Independent Advice Key to BankabilityWed, 02/22/2017 - 17:19
Every energy project is expected to meet goals and requirements but there is one aspect that all, no matter the technology, must have: bankability. Developers, investors and energy companies need to pay attention to detail to ensure projects are worth the time and money they are investing. Considering the significant resources needed for energy infrastructure projects, expert advisers can be a difference-maker.
“Independent engineering services are crucial to the initial development of a project,” says Patricia Tatto, Country Manager of ATA Renewables, a Spanish leader in technical due diligence for M&A and non-recourse project finance.
Tatto sees Mexico, together with the Middle East and North African regions, as one of the fastest growing markets for companies like ATA Renewables, which started 12 years ago, helping energy project developers in Spain gain bankability. “In Mexico we do development, construction and operation. We have participated successfully in the auction processes as an independent expert — perito independiente — and adviser for companies that have won and will build solar and wind projects,” she says. “We estimated plant production and predicted how many megawatt-hours a certain project can provide. This estimation was then used in the bidding offer. As technical adviser, we also help with the entire process, which includes filling out documentation that needs to be presented to CENACE.”
ATA Renewables is a lean, independent renewable energy group with more than 17GW of expertise in projects worldwide. It provides engineering, advisory and certification services for renewable energy, especially solar and wind.
The company believes there is much more to come in Mexico. “We believe that Mexico is capable of building many plants and will be the connection to Central America,” Tatto says. “We mostly serve as advisers for banks, developers and sponsors. We have been working with Santander as technical advisers for nearly three years.
Banks tend to hire us because they need our expertise as engineers either during the process of buying an asset or in regards to a project they already own. We help them to reduce risks in their investments,” Tatto adds.
ATA Renewables also has wide experience doing duediligence for mergers and acquisitions, but Tatto says these kinds of deals have been slow to materialize as a result of the changing market environment. “Banks are not comfortable doing these sorts of transactions because the regulation is taking a while to resolve and it is not clear how the market will pan out. They are taking slow steps toward financing. Some of them are waiting for good projects to hit the market before becoming involved in these deals. “
Banks are also changing their yardsticks in line with the new landscape, which is also causing uncertainty. “We have noticed bank criteria changing and at this stage we are uncertain how this is going to unfold,” says Tatto. “I can say that without a PPA structure, it will be difficult to receive any financing. It is a good window of opportunity to create new models. Companies just need to be creative.”
There is also a greater number of vertically-integrated companies entering Mexico, such as EPCs that bring their own funds to support their company and their projects. This is an emerging strategy in the market because EPCs are seeing new opportunities and are trying to support their own business, Tatto says.
ATA Renewables remains optimistic about the future of the Mexican energy sector and the role the company will play in this new market. “We were very surprised and satisfied with the results of the auctions,” says Tatto. “As a main player in the renewable energy industry, ATA Renewables is certain that Mexico has many opportunities for business diversification. We now have 11 projects to support and eventually our business will be on the rise thanks to new industrial applications. We also look forward to advising governments or governmental institutions such as CFE.”