Financial Diary – Santiago
It was on June 14 of last year when the president of the European Commission, Ursula von der Leyen, met with President Boric, in La Moneda, within the framework of a tour through Latin America. Along with signing two agreements on green hydrogen, her visit addressed the financial situation of some renewable energy companies that at that time were concentrating the attention of the local energy sector, where the German leader asked the President for an “even playing field” and measures to alleviate your situation.
And although its arrival somewhat calmed the waters that at that time were agitated by what some called the renewable energy crisis, for the first time after said meeting of the president of the European Commission, senior executives of the German bank KfW Ipex and its counterparts from Spain, Caixa and Cofides, They will visit Chile this week to meet with government authorities and parliamentarians. On the part of the companies, the German company wpd will be present, led by its CFO, Björn Nullmeyer, and the Project Finance Director Ralf Ketteler.
The agenda of this visit would be marked by discussions of European investments in the national energy sector. Sources comment that the local situation would be closely watched by the banks, since losses from ongoing investments could call into question the financing of new clean energy projects.
After landing this Tuesday, the meeting agenda begins on Wednesday. The first days they will visit wind farms of the local subsidiary of the German company wpd in Chile, which has a portfolio of projects in development for more than 1,000 MW by 2026 for US$1.5 billion, including wind initiatives, solar and storage, and will have meetings that include appointments with the German ambassador to Chile, Irmgard Maria Fellner, representatives of important industry players, international think tanks and law firms.
But the key appointments will occur at the close of the visit: this Thursday the European banks and the German company will meet with the head of public finances, Mario Marcel, and on Friday they will do so with the Minister of Energy, Diego Pardow.
The CFO of the wpd group explains to DF that the firm has been working for more than a year on proposals that contribute to the discussion and encourage the generation of the necessary support to correct market distortions, Therefore, with that objective they have promoted this agenda of meetings and they hope that in the future more companies will join in contributing to the effort to achieve this common objective.
As he explains, this visit “is an opportunity to review the country's progress in maintaining the necessary guarantees that encourage investment in these crucial areas.” “We are optimistic about the future of renewable energies in Chile and we believe that this meeting will be essential to align efforts and raise awareness among all actors of the delicate situation that international banking is facing to continue financing long-term initiatives in Chile and continue supporting the energy transition,” he says.
Regarding whether the situation of renewable firms and access to bank financing has worsened in the last year, recognizes that “the situation of companies and access to financing continues to be a very complex scenario.” From a structural point of view, he says, that 20% of the energy generated cannot be injected into the grid and that 50% of what can be injected is valued at $0 “is absurd.”
Transition project
In addition, he says that they view other market signals with concern, such as the increase in the price of energy in the auction a few weeks ago.
The executive emphasizes that it is urgent to review these conditions to guarantee a fairer and more sustainable market. For this reason, they view with optimism the working groups convened by the Ministry of Energy to propose measures to improve the coordination and operation of the system and to review the Pmgd market.
The attack by renewable firms dates back to February 2023 when they proposed to Pardow changes to the pricing of renewable energy to avoid underinvestment and insolvencies. They then escalated this to a diplomatic level and seized on von der Leyen's quote. Almost a month after the visit, seven firms – including wpd – raised their difficulties in the Senate, coinciding with the entry of the energy transition project, articulated that would seek to give a break to the problem.
It turned out that the delay in processing the latter could be one of the points to be discussed in the meetings. In this case, sources comment that the Government would explain the work involved in the electricity rate stabilization project and that this delayed the progress of the transition text. The debate for stabilization is now closed, In the Government there would be confidence that the energy transition articles can be dispatched from Congress in the middle of the year.
