Energy storage and solar: The perfect combo for Atlas Renewable Energy in Chile

US-headquartered renewables generator Atlas Renewable Energy recently made headlines after securing a US$3bn refinancing for its portfolio in Latin America. The transaction constitutes the largest of its kind for non-conventional renewables in the region to date.

To find out more about the company’s strategy in key market Chile, power purchase agreements (PPAs) and other topics, BNamericas spoke with newly appointed Atlas CFO Esteban Uauy.

Atlas, which has an asset base of almost 11GW, has more than 1.3GW of solar PV and storage capacity under construction in Chile, which will double its installed base of around 640MW. Mexico and Brazil are also target growth markets.

This is the first part of a two-part interview with Uauy.

(The original version of this content was written in English)

BNamericas: Atlas plans to invest around US$2bn in Latin America in the next three to four years, with a focus in the short term on Chile and Mexico. Could you give us a brief overview of your plans for Chile?

Uauy: Chile is one of our core markets, and it’s one that presents, I would say, a very compelling growth story. We’ve been very successful and we’ve been proving very competitive when it comes to our deployment of capital and our investments in the country.

We’ve participated in a number of public tenders, or open tenders, if you will, for power, and we’ve come out on top.

[Our objective is] very organic growth. We understand the market very well. We have very good visibility on where power is needed, what players are looking for these days, and I think we have a good offering to serve our clients.

We build relationships with our clients. These are the big mining companies, big industrials. In general, we feel like that’s the way to go, to serve a client and ultimately try even to look to serve a client in more than one jurisdiction.

BNamericas: What size of project do you prefer?

Uauy: In Chile, size matters. Anything north 200MW. That’s the sweet spot. 

If we look at something smaller, that would be on a more opportunistic kind of targeted, designated opportunity.

BNamericas: Your focus is solar and batteries. What about wind?

Uauy: Ultimately, it depends on the market. For Chile, it makes sense to do PV and batteries. So, PV and batteries is a great combination for the country. It helps us alleviate some of the curtailment issues that we’ve seen on the grid.

Wind has proven, I would say, not to be a very compelling story in Chile.  

The resources, in terms of the good spots, are taken. They’ve been developed already. So, now you’re looking at basically a breakthrough with the technology to be able to work with lower wind speeds. And that typically comes with a price. 

And then interconnections are tricky because the wind resource is not always very close to the transmission line. So, you’re having to build kilometers of transmission line, which renders the project not very competitive. So, PV and BESS is, I would say, our preferred technology these days.

This is ultimately driven by demand. I think that is a key concept to keep in mind. It’s going back to the clients.

We want to serve the clients where they are, and we want to meet their demands. The technology in Chile that provides the best product for our clients’ demand is solar and BESS.

BNamericas: This could be tricky to answer concisely, but what’s your financing strategy in Chile?

Uauy: The way we go about financing is to create through project finance, enable your growth. That’s the way to go in terms of a capital-intensive industry like ours. 

And then once you’ve reached a certain critical mass and a certain operational complexity of managing all of these different bits and pieces, you want to ultimately seize the value of a portfolio. You want to simplify your capital structure.

You want to have a simpler capital stack that is ultimately easier to manage. So, we, as a company, were coming to a point where we had to manage thousands of covenants, dozens of different loans with different counterparties, with different types of lenders. We had multilaterals, we had government agencies, we had local banks, we had international banks.

All of that comes with each of their policies and each of their requirements in terms of reporting and covenants and what you generally have to comply with. And when you sum all of that up, it basically became too cumbersome and too operationally complex to manage. So, we bundled everything together and we simplified it.

BNamericas: You’ll maintain that strategy?

Uauy: We will continue to use project financing. That’s the way to build, that’s the way to grow. And once the critical mass is there, maybe we do another one of these, we refinance. 

(The original version of this content was written in English)

BNamericas will publish part two of the interview in the coming days.