Latin America Clean Energy Deals Surge Amid Rising Power Demand

  • Deals in the region were worth $7.6 billion in 2015, PwC says
  • Multinationals `taking stronger positions in Latin America'

Clean-energy acquisitions in Latin America almost tripled last year, the highest growth rate in the world, driven by favorable national policies and growing demand for electricity, according to PwC.

The value of of renewable energy deals in the region reached $7.6 billion, up from $2.7 billion in 2014, the accounting and consulting company said in its annual Power & Renewables Deals report Thursday. All mergers and acquisitions in Latin America climbed 56 percent to $12.4 billion, trailing only Asia Pacific.

That growth reflects climbing demand for energy, and especially energy from clean sources, as countries seek to curb carbon emissions while providing enough power to expand their economies.

“There is increasing interest in the region,” Arthur Ramos, a partner at PwC’s strategic consulting unit Strategy&, said in an interview. “Multinationals are taking stronger positions in Latin America, where there is a perspective of lack of power supply in the long term. And many countries are offering low risk models of energy contracts for investors.”

The biggest deals in the region last year were the $3.7 billion purchase by
China Three Gorges Corp. of the Jupia and Ilha Solteira hydropower plants in Brazil, and Sempra Energy’s acquisition for $1.5 billion of the remaining stake in its Mexican joint venture Gasoductos de Chihuahua.

Buyers are attracted to Latin America by steady returns from renewable-energy assets, according to the report. “We expect this momentum to continue in 2016, despite the current challenging economic and political environment in many countries,” Ramos said.

Brazil, the region’s biggest economy, is mired in a deep recession, with analysts expecting gross domestic product to shrink 3.21 percent in 2016, while policy makers struggle to get inflation back under control. Even so, the weak currency is spurring more interest from international buyers, and economic problems and corruption scandals may prompt owners to consider selling assets, Ramos said.

The value of energy deals in the Asia Pacific region more than doubled to $66.6 billion last year from, driven mainly by Chinese buyers, according to the report.

Globally, energy deals decline 16 percent to $199 billion in 2015. Renewables deals almost doubled to $55.3 billion from $28.3 billion in 2014.