AES reinforces renewable energy commitment in LatAm

AES Corporation has focused on optimizing a strategy that prioritizes renewables investments, batteries and direct engagement with large private consumers in its operations in Brazil, Colombia and Chile.

Julián Nebreda, AES Corporation's South America president, told BNamericas this strategy is in line with global corporate objectives, which aim to reduce the carbon footprint by 70% by 2030.

Currently, the company is moving forward in Chile with two wind projects in Biobío region (Los Olmos and Mesamávida) and continues with its large Andes Solar photovoltaic project, which is expanding by 80MW. It also bought the Los Cururos wind farm in Coquimbo region, which stands out for its proximity to key demand centers. Nebreda also ensures observers that the company is ready for new projects.

Regarding the flagship project of its Chilean subsidiary AES Gener, the Alto Maipo hydroelectric plant, which has suffered extensive delays and budget overruns, Nebreda highlights the 82% progress and reaffirms commissioning by 2020. Once the US$3bn plant starts operating, 531MW of capacity can directly go to the country's nearby main demand center, Santiago. Located as close as possible to demand, such projects will become more common, the executive predicts.

BNamericas: What's your take on the electricity markets in Argentina, Chile, Colombia and Brazil?

Nebreda: The electric world is in a process of transformation. It is a technological change brought by force, but also brings great opportunity for our companies, because there is a great need among our clients to adapt. Our clients are asking us for solutions that fit the new technological offerings. That is a bit what we are focused on.

We are focused on a renewable offer that today is very competitive in Chile, Argentina, Colombia and Brazil. This allows us to offer a better price and better conditions, and helps our clients achieve their sustainability goals. Many of our clients have their own sustainability goals. That is a very important element.

The second element we are working on relates to batteries. We also see a great opportunity for batteries in Latin America, because most of our countries have renewable resources in one place and demand in another. To take renewable energy to the consumption centers large investments in transmission are required. That's where the great opportunity for batteries is, to help make those investments in transmission much more efficient.

Many of our customers would like renewable energy 24/7. To have such solutions, batteries are required. We have done it in Hawaii and we are doing it in several markets.

BNamericas: AES Gener has large coal generation capacity. What is the company's position regarding the agreement for the closure of coal plants in Chile by 2040?

Nebreda: The portfolio of assets we have is a product of our success. At one point, Argentina cut off gas to Chile amid the international commodities boom. At the beginning of that boom, and with the great investment expectations in the country, everyone in the electricity industry set themselves the challenge of addressing that problem. We became the ones that addressed the problem most efficiently and ended up having the coal-fired plant infrastructure.

My central point regarding coal is this: we are a company that serves the needs of our customers. These coal plants should not be in the system for one day longer than need be. If one day they are no longer needed, let's close them. That is our basic vision.

There are people who believe that it is we [who support the operation of these plants], but it is a systemic problem. Between the system, the regulator, the investments in transmission, the adoption of new technologies and the investments in renewables that we also want to do, I believe that we can accelerate this, fulfilling what the Chilean community wants.

That is the real objective: to make those plants unnecessary for the system. The way to achieve this is by investing. With that scheme, we can do this with the speed the government defines.

BNamericas: Where do you see the greatest growth opportunities in Colombia? Are you interested in the renewable tender that takes place in that country?

Nebreda: In that country we are working with the oil sector, where we see a great opportunity to help them reduce their energy costs and make them more sustainable. [We are working] with Ecopetrol on the first 20MW distributed solar generation project in Colombia. This is the first step with Ecopetrol, but we want to continue.

At the beginning of this year we bought wind projects in La Guajira. They are very interesting, as La Guajira has one of the best wind resources in America. We are very interested in the tender, we see an opportunity and we believe that it is a very good mechanism to accelerate the process of taking advantage of these resources in Colombia. We are actively working on these two lines.

Colombia is probably one of the countries with the best opportunities in terms of renewable growth. It has a lot of resources, but many are not being used. It has always been a hydro country, just like Brazil. But today renewable energy helps hydrology a lot, because they have a negative correlation: when it is raining there is no wind or sun; when it's not raining, there is wind and sun. This contributes to the stability of the system, helps lower costs and increases efficiency.

BNamericas: Where do you see the greatest opportunities in Brazil? What challenges does this market present?

Nebreda: Brazil is a country that has historically had relatively cheaper energy prices than the rest, so it is always a challenge, you must always be looking for the best sites [for projects], the best capabilities. It is a country that has its own technology industry, which helps a lot. It has a sourcing system. The entire value chain of wind and solar solutions is local, which generates another dynamic.

We have worked in Brazil basically focused on the market of industrial and commercial clients. We continue to make progress in this client sector with the same concept: we believe that there is a lot of value in approaching the client and trying to provide our own solution to help them achieve their goals. For many of our clients, solving the electricity issue is a central component of their value proposition. We are part of that dynamic.

BNamericas: How do you assess the current situation in Argentina? What position is AES taking in the face of political and financial instability?

Nebreda: We have been in Argentina for 26 years, since 1993. We have seen several governments. At this time, in the midst of the election campaign, it is very difficult to assess what will happen if one or the other wins. It is typical of election campaigns.

We are waiting for the elections and we hope that whoever wins will come with a regulatory exchange structure that seeks stability, since the only way to reduce the cost of electricity in a country is to invest. Today, it is more evident than ever. It is necessary to incorporate new technologies to the market, for example, renewable energy, batteries, transmission. We are aligned with the concept that we must work to reduce the cost of energy in Argentina. The solution is to invest more, but for this, it is necessary to have a stable regulatory climate. We are all waiting to see what will happen in the elections at the end of the month.

Sometimes the noise and reality are [jarring]. Argentina has gigantic renewable potential. You have to capture it, take advantage of it. The country has [unconventional formation] Vaca Muerta, with great thermal potential. You have to be able to capture it. I have no doubt that these investments will become lower energy costs for people. We are not in the job of telling anyone what to do, above not all any government, but it is very important for us as investors. As people who have believed in Argentina for 30 years and who want to do things there for another 30, 40 or 50 years, we want to have regulatory stability to be able to make investments and move on.