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Mexican energy copes with funding spikes and land issues
18 July 2012
Recent elections and the Eurozone crisis are unlikely to curb sponsor and lender enthusiasm for Mexican energy and infrastructure assets. By Brian Eckhouse
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Mexico plans to increase its generation fleet by over 50% over the next 13 years, a plan that will require the thousands of MW of new gas-fired generation. Mexican power projects have established a strong record – both as independent power projects and public works financings – so this slate presents some tempting investment opportunities. Gas pipeline projects may lure some of the biggest international players – and also potentially international financial sponsors. The wind and solar sectors, while comparatively immature, promise significant gains in the next decade.
But the obstacles to closing big-ticket financings in the Mexican market are significant. Some of the country’s most robust wind resources are well off Mexico’s grid. Mexican pension funds, or afores, are still building up experience in infrastructure. Sponsors face varied risks, including acquiring rights-of-way and managing the impact of currency fluctuations.
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