RENEWABLES

Panama 2017 | GREEN ECONOMY | B2B

Despite being a transport hub surrounded by carbon-rich economies, Panamanian firms are beginning to embrace renewables in a way that is good for business and the environment alike.

Jorge Vialette
JORGE VIALETTE
Director for Central America and the Caribbean
Faro Energy
Hector Aguilar
HECTOR AGUILAR
CEO Americas
OPEN Opportunities in Envirotech

How are you positioned to enable new businesses to capitalize on renewable energy?

Jorge Vialette We are an investment fund out of London and are focused for the time being on Latin America. We invest in distributed energy, which is quite different from utility scale. This means that we own and operate renewable energy-generating plants that provide cheaper energy to the end customer. Faro signs a contract with a commercial or industrial client and will build a plant (usually but not necessarily) on their site, always at our own cost. Our value proposition is that businesses can become more profitable by gaining access to lower energy costs from day one. Also, customers hedge against rising energy prices, while investing more predictable profits to expand their business and create jobs. Additionally, by consuming solar-generated energy, the customer is doing its part to protect the environment. As of today we have a presence in three regions: Brazil, which is its own region due to its size; the Andes, which looks at investments in South America focusing on Colombia and Peru; and Central America and the Caribbean. In this region, we began concentrating on Honduras and the Dominican Republic, as they are attractive markets with high electricity prices and also have important transmission losses. We recently started looking at opportunities in Panama and Nicaragua, and while we are looking at opportunities in other countries, these are the ones where we have been more aggressive.

Hector Aguilar The region offers attractive potential business for every industry, which is a result of the growth of the middle class. That economic development has created a greater middle class that demands more products from different segments such as healthcare, transportation, and energy. Education is growing but is still developing, and these are the things that attract people. It is truly a combination of different things that make Panama the place to be and the place to have the regional OPEN office for Latin America. We are connected to almost every place in the world. Despite the problems that Panama has faced, it continues to grow, and growth is here to stay, despite challenges. The energy market in Panama is still a large challenge for the country because the cost of energy is high. People are still surprised by how much they pay. If the country truly wants to be one of the top hubs for new businesses, it has to be more efficient in the energy sector. As long as we can be more competitive, then we will have more business and attract more opportunities. On the other hand, green technologies are also great because if a country wants to be one of the best, what it does with the environment is also important; we cannot just be efficient without being green. That opened the sector, and is why solar and wind power production are growing so rapidly. Investors here in Panama are still the typical Latin American investor who wants to invest only in something that works. If they invest in a building, they get a good return that is safe and fast. Why would they invest in a new technology that they do not know about but that may give them a much greater return? Building a restaurant or commercial space used to be easy; however, now that market is shrinking, we must look at new alternatives to invest in.

What are your consolidation and expansion plans over the short term for this region?

JV The strategy is to retain balance. Our balance through geographic diversification is part of what makes us very attractive. For example, we invest in markets with large populations with immense room for growth while also investing in smaller investment-grade countries. Several countries in Central America, for example, enjoy a fully dollarized economy, which is very attractive for our investors. Our investors also enjoy wide project diversification, as we have developed the knowledge to invest efficiently in small- and mid-sized projects starting at 100kWp.

HA We have three areas in the company: fundraising, project management, which is all about assets and product identification, and business development. We do not want to “just invest the money;" we want to be part of the management team that develops and grows something. If we invest in a solar panel company in Europe or sign deal for products and distribution in Brazil, we want to be part of the board of directors. That is our strategy to secure the right control and maximize returns; we want to ensure that the money is being put to good use. We focus a great deal on fundraising currently. We will then focus on asset management and business development as we can start selecting those projects and businesses to invest in to create capital appreciation and generate income for our stakeholders.