Industry Trend Analysis - Auctions Highlight Big Renewables Companies' Competitive Advantage - JAN 2018

BMI View: The results of the latest power auctions in Mexico and Chile align with our view that large global developers will dominate the competitive landscape for developing renewables projects in Latin America . Major power companies like Enel and Engie w ill outperform competitors thanks to their ability to access cheaper capital and tolerate a lower rate of retur n on their projects.

Chile and Mexico both finalised long-term power auctions in the past few weeks, with results announced on November 2 and 22, respectively. Both auctions recorded a very high participation by project developers and resulted in a large number of non-hydropower renewable energy projects being contracted. In addition, the average price of the winning bids was significantly lower than in previous auctions held in the two countries. The tables below show which companies were chosen to supply energy in Chile, and energy, clean energy certificates and firm power capacity in Mexico.

These results align with our long-held view that the biggest global project developers will outperform smaller and local competitors in reverse power auctions ( see ' Renewables Auctions To Become More Widespread, Favour Big Companies ', July 1 2016). Italian utility and project developer Enel secured contracts to supply the majority of the energy on tender in both Chile and Mexico, while French power group Engie was the second biggest winner in the Mexican auction. Both companies had already won contracts to develop renewables projects in Mexico in 2016, alongside other major European power groups like France's EDF and Spain's Iberdrola ( see ' Renewables Auction Success Prompts Forecasts Upgrade ', October 12 2016).

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