Renovalia Reserve investment platform expands with the addition of two onshore wind power plants in Mexico
Tuesday, Apr 30, 2013
GREENWICH, Conn., MADRID, and LONDON, April 25, 2013 /PRNewswire/ -- The First Reserve Energy Infrastructure Fund (FREIF I) of First Reserve, the largest global private equity firm exclusively focused on energy, and Renovalia Energy, one of the largest renewable energy developers and Independent Power Producers, today announced the expansion of their Renovalia Reserve joint venture with the addition of two wind power plants in Southern Mexico. The investments diversify the Renovalia Reserve portfolio beyond Europe into North America and nearly double the power capacity of the wind farm assets worldwide. Financial details of the transaction were not disclosed.
"Adding wind power plants in Mexico to Renovalia Reserve's portfolio is a natural extension of the company's strategy," said John Barry, Managing Director of First Reserve and member of the Board of Directors of Renovalia Reserve. "Growth in electricity demand is expected to continue to trend upward based on the pace of population and industrial and manufacturing growth, and the legal and regulatory framework signals stability and predictability of renewable energy policies for the region. These conditions provide a fertile environment against which we can apply our growth equity capital and strong operational model to provide predictable EBITDA and cash flow over the long term, with the principal short term variability being wind resource."
The first 90 Megawatt (MW) farm in Mexico has been operational since June 2012. The second 137.5 MW farm is under construction and expected to be fully operational in early 2014. The 228 MW of the combined farms will be enough to power between 287,000 – 359,000 Mexican households annually (1).
The 90MW operation in Mexico has long-term financing already in place and similar financing is anticipated for the second wind farm. Revenues from the farms are from long-term, inflation-linked Power Purchase Agreements (PPAs) with strong counterparties – Grupo Bimbo and a world-leading retailer - andno reliance on government subsidies. The agreement periods cover a 15-18 year period with 5-10 year additional extensions at the option of the off-takers.
"Renovalia has been present in Mexico since 2007 through its affiliate Demex. The development of 228MWs of Mexican wind assets reflects the successful implementation of our international asset diversification strategy in countries with superior growth in GDP (Gross Domestic Product) and energy consumption, outstanding wind resource, and solid legal and political frameworks, such as Mexico. We are very impressed by the commitment shown by the Mexican Authorities in promoting the development of clean and competitive renewable energy," said Jaime Galobart CEO of Renovalia Energy and Director of Renovalia Reserve. "We are delighted to continue sharing our expansion plans with such a solid partner as First Reserve."
SOURCE First Reserve