Why did LS Energia choose to establish its headquarters in Panama?
Out of all the countries we could have picked, Panama had the best environment. It has high-quality infrastructure, its airport is a hub, and there are a number of fiscal benefits. We view Panama the same way people see Dubai in the Middle East: it is a country that has security, a solid legal framework, and there are many factors that allow you to work efficiently. Here you can really focus on your core business.
How do you assess Panama's efforts in moving toward renewables?
We have dedicated the greatest amount of time and effort into natural gas and liquid fuels; however, we make major efforts with regards to solar energy—much more than wind or hydro—as we see a lot of potential here. One of the challenges, especially in Africa or even Latin America, is bringing power to remote villages. If you string in cables from the power grid it will involve great cost and will not be effective. If you put a power plant there, you have to supply the fuel, which is worse. Solar energy, on the other hand, if available, is free; you just build the panels and power the town. That is where we see the best solution and best replacement for fossil fuels, which, of course, also helps the environment and powers the village. But once you deliver electricity to a town, it has to be delivered consistently and with quality. This is a huge challenge, especially when we talk about a remote area. There are technologies for energy storage, which provide some level of solution.
Where are your R&D efforts focused and what innovations are you working on?
We plan our next moves on the renewable side, namely building hybrid plants. There are towns that, for example, require power for more than 5,000 people where it is not feasible to have batteries that last that long. Therefore, we work on hybrid plants where you have a conventional power source, such as a generator, but you only run the generator when your primary source of electricity, whether it is solar or wind, is unavailable and your batteries are empty. This allows you to provide more reliable power.
What are your plans for expansion in Panama?
We are looking at South America, Central America, and the Caribbean, which are three separate areas for us. South America is relatively well developed as far as power generation goes but this is not the case for the Caribbean, which mostly works with unclean fuels, such as diesel. This source of power is expensive and the resulting pollution is a deterrent to the tourism industry on which these islands depend. Those countries present considerable challenges but are also exciting places to work in. We are trying to develop that market from our base in Panama. There is a similar situation in Central America, the difference being that Central America has hydro energy, which is a great source of power, but the region also relies on imported fossil fuels when its reservoirs are low or empty. Again, the hybrid concept may be the ultimate answer: combining technologies.
What are your expectations for 2016?
I predict the price of oil in 2016 will stay low, which has an impact on our business and not necessarily a positive one. Countries with fewer investment capabilities do not invest in technology, as they expect their returns will be lower. This year will not be a bad year altogether; we will see cheaper energy and countries that depend on imports of energy will experience growth, whereas those dependent on energy exports will go down. Europe and Asia will grow and other countries will slow down a little. It will definitely be an interesting year.