Paving the Way for Latin America's Renewables BoomBy Cas Biekmann | Wed, 09/15/2021 - 09:55
Q: Why did Cox Energy decide to venture into Latin America and why is Mexico the company’s ideal starting point?
A: Cox Energy was founded in Spain in 2014 to address the needs of the renewable energy boom that was taking place in Europe. Today, in Latin America, we are seeing the same phenomenon that occurred four or five years ago in Europe. The industry is on the right track. There are governments, like Chile's, that are much more advanced than Mexico's in terms of policies and regulatory processes related to renewable industry.
Given the boom in the industry in 2017 and 2018, many companies went public in Europe, especially in Spain. We went through that process with Cox Energy America in Mexico and last year, despite the pandemic, we were the only equity IPO on the BIVA stock exchange. We listed 15 percent of the company, which was a breakthrough for us and sets the stage for exponential growth. For us, going public, in addition to opening new capital financing alternatives, has been vital to accelerate our entire institutionalization process. The IPO was a wise decision for Cox Energy America.
We are paving the way for what we believe is going to be a great future. We know that there is no turning back and that renewable energies are here to stay. In addition to initiating the transition to renewable energy and improving environmental conditions in Latin America, this change will be necessary because the current energy network will not be able to meet the demand expected in the coming years. Today, 50 percent of all renewable energy generation worldwide is photovoltaic solar, which is the main reason why we decided to specialize in this field.
Q: What sets the company’s community development and environmental protection strategy apart?
A: As a renewable energy company, we have met the main requirements in environmental, social and corporate governance matters. Our approach is to create an ESG philosophy and strategy through our Mexico 2021-2025 plan.
At Cox Energy, we have three clear commitments that we want to start fulfilling. The first is our commitment to the environment. Through the pursuit of new technologies, we seek to reduce the environmental impact of our solar power plants. Although we are a green company per se, we seek new ways to contribute to improving the environment. Our second commitment is the social approach. We seek innovative solutions that allow us to improve the quality of life in the communities where we operate. When you have a photovoltaic solar park, you generate a positive social impact by creating jobs; we go beyond that. Therefore, it is important that we define internal policies and regulations to consciously increase our impact.
Corporate governance is our third objective. If you have good corporate governance, in addition to ensuring long-term sustainability, good corporate governance helps to generate and maintain a disciplined approach to environmental and social issues. Two years ago, it was very rare to receive questions about ESG issues in meetings with investors. Today, in every meeting we have with national or international investors, 25 to 30 percent of the meeting time is focused on ESG issues.
Q: How has Cox Energy worked to grow its Mexican portfolio in light of the regulatory challenges in the country?
A: The market is full of opportunities. The renewable energy industry is much more difficult to understand than others but once you understand it, you can market your services better. Today, we have a portfolio with over 40 projects in different stages of management. Our projects are quite diversified among the main economies in the region that we consider key for the development of renewable energies. These include Mexico, Chile, Colombia, Central America and the Caribbean, the Dominican Republic and Panama.
A significant percentage of our portfolio is focused on Chile, where we have a project in partnership with Sonnedix from JPMorgan Chase called Meseta de los Andes. It is a park that aims to generate 160MW but our strategic plan estimates that by 2025 we will have around 3,000MW in operation. Construction will begin at the end of the year.
We expect the industry to skyrocket in Mexico by 2024. Sooner or later, it has to happen. It is no longer just a matter of complying with international agreements to reduce emissions. The country will soon have a fossil energy deficit as demand grows at more than 5 percent per year. More than 20 percent of our portfolio today is in advanced stages of management and we expect some of these projects to become operational in early 2022.
Q: How is the company signing PPAs in a flexible manner as a basic guarantee for project development?
A: In Latin America, there is an opportunity to get into the spot market. The partnership we have with Nexus Energía opens up a great opportunity for our business model. We have two major lines of business: generation and other core areas that include operation, maintenance, asset management, distributed generation and transmission line operation. The latter poses a great opportunity in the region. There is an infrastructure deficit in the region and this is a line of business that we have been exploring as it generates stable profitability.
Taking into account our management and growth plan, our goal is to develop parks ourselves and to buy parks or projects that are poorly managed. There are many family offices or pension funds in the region that acquired these projects but have neither the know-how nor the capacity to operate them, creating a profitable opportunity for our business model.
Q: What are the company’s goals for 2021?
A: This year, we will focus on starting operations at the Chilean project. In Mexico, we are looking to develop solar parks near areas that have high energy demand, such as industrial parks. The goal is to have our first park in operation by mid-2022. It makes no sense to put a solar PV park in Sonora and then try to distribute from there to the Bajio region.
Cox Energy America is a renewable energy company, focusing on developing and operating photovoltaic solar projects. It is the only solar company listed on the Mexican Institutional Stock Exchange (BIVA) and other stock markets in Latin America.