Mexico-based Zuma Energia, a renewable energy company backed by emerging market specialist Actis, has secured $600 million to reach financial close on what will be one of Latin America’s largest wind projects.
A consortium of local and European banks agreed to finance the 424MW Reynosa Wind Farm, including Bancomext, Banobras, Nafin, Santander and EKF.
Expected to be Mexico’s largest wind farm, Reynosa will generate enough energy to power one million homes when operations begin by the end of next year, Actis said. The project is part of Zuma Energia’s 800MW renewables portfolio.
Actis launched Zuma Energia in 2014 through its $1.15 billion Actis Energy 3 fund. The firm holds an 80 percent interest, while Latin America-focused manager Mesoamerica Investments has a 20 percent stake. London-based Actis has a strategy to develop and scale power generation and high-growth electricity distribution businesses. It now has nine active renewables and power platforms in Latin America, Africa and India.
Reynosa is the first financial close among projects awarded power-purchase agreements in Mexico’s 2016 long-term electricity auction. The auction model Mexico used to procure private investments in its power sector created competition that has lowered the cost to develop projects, Actis said.
Contracts awarded at Mexico’s last auction in September cost an average of $33.47MWh, below the $41.80MWh rate awarded at an earlier auction and the national maximum price of $60MWh.
Mexico’s renewables sector will attract up to $70 billion of foreign investments between 2015 and 2029, Actis said, citing research from financial services group PwC.
“We are currently witnessing the transformation of the country’s energy sector, where renewables are increasingly competitive and a real solution to reach sustainability,” Zuma Energia chief executive Adrián Katzew said.
Michael Harrington, head of Actis’s Mexico division, added: “Mexico has compelling fundamentals for investing in power generation, including superior natural resources, an evolving and supportive regulatory framework and a deep project finance capacity.”
In March, the private equity firm closed Actis Energy 4 at $2.75 billion. Since closing, Actis has pledged around 60 percent of its capital to projects in Africa and Latin America. It has also launched two renewable energy platforms in Latin America: a vehicle operating 578MW of solar projects and 1GW of early-stage developments; and a Brazil-focused wind platform seeded with two projects generating a combined 346MW.