How Important Is U.S. Financing for Latin Projects?

The Overseas Private Investment Corporation provided financing for InterEnergy Holdings to build the Dominican Republic’s first wind turbine farm, located in southwestern province of Pedernales. // File Photo: OPIC.

The U.S. government-run Overseas Private Investment Corporation doubled its investment in solar power projects abroad last year, lending more than $600 million to solar, wind or other clean energy ventures, including projects in Honduras and El Salvador, among other countries. How significant has U.S. funding been for renewables in Latin America and the Caribbean? How likely is it that Latin America will continue to see investment in renewables projects under the Trump administration? What is the outlook for renewables projects in Central America and the Caribbean, where advocates have said lack of scale requires foreign assistance in order to further expand their renewable sources of energy?

Dino Barajas, partner at Akin Gump Strauss Hauer & Feld: “The support of OPIC, multilateral banks and development banks is essential for the further development of renewable energy, particularly solar, across Latin America. Currently, countries such as Mexico and Argentina are pushing the solar power sector to rely less on long-term government-sponsored power purchase agreements (PPAs). Instead, policymakers are opting to provide shorter-term PPAs to market participants in hopes that developers and private-sector lenders become comfortable with the large-term merchant structure of the relevant jurisdiction. The problem with this policy decision is that although these markets continue to evolve away from government-driven markets, they still remain vulnerable to government intervention or manipulation. Given the long-term unpredictability of certain markets, some private-sector commercial lenders remain…”

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