market,?specializing?in?policy?analysis,? fundraising,?project?finance,?strategic?planning,?and? connecting?projects?and?investors.?Camila?is?also?an? Advisory?Board?Member?of?the?InterAmerican?Clean? Energy?Institute,?a?California‐based?clean?energy? think?tank.?? Prior?to?founding?CELA,?Ms.?Ramos?served?as?Country? Manager?and?Head?of?Latin?America?Research?at? Bloomberg?New?Energy?Finance?(BNEF).??She?was? also?Marketing?and?Communications?Manager?at? ERB?‐?Energias?Renováveis?do?Brasil,?a?Brazilian? renewable?energy?company.??She?has?also?worked?as? a?consultant?at?PricewaterhouseCoopers?with?a?focus? on?agribusiness.?Camila?holds?an?MSc.?and?BSc.?from? the?London?School?of?Economics?and?Political?Science? (LSE).

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American?Council?On?Renewable?Energy?(ACORE)??

REGIONAL?BRIEFING:?RENEWABLE?ENERGY?IN?LATIN?AMERICA?AND?THE?CARIBBEAN?

APRIL?2014?

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THE RENEWABLE ENERGY SECTOR’S NEW FRONTIER: LATIN AMERICA AND THE CARIBBEAN
Dino?Barajas? Akin?Gump?Strauss?Hauer?&?Feld,?LLP? ? ?
While?most?jurisdictions?within?Latin?America?and? the?Caribbean?base?their?core?electric?generation? asset?portfolio?on?fossil?fuels,1?renewable?energy? technologies?are?now?changing?the?regional?energy? landscape.?Now,?wind,?solar,?hydro,?tidal,?and? geothermal?power?plant?developers?are?focusing? efforts?on?transforming?Latin?America?and?the? Caribbean?into?more?eco‐friendly?power?generators.? As?a?result,?local?governments?have?been?modifying? electric?utility?regulatory?frameworks?to? accommodate?the?introduction?of?renewable?energy? into?regional?electric?generation?and?distribution? systems.? The?renewable?energy?development?activity? throughout?the?region?has?resulted?from?a?recent? two‐year?“perfect?storm”?of?global?energy?events.? For?example,?wind?power?project?developers?and? their?tax?investors?face?tax?policy?uncertainty?in?the? United?States.?The?result?is?a?“choppy”?series?of? boom‐and‐bust?development?cycles.?Global?solar? power?plant?developers,?who?have?been?gaining? some?competitive?advantages?as?a?result?of?declining? solar?panel?and?supply‐pipeline?costs,?were?dealt?a? crippling?blow?in?the?U.S.?after?Chinese?solar?cell? manufacturers?were?levied?“anti‐dumping”?tariffs?on? products?imported?into?the?U.S.?Equally,?solar?power? developers?have?also?been?affected?in?the?European? Union?by?a?threat?of?high?tariffs?being?imposed?on? Chinese‐manufactured?solar?panels.?Additionally,? Spain,?which?had?been?a?darling?of?renewable?energy? developers,?retroactively?lowered?its?renewable? energy?feed‐in?tariffs?and?threw?the?certainty?of? Europe’s?renewable?energy?industry?into?a?tailspin.?

CAPITALIZING?ON?LATIN?AMERICAN?AND? CARIBBEAN?MARKETS?AND?POLICIES?
Faced?with?the?downturn?and?uncertainty?in?the? European?and?U.S.?renewable?energy?markets,?many? renewable?project?developers?are?turning?their? attention?and?development?dollars?toward?Latin? America?and?the?Caribbean.?The?region,?which?has? been?plagued?with?unnaturally?high?energy? production?costs,?mostly?due?to?the?need?for? expensive,?imported,?fossil‐based?bunker?fuel?and? diesel,?offers?a?market?where?renewable?energy?can? compete?directly,?on?a?true?economic?basis?with? existing?power?generators,?even?without?extensive? financial?subsidies?or?feed‐in?tariffs;?however,? regional?governments?must?be?proactive?and?enact? favorable?renewable?energy?regulatory?and? integration?policies.?The?predictability?of?such? market‐based?opportunities?offers?renewable?energy? developers?a?long‐term,?stable?development? environment?where?success?is?largely?crafted?by? economic?opportunity?based?on?technology? competitiveness?rather?than?ever‐changing?political? and?public?opinion.?? The?integration?of?renewable?energy?into?regional? generation?portfolios?will?help?achieve?individual? national?and?regional?security,?economic?security,? and?environmental?security?through?the?use?of?local? renewable?energy?resources.?As?more?and?more? countries?in?the?region?assert?greater?control?over? energy?production?costs?via?renewable?resources,? susceptibility?to?variances?in?imported?fuel?prices?will? be?minimized,?and?regional?energy‐intensive? industries?will?emerge?as?more?competitive?on?a?

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1?With?the?notable?exceptions?of?Brazil?and?Costa?Rica?

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American?Council?On?Renewable?Energy?(ACORE)??

REGIONAL?BRIEFING:?RENEWABLE?ENERGY?IN?LATIN?AMERICA?AND?THE?CARIBBEAN?

APRIL?2014?

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global?basis.?These?benefits?will?also?allow?the?region? to?attract?a?greater?variety?of?industries?to?their? markets?and?permit?higher?value,?more?energy‐ intensive?processes?to?be?done?locally,?thus?allowing? a?greater?amount?of?the?value?chain?to?remain?at? home.? Some?countries?in?the?region,?such?as?Mexico,?are? actively?courting?renewable?energy?developers?by? creating?attractive?regulatory?systems?that?recognize? the?unique?features?of?renewable?energy? production.?For?example,?Comisión?Federal?de? Electricidad?(CFE),?Mexico’s?national?electric?utility,?is? addressing?issues?of?wheeling?power,?which?has? often?hindered?past?development?of?regional? renewable?power?projects.?CFE’s?previous?wheeling? structure?failed?to?account?for?wind?and?solar? power’s?unique?characteristics.?CFE?was?penalizing? such?renewable?energy?power?projects?for?not? producing?base‐load?electricity?supply?without? consideration?of?the?actual?value?of?renewables?over? fossil?fuel?power?projects.?Today,?CFE’s?wheeling? arrangements?balance?the?unique?characteristics?of? renewables.?CFE?has?created?a?system?where?a? renewable?energy?project?can?“bank”?excess?energy? production?during?periods?when?an?off‐taker?does? not?require?energy?from?the?project,?and?allows?the? user?to?access?the?“banked”?energy?during?periods? when?the?power?project?produces?insufficient?energy? to?meet?the?user’s?needs.?Additionally,?postage‐ stamp?wheeling?charges,?earmarked?solely?for? renewable?energy,?have?benefitted?renewable? energy?production.?As?a?result,?buyers?of?renewable? power?see?energy?sale?rates?that?compete?effectively? and?directly?with?fossil?fuel‐generated?energy.? numerous?projects.?Projects?on?the?verge?of? achieving?financing?have?collapsed?upon?the? discovery?that?negligent?or?ill‐informed?actions?were? taken?during?the?early?stages?of?a?project’s? development,?requiring?developers?to?redo?their? projects’?fundamentals.? Mindful?of?these?challenges,?successful?renewable? energy?developers?in?the?region?have?leveraged?the? lessons?learned?from?previously?developed?projects? in?specific?countries.?The?complex?project? contracting?and?equity?infusion?structures?developed? over?the?last?20?years?are?serving?today’s?renewable? energy?pioneers?well?by?helping?them?create?the? most?efficient?tax?structures?possible?for?their? projects?and,?in?turn,?preserving?their?projects’?rates? of?return.?Given?that?the?Latin?American?and? Caribbean?markets?do?not?resemble?the?U.S.?or? European?markets,?knowledge?of?the?terms?and? structures?of?existing?power?project?deals?specific?to? the?region?is?essential?to?achieving?early?success.? Additionally,?many?developers?have?formed?joint? ventures?with?local?companies?to?gain?market?legal? and?cultural?knowledge?where?possible.?Others?have? reassembled?the?external?legal?and?technical? advisory?teams?responsible?for?structuring?earlier? power?project?transactions?in?order?to?gain?valuable? market?access?and?knowledge.?

CONCLUSIONS?AND?RECOMMENDATIONS?
Given?existing?high?fossil‐based?Latin?American?and? Caribbean?energy?prices,?renewable?energy? developers?entering?the?region?are?finding?some?of? the?most?lucrative?projects?anywhere?in?the?world.? The?ultimate?result?of?the?expansion?of?the? renewable?energy?industry?throughout?Latin?America? and?the?Caribbean?will?be?a?“win‐win”?for?developers? and?investors?as?well?as?local?consumers.?For? developers,?an?expanded?renewable?energy?market? and?increased?equipment?demand?will?continue?to? drive?innovation?in?the?market?and?lower?equipment? pricing.?For?consumers,?the?inclusion?of?new? renewable?energy?power?projects?into?their?national? power?generation?portfolios?will?lower?overall? electricity?prices?and?promote?increased?

LESSONS?LEARNED?AND?BEST?PRACTICES??
Renewable?energy?companies?entering?the?Latin? American?and?Caribbean?markets?are?quickly? learning?that?the?potential?rewards?available?in?the? region?are?not?without?their?challenges.?Successfully? navigating?jurisdictional,?legal,?cultural,?and?business? environments?is?the?determining?factor?as?to? whether?a?new?market?entrant?can?be?successful.? Seemingly?simple?tasks,?such?as?securing?site?control? and?permitting,?have?been?the?Achilles?heel?on?

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American?Council?On?Renewable?Energy?(ACORE)??

REGIONAL?BRIEFING:?RENEWABLE?ENERGY?IN?LATIN?AMERICA?AND?THE?CARIBBEAN?

APRIL?2014?

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industrialization?throughout?the?region?as?a?result?of? pricing?predictability.? The?true?litmus?test?of?the?feasibility?of?these? renewable?energy?power?projects?is?whether?or?not? third‐party,?non‐recourse?financing?is?available.?In? the?case?of?Latin?America?and?the?Caribbean,? commercial?lending?institutions?are?actively?looking? for?lending?opportunities?to?well‐structured? infrastructure?projects?throughout?the?region.? Multilateral?lending?institutions,?such?as?the? International?Finance?Corporation?(IFC),?the?Inter‐ American?Development?Bank?(IADB),?the?Central? American?Bank?of?Economic?Integration?(CABEI),?and? the?Development?Bank?of?Latin?America?(CAF),?have? become?increasingly?determined?to?ensure?that? renewable?energy?projects?find?funding?by? introducing?creative?financing?structures?that?also? attract?interest?from?the?private?lending?community.? In?addition?to?global?and?regional?financing? institutions?and?commercial?lenders,?development? banks,?such?as?FMO?(Netherlands),?DEG?(Germany),? Proparco?(France),?OeEB?(Austria),?and?the?Overseas? Private?Investment?Corporation?(U.S.),?have? supported?the?financing?of?numerous?infrastructure? projects?that?promote?certain?economic,? environmental,?or?social?objectives.?Some?of?these? international?development?banks?have?even?gone?as? far?as?prioritizing?the?region?as?a?lending? environment?in?order?to?spur?the?development?of? renewable?energy?power?projects.? The?secret?to?navigating?these?rich?environments?will? be?assembling?the?right?team?armed?with?market? knowledge,?language?skills,?and?business?acumen.?

ABOUT?THE?AUTHOR?
This?article?was?prepared?by?Dino?T.?Barajas,?partner? in?the?Global?Energy?Transactions?Group?(specializing? in?project?finance?and?Latin?American?transactions)? of?Akin?Gump?Strauss?Hauer?&?Feld?LLP? (www.akingump.com).?You?may?contact?the?author? by?telephone?at?(310)?552‐6613?or?by?email?at? dbarajas@akingump.com.?The?author?welcomes? questions?and?comments?regarding?this?article.? Mr.?Barajas?has?extensive?experience?representing? lenders,?investors,?and?developers?in?a?wide?range?of? domestic?and?international?project?financing?in?the? energy,?power,?infrastructure,?and?commercial? sectors,?as?well?as?traditional?banking,?structured? finance,?mergers?and?acquisitions,?corporate?finance,? asset?finance,?joint?ventures,?and?venture?capital.?His? clients?include?commercial?lenders,?institutional? investors,?investment?funds,?project?sponsors,?and? public?and?private?companies.?He?received?his?J.D.? from?Harvard?Law?School?and?is?bilingual.?

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American?Council?On?Renewable?Energy?(ACORE)??

REGIONAL?BRIEFING:?RENEWABLE?ENERGY?IN?LATIN?AMERICA?AND?THE?CARIBBEAN?

APRIL?2014?

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GAME-CHANGING ENERGY STRATEGIES
T HE I MPERATIVES OF I NCORPORATING S IGNIFICANT R ENEWABLE P OWER IN L ATIN A MERICA AND THE C ARIBBEAN ’ S G ENERATION F UELS M IX & G RID U PGRADES
Juan?Carlos?Iturregui?and?Sydney?McNiff?Johnson? Dentons? ? ?
Proven?renewable?power?technologies?available? today?provide?a?unique?opportunity?for?many? countries?and?regions?in?Latin?America?and?the? Caribbean?(LAC)?to?secure?their?energy?future?in?a? sensible,?cost‐effective,?and?sustainable?manner.? Stakeholders?should?empower?their?ratepayers?and? citizens?by?acting?on?short‐term,?feasible?goals?to? reach?an?average?of?15‐20%?renewable?energy?by? 2017.?These?goals?can?be?advanced?in?several? regional?nations?in?a?mere?three?to?four?years,?if?not? sooner,?and?can?yield?significant?and?quantifiable? national?security,?economic,?health,?and? environmental?benefits.?Particularly,?forward‐ thinking?nations?might?even?adopt?game‐changing,? mid‐term,?feasible?goals?to?upgrade?their?grids?to? generate?30‐40%?from?renewable?energy?sources?by? 2020.? In?general,?one?might?say?that?countries?fall?into?one? of?the?following?categories:?the?status?quo?group,? the?developers,?and?the?indecisive.?Actions?taken? today?by?governments?and?policymakers?in?the? energy?security?realm?have?almost?immediate? impacts?on?the?well‐being?of?a?national?population.? Even?without?a?comprehensive?national?energy? policy?and?possessing?a?quite?fragmented? marketplace?in?terms?of?grid?operators?and? regulators,?the?United?States?has?become?even?more? competitive?in?economic?terms?because?it?has? adopted?an?aggressive?strategy?to?deploy?all?kinds?of? renewable?power.?In?fact,?the?majority?of?all?new? generation?installed?last?year?in?Canada?and?the?U.S.? came?from?renewable?sources,?with?wind?and?solar? power?playing?key?roles.?The?U.S.?manufacturing? sector?is?experiencing?a?resurgence,?while?consumer? inflation?has?remained?virtually?flat,?in?part?because? of?the?availability?of?affordable?and?reliable?energy? supplies.?Of?course?there?are?several?reasons?for?this? resurgence,?but?one?cannot?underplay?the?positive? effect?renewable?energy?is?having?today?in?the? marketplace?and?society.? Several?LAC‐regional?countries?approach?the? deployment?of?renewable?power?as?an?economic? development?imperative???part?of?the?critical? infrastructure?strategy?necessary?to?foster? competitiveness?and?growth.?The?immediate? national?returns?are?quite?clear:?continued? development?progress,?diversification,?predictability,? sustainability,?and?affordability?of?energy,?all?while? preserving?the?environment?by?using?less?fossil?fuels? and?reducing?carbon?emissions.? Some?nations?in?the?region?are?blessed?with? abundant?natural?resources,?enabling?a?few?to? efficiently?optimize?the?use?of?hydropower.?As?a? prime?example,?Colombia’s?installed?hydropower? capacity?represents?over?50%?of?all?electricity? generation.?Yet?other?“energy‐rich”?countries?are? simply?wasting?their?potential,?as?their?policies?and? track?records?have?created?obstacles?that?push?away? private?sector?investments.?Venezuela?is?sadly?a?vivid? example?of?this?reality.?The?country?possesses?one?of? the?largest?oil?and?gas?deposits?on?the?planet,?along? with?artificially?low?and?subsidized?electric?rates.? However,?perplexingly,?their?people?suffer?power?

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American?Council?On?Renewable?Energy?(ACORE)??

REGIONAL?BRIEFING:?RENEWABLE?ENERGY?IN?LATIN?AMERICA?AND?THE?CARIBBEAN?

APRIL?2014?

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outages,?draconian?inflation?rates,?and?severe,? unsettling?economic?contraction.? Poor?energy?access?also?results?from?the?inefficient,? insufficient,?or?outdated?power?generation?models? or?operations?that?exist?in?many?of?the?regional? nations.?The?Inter‐American?Development?Bank??? predicts?that?several?hundred?billion?dollars?will?need? to?be?invested?in?the?region’s?energy?sector?over?the? next?decade?to?satisfy?demand,?improve?or?maintain? growth,?mitigate?climate?change,?and?supply? affordable?electricity?to?the?majority?of?the? population.?These?needs?represent?a?unique? opportunity?to?upgrade?electricity?resources.?From? generation?to?transmission?to?distribution?and? operations,?the?incorporation?of?renewable?power? can?be?a?win‐win?for?all?stakeholders.?Capital?is? available,?and?financing?tools?can?leverage? investments?and?facilitate?well‐conceived?projects?in? places?with?reliable?regulatory?and?legal?frameworks.? Ironically,?two?of?the?least?efficient?energy?grids? happen?to?be?inside?U.S.?borders:?Puerto?Rico?and? the?U.S.?Virgin?Islands.?These?isolated?island?systems? depend?on?burning?oil?for?over?70%?of?their? generation.?It?is?no?surprise?then?that?both? economies?remain?economically?burdened?while? many?of?their?neighbors?have?experienced?emergent? or?sustained?growth.?With?rates?ranging?from?29? cents?per?kWh?in?the?case?of?the?Puerto?Rico?Electric? &?Power?Authority?(PREPA)?and?45?cents?per?kWh? charged?by?the?Virgin?Islands?Water?&?Power? Authority?(WAPA),?it?is?nearly?impossible?to?foster? economic?growth.?? With?oil?prices?hovering?at?about?$100?per?barrel? now?and?in?the?future,?the?economics?are? detrimental?to?any?nation?to?surrender?its?energy? present?and?future?to?oil,?as?well?as?imprudent?for?a? regional?nation’s?environmental?well‐being.?The? problem?becomes?more?vivid?with?a?side‐by‐side? comparison?of?energy?prices?in?developed? economies,?in?part?because?in?order?to?measure?the? real?and?complete?adverse?effects,?one?must? consider?the?"purchasing?power?parity"?(PPP)?of?a? nation’s?ratepayers?relative?to?national?per?capita? GDP.?In?real?and?absolute?terms,?most?ratepayers?in? the?Caribbean?basin?are?paying?4‐7?times?more?for? electricity?than?ratepayers?in?the?U.S.?To?begin?with,? the?family?or?business?that?is?subject?to?the?35?cents? per?kWh?cost?for?electricity?in?a?developing?island? nation?would?be?paying?about?10?cents?per?kWh?in? Texas?or?Maryland.?But?in?addition,?the?islanders? have?a?PPP?that?is?less?than?50%?of?their? counterparts’?in?the?U.S.?In?effect,?the?islanders?are? paying?the?equivalent?of?about?400‐500%?more?for? the?same?amount?of?energy?consumed?by?people?in? the?U.S.?This?is?the?situation?today,?whether?you?are? a?client?of?WAPA,?PREPA,?the?CDEEE?in?the? Dominican?Republic,?or?elsewhere.?

SURMOUNTING?PETROLEUM?DEPENDENCY?
In?some?regions,?such?as?Central?America?and?the? Caribbean,?the?dependency?on?fossil‐based?liquid? fuels?to?generate?electricity?has?fostered?economic? stagnation,?or?in?some?cases,?a?regression.?Burning? oil?to?produce?energy?is?among?the?most?inefficient? energy?production?practices?known.?Not?only?making? zero?economic?sense,?the?adverse?environmental? effects?are?tragic.?Several?regional?nations?have?an? excessive?addiction?to?a?fossil‐based?liquid?fuel?habit? that?siphons?tremendous?wealth?from?their? economies?and?ratepayers?while?destroying?their? environmental?health.?Contrast?such?practices?with? those?of?the?U.S.,?where?less?than?one?percent?of?the? country's?energy?generation?comes?from?burning?oil.? Petrocaribe,?the?initiative?begun?ten?years?ago?by? Venezuela's?national?state?oil?monopoly?(PdVESA)?to? create?an?oil?alliance?with?many?Caribbean?states,? may?have?appeared?to?assist?some?of?its?affiliated? countries?(clients)?in?the?short‐term;?but?at?its?core,? it?is?a?political?tool?to?ensure?subsidized?deliveries?of? expensive?fuels,?an?even?less?reliable?mechanism? today?given?the?declining?production?of?PdVESA?and? the?political?turmoil?in?Venezuela.??

SEIZING?MARKET?OPPORTUNITIES?
With?such?a?marked?contrast?having?real?and?very? detrimental?effects?on?people?and?businesses,?the? only?way?out?of?this?socio‐economic?enigma?is?to? push?forward?with?game‐changing?renewable?energy? strategies.??

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American?Council?On?Renewable?Energy?(ACORE)??

REGIONAL?BRIEFING:?RENEWABLE?ENERGY?IN?LATIN?AMERICA?AND?THE?CARIBBEAN?

APRIL?2014?

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All?countries?have?at?least?partial?“energy‐wealth”? through?the?ability?to?exploit?renewable?power,?be?it? hydro,?solar,?wind,?geothermal,?biomass,?or?all?of?the? above.?The?people?and?their?elected?officials?are? responsible?for?optimizing?such?natural?resources.? While?some?assert?that?it?is?very?difficult?to? incorporate?significant?renewable?power?in?island? jurisdictions,?the?facts?demonstrate?otherwise.?A?few? years?ago,?the?Hawaiian?archipelago?adopted?an? ambitious?yet?feasible?goal?of?diversifying?its? generation?matrix?on?a?fast‐track?basis.?Thus?far,? Hawaii’s?plan?is?ahead?of?schedule?and?reaching? tangible?economic?and?environmental?benefits.?? Take?the?case?of?Chile;?its?economy?has?grown?by? leaps?and?bounds?over?the?last?two?decades.?Official? estimates?indicate?that?the?country?needs?to? increase?its?present?energy?output?by?100%?during? the?next?eight?to?ten?years?to?keep?up?with?demand,? meaning?Chile's?energy?matrix?needs?to?be?very? quickly?duplicated.?To?achieve?this?reality,?authorities? have,?of?necessity,?fast‐tracked?energy?development? made?the?inclusion?of?unconventional,?renewable‐ energy?sources?(i.e.,?virtually?all?renewables?except? traditional?big?hydro)?a?top?national?priority.?Hence,? Chile’s?emerging?but?robust?green?power?sector?is? expected?to?experience?over?60%?growth?in?2014.? Grid‐connected?projects?in?the?pipeline?will?add? approximately?650‐750?MW?of?new?renewable? power,?for?a?total?installed?capacity?of?about?1,800? MW.?In?addition,?considerable?deployment?of?off‐ grid?renewable?energy?is?taking?place?via? freestanding?projects?that?support?critical?economic? activities,?including?the?use?of?solar?photovoltaics? (PV)?at?mining?sites?and?biomass?and?small?hydro?in? forestry?and?agricultural?operations.? Change?is?here?to?stay.?In?the?Caribbean,?the?CDEEE? is?implementing?a?plan?to?incorporate?over?2,000? MW?in?new?generation?while?re‐structuring?its?fuels? matrix,?significantly?adding?renewable?energy,?but? also?including?imported?natural?gas?and?coal.?The? end?result?will?be?to?grow?and?stabilize?both?the? national?grid?and?prices.?Other?regional?nations?are? taking?the?jump?into?the?future?as?well.?Uruguay?had? virtually?zero?unconventional,?renewable?power? installations?in?2011.?By?the?end?of?this?year,?it?will? have?over?700?MW?of?new?wind?and?solar?PV? capacity?installed.?Noteworthy?is?the?fact?that? Uruguay’s?strategy?is?being?implemented?100%?via? private?investments.? Game‐changing?strategies?are?realistic.?Renewable? energy?deployment?in?Europe,?the?U.S.,?and?Canada? have?proven?to?be?smart?policies?and?good?economic? choices.?China,?South?Africa,?Chile,?and?other?fast‐ paced?economies?are?adopting?aggressive?metrics?to? install?several?thousand?gigawatts?of?renewable? energy?over?the?next?few?years.?Now?is?the?time?for? Latin?America?and?the?Caribbean?to?leap?forward?and? advance?this?sustainable?trend.?The?public?and? private?sectors?ought?to?work?together?in?this?critical? endeavor?to?complement?and?support?each?other.? Governments?can?leverage?private?capital?and?foster? direct?investments?in?generation?and?technology? transfer.?Using?private?sector?funds?for?new?smart? and?renewable?generation,?the?public?sector?can? liberate?resources?to?invest?in?transmission?and? distribution,?and?other?areas?including?social? priorities?such?as?low‐?and?medium‐income? renewable?finance?tools.? Globally,?technologies?are?ever‐improving?and? achieving?“grid?parity”?in?many?locations.?A?kWh? generated?by?petroleum?may?cost?over?30?cents;? however,?a?kWh?produced?by?renewable?resources? averages?roughly?50%?less.?Moreover,?advances?in? storage?technologies,?better?efficiency?ratios?in? equipment,?and?smart?metering,?among?several? other?technologies,?reinforce?the?economic?security? of?incorporating?renewable?power?into?LAC?national? grids.?

CONCLUSION?
Amidst?all?the?changes?in?the?LAC?energy?landscape,? one?thing?is?fairly?certain:?renewable?power?sources? are?predictable,?sustainable,?affordable,?and?ready?to? be?deployed.?Smart?technologies?are?now?a?reality,? financing?options?are?attractive,?and?a?distributed? generation?and?microgrid?revolution?looks?to?be?the? next?big?market?driver.?Such?indicators,?conditions,? and?developments?are?a?great?harbinger?for?Latin?

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American?Council?On?Renewable?Energy?(ACORE)??

REGIONAL?BRIEFING:?RENEWABLE?ENERGY?IN?LATIN?AMERICA?AND?THE?CARIBBEAN?

APRIL?2014?

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America?and?Caribbean.?For?most?regional?nations,? renewable?energy?portfolios?of?between?30‐40%?by? 2020?are?doable.?Meanwhile,?short‐term,?feasible? goals?–?such?as?15‐20%?of?total?deployed?renewable? power?by?2017?–?must?be?a?priority,?and? achievement?of?that?goal?would?be?quite?a?game? changer.? global?trade,?commerce,?energy,?renewables,?and? infrastructure?sectors.?He?travels?extensively? throughout?Latin?America?and?the?Caribbean?and?has? been?a?committed?advocate?for?closer?integration? and?north‐south?commercial?ties?for?many?years.?He? obtained?his?BA?in?Political?Science?from?the? University?of?Massachusetts?in?Amherst,?and?his?JD? from?the?Catholic?University?of?America?in? Washington.?Juan?Carlos?speaks?Spanish?and?English.? Sydney?McNiff?Johnson?is?a?Principal?at?Dentons,? based?in?Washington,?D.C.?Sydney?has?over?thirty? years?of?energy?policy?experience,?starting?on?Capitol? Hill?with?Congressman?Pete?McCloskey?(R‐CA)?in? 1978?as?Energy?and?Environmental?Legislative? Assistant.?Sydney?works?in?the?Dentons?Energy? Practice?on?project?management?for?alternative? energy?and?traditional?energy?clients,?as?well?as? strategic?communications?strategies?to?increase? client?visibility?and?direct?public?opinion?within? government?and?commercial?sectors.?She?also? advises?clients?on?current?energy?policy?issues.? Sydney?consults?with?CEOs?and?senior?management? teams?to?make?long‐term?business?decisions?to?help? bring?products?to?a?larger?marketplace.?She?is?skilled? in?evaluating?the?government?relations?strategy?and? public?relations?efforts?of?a?company?to?ultimately? increase?shareholder?value.?Sydney?serves?on?the? Leadership?Council?of?ACORE,?the?Board?of?Directors? of?the?Women's?Council?on?Energy?and?Environment? (WCEE),?and?is?a?member?of?the?Chairman's?Council? of?Conservation?International.?Sydney?obtained?her? BA?in?Political?Economics?from?the?Colorado?College? and?speaks?English?and?French.

ABOUT?THE?AUTHORS?
Dentons?is?a?global?firm?driven?to?provide?a? competitive?edge?in?an?increasingly?complex?and? interconnected?world.?It?was?formed?in?March?2013? by?the?combination?of?international?law?firm?Salans? LLP,?Canadian?law?firm?Fraser?Milner?Casgrain?LLP? (FMC),?and?international?law?firm?SNR?Denton.? Dentons'?clients?benefit?from?approximately?2,600? lawyers?and?professionals?in?more?than?75?locations? spanning?50‐plus?countries?across?Africa,?Asia?Pacific,? Canada,?Central?Asia,?Europe,?the?Middle?East,? Russia?and?the?CIS,?the?UK,?and?the?U.S.?who?are? committed?to?challenge?the?status?quo?and?offer? creative,?dynamic?business?and?legal?solutions.? Juan?Carlos?Iturregui?is?a?Senior?Advisor?at?Dentons,? based?in?Washington,?D.C.?He?is?an?accomplished? attorney,?entrepreneur,?and?public?policy? professional?with?two?decades?of?Washington?and? international?experience.?He?has?practical?experience? and?years?of?working?with?diverse?clients,?colleagues,? and?interests?in?both?public?and?private?sectors.?Juan? Carlos?has?a?keen?understanding?of?the?interactions? and?interconnections?among?governments,? multilateral?entities,?stakeholders,?and?special? interests?in?the?formulation?and?execution?of?public? policy?and?projects,?with?particular?focus?on?the?

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American?Council?On?Renewable?Energy?(ACORE)??


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