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Chinese Energy Player Acquires Mexico's Zuma Energía

By Cas Biekmann | Mon, 11/23/2020 - 17:17

The Chinese energy giant State Power Investment Corporation (SPIC) has acquired Mexico’s Zuma Energía, the largest private renewable energy producer in the country, to gain a stronger foothold in Latin America, reported Bloomberg News.

SPIC possesses over US$170 billion in assets in 41 countries, including renewable power assets in Chile and Brazil. It represents an energy generating capacity of 165GW, of which 53.3 percent is based on clean energy sources, reported La Jornada. The deal with Zuma Energía helps SPIC meet its 2020 goal of having 8GW of power generation capacity abroad. As of March, it had 5.21GW installed outside of China, with further projects under construction representing 1.47GW.

With Zuma Energía’s portfolio, which consists of over 800MW of wind and solar in four Mexican states, the investment corporation will gain a significant foothold in Mexico. Other private companies have decided to remain cautious with their investment in the country, as a direct response to President López Obrador ramping up measures against the private sector to protect state-owned PEMEX and CFE. Regardless, SPIC is unabated when it comes to Mexico’s prospects. According to Chairman Qian Zhimin, the purchase signifies “confidenkatce in the Mexican economy,” adding that Zuma “will radiate operational and investment support to nearby countries.” SPIC could use Zuma as a platform to expand into Latin America while committing to Mexico for the long run, confirms CEO of Zuma Energía, Adrián Katzew, in a statement. “We have built a robust platform to pursue multiple growth avenues regionally. The backing of SPIC will allow us to build on our mission of making a substantial contribution to a global clean energy system,” said Katzew.

One landmark project Zuma Energía developed in Mexico is the Reynosa wind farm, featuring 424MW of capacity coming from 123 Vestas wind turbines - each 120m high. This makes it the largest wind project in Mexico and one of the largest in Latin America to boot, which requires extensive financing. “Reynosa is the first auction project to finalize its financing phase. Our team raised more than US$600 million, which was the largest amount of money directed to the electricity sector in Latin America in 2018. The project comes with an element of merchant risk for its 15 years of operation and the contractual scheme had to provide an adequate solution to deliver an annual energy package. Reynosa set the precedent for future projects in northern Mexico, Katzew told Mexico Energy Review in 2019.

This purchase reflects a wider trend of Chinese investment in Latin American renewables, which is unsurprising considering the key role China plays in renewable energy development, said Juan Manuel Ávila, CEO of TOP Energy. “The sector and the industry have been growing in the past years, mostly motivated by Chinese investment,” he told MBN.

The data used in this article was sourced from:  
Bloomberg News, La Jornada, Zuma Energía, MER
Cas Biekmann Cas Biekmann Journalist and Industry Analyst