Renewable energy is booming across Latin America and the sector is demanding project finance like never before. Thomas Muskett-Ford reports from Latin Lawyer′s 2nd Annual Regional Project Finance Summit on the factors driving the uptake of non-conventional power sources and explores some of the more unusual hybrid financing proposals designed to bring wind and solar projects online

If a renewable energy revolution is currently sweeping Latin America, then Brazil, Chile and Uruguay are rapidly emerging as its flag bearers. Recent years have seen all three countries embark on a long march towards diversifying their energy mix and expanding the share that comes from renewable sources. In the past year alone, a flurry of wind energy projects coming online has seen both Brazil and Uruguay double their installed capacity - albeit, in Uruguay′s case, from a far lower base -and Chile quadruple its installed wind capacity over the same period. On the solar front, Chile has made the greatest incursion, driving a 100-fold increase in capacity from 4 megawatts to 400 megawatts (the highest in Latin America), while in November, Brazil launched tenders for a gigawatt of solar projects, the first of which are set to come online in 2017. Should current trends continue, all three countries will have added more than enough renewable energy to power every household in their capital cities by the end of 2015.

For all three countries, necessity has proved the motivating factor behind the adoption and promotion of an aggressive renewables policy. In Chile, annual growth rates of five per cent over the past decade - coupled with demand from the country’s vast, energy-intensive mining industry - has strained its energy infrastructure and increased electricity prices 193 per cent; over 80 per cent higher than the average global increase over the same period. In Uruguay, limited oil and gas reserves and no proven uranium deposits, has led the government to draft 25-year, cross-party energy plan to diversify the country′s energy matrix, reduce costs and decrease its reliance on imported fossil fuels. In Brazil, a drought that began over a year ago - the worst since records began - continues to cause rolling blackouts across the state of São Paulo, bringing into sharp relief the risk of relying on hydropower for 75 per cent of its electricity needs. "Even if we can get away with the risk of power shortages in 2015, we will certainly need much more investment ahead to avoid the same risk in the near future," says Machado, Meyer, Sendacz e Opice Advogados partner José Virgílio Lopes Enei.


- Latin Lawyer