Tag Archive for: Other

Thanks to competitive prices, technological advances and excellent financial and fiscal support, solar energy is at its most attractive yet. The time to make the switch from conventional energy to clean energy is now. Here’s why.

SOLAR: THE US’s TOP ENERGY RESOURCE

There is the same amount of energy in just 18 days of sunshine on Earth as there is in all of the planet’s reserves of coal, oil, and natural gas – and the US is blessed with exceptionally high photovoltaic power potential compared to other nations in the northern hemisphere.

While the sunny southwest states of California, Arizona, and Nevada have the greatest solar energy potential, outputs can be increased with specialized tracking mechanisms that allow panels to follow the sun and collect light at an optimal angle, which means a system set up as far north as Portland, Maine can generate 85% of what it would in Los Angeles. 

Averaged over the entire country, a square meter collects the approximate solar energy equivalent of nearly a barrel of oil per year. Harnessing just a small proportion of this – around 0.6%  of the nation’s total land area – could power the entire country with environmentally and economically attractive electricity. 

SOLAR COSTS ARE AT THEIR LOWEST EVER

Unlike oil, which is seeing lifting costs increase as fields mature and much of the potential is already exhausted, the cost for producing solar energy has become increasingly competitive. Since 2010, the cost to install utility-scale solar photovoltaic (PV) power has plummeted by 82%, meaning it now costs less to build a new solar PV plant than it does to keep many existing coal plants in operation.

This also translates to lower electricity prices: research from the US Department of Energy (DOE) shows the solar industry achieved the 2020 utility-scale solar cost target three years early, in 2017, making it competitive with conventionally generated electricity even without subsidies.

TECH ADVANCES MEAN MORE FOR LESS

As solar has become more popular, there are now more installation experts, more producers of components, and more consumers, as well as decreasing material costs, which means economies of scale. In addition to this, clever engineering tricks have now pushed the efficiency of solar installations close to their theoretical maximum. Bifacial panels, which catch solar rays from both sides, as well as electronics that enable the panel to track the sun as it moves through the daytime sky, mean that it’s now possible to capture almost all of the available sunshine.

SOLAR PPA PRICES ARE AT THEIR LOWEST…

Another factor which has made solar as attractive as it is today is access to financing options and business models which make it even more affordable. The most exciting of these are power purchase agreements (PPA), long-term contracts under which a business agrees to purchase electricity directly from an energy generator. 

According to research carried out by the International Renewable Energy Agency (IRENA), solar PV prices based on competitive procurement could average US$0.039/kWh for projects commissioned in 2021, down 42% compared to 2019 and more than one-fifth less than coal-fired plants. 

In the US, PPA prices are now at their lowest yet, but as demand begins to outstrip supply, companies that act quickly will lock in savings ahead of their competitors.

… AND TOP US BRANDS ARE GETTING IN ON THE ACT

As a result of these historically low prices, corporate solar purchases have surged across the US, which is now the world leader in corporate PPAs for solar, representing over 60% of the global market. Today, 220 companies operating in the United States are already procuring renewables or plan to do so.

While in the past, tech companies like Google and Apple have led the way in solar procurement in the US, entering PPAs is no longer the sole preserve of firms with large data center operations. Today, we’re seeing manufacturers, retailers, and even oil and gas majors getting in on the action. 

It isn’t just the cost savings that America’s major corporations are looking for. As shareholders and investors set decarbonization targets, demonstrating leadership in clean energy development has become central to corporate strategy, and investing in large off-site installations via PPAs has become a key way to demonstrate a company’s green credentials. 

RENEWABLES ARE THE WAY OUT OF THE CLIMATE CRISIS…

Renewable energy systems don’t produce air pollutants or greenhouse gas emissions, which is why the American Lung Association advocates for switching away from fossil fuels to renewables to power the country. For example, the electricity generated at on-site and off-site commercial solar installations in the US alone offsets more than 8.9 million metric tons of CO2 emissions annually, equivalent to taking 1.9 million cars off the road or planting 147 million trees. 

And Americans want to see more of this: after countless wildfires, hurricanes, and heatwaves in 2020 that scientists say are caused directly by climate change, the majority of Americans of all demographics say they are in favor of the bold action to combat global warming laid out by President Biden, which includes transitioning to 100% clean energy by 2035.

… AND SOLAR ASSETS PERFORM WELL IN A CRISIS

We recently saw how a massive, historic winter storm buckled Texas’ independent power grid. Data from the Electric Reliability Council of Texas (ERCOT) shows that the blackouts were primarily caused by a huge drop in thermal generation as coal piles froze and nuclear reactors were taken offline. Solar, meanwhile, produced 1,000MW more power than the grid operator expected – even under cloudy skies due to the storms. 

Thanks to new technology, solar can also help restart the grid if it goes down. In the past, following a blackout, grid operators have been forced to first turn on a conventional energy source, like a coal or natural gas plant to set the beat of the grid, before they can add other energy sources, like solar. New “grid-forming” controls on solar inverters, which are being funded by the US Department of Energy Solar Energy Technologies Office (SETO), enable solar inverters to form voltage and frequency levels like traditional generators, which means reliability and stability, even in a 100% renewable grid.

THE US REGULATORY FRAMEWORK FAVORS SOLAR

In the US, the Investment Tax Credit (ITC) allows for a 26% tax credit on solar systems. This important federal policy mechanism supports and incentivizes the growth of solar energy in the nation – in fact, according to the Solar Energy Industries Association, since the ITC was enacted in 2006, the US solar industry has grown by more than 10,000%. 

But all good things come to an end, and the solar ITC is set to start phasing down after 2023, meaning that projects that begin construction in the next two years will achieve a better dollar-for-dollar reduction than those set to start from 2023 onwards – another reason for companies to get into solar now and lock in the best savings they possibly can.

SOLAR INTEREST REMAINS HIGH DESPITE COVID-19…

Despite shelter-in-place orders and movement restrictions, most utility-scale solar construction was deemed essential. As a result, according to the SEIA, large corporations across the US reported few delays in their projects, and what’s more, they don’t expect any changes to their renewable energy goals or timelines. 

By their very nature, renewable energy project sites lend themselves well to social distancing: even the smallest of our solar farms are measured in the hundreds of acres, and at Atlas, we’ve set industry-leading standards to keep people safe from Covid-19, ensuring the sustainability of our projects for many years to come – no matter what’s on the horizon.

…AND SOLAR CREATES MUCH-NEEDED JOBS TO DRIVE ECONOMIC RECOVERY

Renewable energy generation will play a transformational role in the economy post-Covid-19. As the US economy looks to bounce back from the pandemic, getting Americans back into work is a major priority. In the five-year period between 2014 and 2019, solar employment in the US increased 44%, five times faster than job growth in the overall US economy. Solar employment is also inclusive of all Americans: women make up 26% of the solar workforce, while people from minority backgrounds make up 34%. What’s more, almost one in 10 solar workers are military veterans, according to the latest National Solar Jobs Census.  

Today, the solar industry in the US provides 250,000 Americans with well-paying jobs, and as the sector expands thanks to the fast-declining cost of technologies and its increased popularity, this number will only get higher. 

THE TIME TO TRANSITION IS NOW

Solar is no longer a futuristic, expensive power source. Today, solar is more affordable, better and more reliable than traditional fossil fuels. Shifting to solar can create much-needed jobs, help clean up America’s air, and enable companies to meet profitability, environmental and performance targets. 

The time to make the transition to solar is now. At Atlas Renewable Energy, we develop, build and operate large-scale renewable energy projects as a trusted partner for large energy consumers across numerous markets. Contact us to learn more about how your company can take advantage of all that solar has to offer today.  

US President Joe Biden’s two-day climate summit, held online on April 22-23, saw 40 global leaders make a series of commitments aimed at increasing cooperation to fight climate change and reduce greenhouse gas emissions.

Over eight sessions, heads of state and government, as well as leaders and representatives from international organizations, subnational governments, and indigenous communities spoke of the need for unprecedented global collaboration and ambition to meet the moment.

While the summit saw political decision-makers discuss the future of climate action, there are key opportunities for businesses and investors as well.

Major emitters up the ante on carbon neutrality

Recognizing that the status quo is no longer viable, leaders attending the climate summit vowed to take bolder climate action. The US submitted its new Nationally Determined Contribution (NDC), with a target to achieve a 50-52% reduction from 2005 levels in economy-wide greenhouse gas emissions by 2030. 

China indicated that it will strengthen the control of non-CO2 greenhouse gases, strictly control coal-fired power generation projects, and phase down coal consumption. The European Union is putting into law a target of reducing net greenhouse gas emissions by at least 55% by 2030 and a net zero target by 2050. Brazil committed to achieve net zero by 2050 as well as end illegal deforestation by 2030. These countries were joined by pledges from India, Japan, Canada, South Africa and Argentina, among others.

These unprecedented commitments indicate that pressure is set to increase on corporations to take emissions reduction seriously. To stay ahead of the game, large energy users, from chemicals manufacturers to textiles producers and industrial firms, will need to make a decisive shift to tackling the key CO2 emissions elements in their business – or risk falling behind. 

An investment opportunity

During a special session with US climate envoy John Kerry, leaders from government, international organizations, and multilateral and private financial institutions noted the need to leverage large sums of private capital for sustainable projects. 

Plans such as the Biden Administration’s US$2tn clean energy investment plan, aiming for 100% clean electricity by 2035, and the European Union’s Green Deal, which includes US$572bn earmarked for spending on green projects, among them renewable energy generation, were reinforced during the talks, which will provide a boost to investors, who are increasingly being drawn in by outsized government spending and tax breaks for green projects. 

In renewable energy in particular, we are already seeing an increase in investors entering the sector, and this isn’t only a result of public sector initiatives. In fact, we’re hearing that the stability of renewables is one of the biggest reasons driving the decision to invest. Traditional energy producers rarely enter pricing contracts that span decades. Renewables producers, on the other hand, can, thanks to the inexhaustibility of their energy sources.

Time’s up for fossil fuels

Transitioning away from fossil fuels was a major focus of the summit. Israeli Prime Minister Benjamin Netanyahu described hundreds of start-ups working to improve crucial battery storage for solar, wind and other renewable energy. Danish Prime Minister Mette Frederiksen renewed the country’s pledge to end oil and gas exploration in the North Sea. Others spoke of phasing out fossil fuel subsidies that have kept polluting energy sources artificially cheap for some time. On the flip side, in his closing speech President Biden urged world leaders to ramp up their investment in clean energy. 

Taken together, indications are clear that the current price divergence between renewables and fossil fuels – whereby renewables become more affordable and fossil fuels are priced out – looks set to continue. To lock in energy price stability, we’re already seeing several companies around the world start to take a close look at their energy strategy, and the possibilities made available through innovative financial structures such as corporate power purchase agreements (PPAs).

New business opportunities for low-carbon energy and transportation infrastructure

Launched during the event, the US Trade and Development Agency’s (USTDA) Global Partnership for Climate Smart Infrastructure will aim to drive the adoption of transformational technologies that reduce greenhouse gas emissions and support resiliency to climate change, around the world.

In practice, this will mean public and private investment into projects such as energy storage and utility-scale solar and wind projects, as well as energy-efficient transportation technologies that reduce energy and water use.

Since the launch, grants have already been awarded to projects and suppliers in Thailand, Cameroon, Brazil and India, and the USTDA has released a Global Climate Partnership webpage to connect companies with the latest information on the business opportunities associated with this initiative, as well as requests for proposals.

For businesses, climate smart activities and profit now go hand-in-hand. But for companies that aren’t directly involved in the sectors targeted by the USTDA, there are still ways to piggyback on the benefits. 

Take renewable energy development, for example. Through the power purchase agreement (PPA) structure, corporate energy consumers can take advantage of better strategic energy sourcing decisions. We believe bilateral power purchase agreements for renewable energy are a vital tool in building resilient, climate smart businesses, and numerous international companies have been early movers in this respect – from Anglo American to multinational companies such as  Dow.

Leaders emphasize the need for private sector help

Although the summit focused on country-level targets, participants stressed the need for involvement from the business community.

Fortunately, the private sector has already shown it is ready and willing to take action. Ahead of the summit, 408 businesses and investors, ranging from SMEs to large multinationals, signed an open letter indicating their support for “a highly ambitious 2030 emissions reduction target, or Nationally Determined Contribution (NDC) pursuant to the Paris Agreement, in pursuit of reaching net-zero emissions by 2050.” 

The global community still has a lot of work ahead of it, and it is hoped that all countries will commit to further climate action at the COP26 conference due to be held in Glasgow this November. However, at Atlas, we believe that businesses can start to harness the momentum of the Biden climate summit now to boost their own long-term strategies and set a trajectory towards net-zero.

As Angela Merkel, chancellor of Germany, said at the summit: “This is a herculean task, because this is nothing short of complete transformation of the way we do business.”

São Paulo, May 6, 2021 Atlas Renewable Energy, a leading renewable energy company in the Americas, announced today that it has obtained a USD 150 million loan from IDB Invest, a member of IDB Group, and from DNB Bank ASA (the largest financial services group in Norway) to finance the construction of its Lar do Sol – Casablanca project, a 359MWp solar project to be developed in Brazil that will provide clean energy to Anglo American’s operations in Minas Gerais.

The loan was secured from IDB Invest, including the Clean Technology Fund and the Canadian Climate Fund for the Private Sector in the Americas – Phase II, both administered by IDB Invest, together with a participation from DNB Bank ASA.

The plant will generate 805 GWh per year and the Power Purchase Agreement is, to date, the largest contract with a solar project for the supply of clean energy to a private offtaker in Brazil and indexed to the United States dollar. Lar do Sol – Casablanca’s generation will be the equivalent of supplying energy to 390,000 houses per year according to the average consumption of a Brazilian family and will avoid approximately 50,000 tons of CO2 emissions per year, which could be compared to removing 19,867 vehicles from the streets of São Paulo in the same period.

The Casablanca solar plant is part of Anglo American’s strategy to use 100% renewable energy for its operations in Brazil as of 2022 and is integrated into its Sustainable Mining Plan which has a goal of reducing 30% of its global CO2 emission by 2030.

This transaction was structured following a similar format used by Atlas Renewable Energy in a recently announced financing for its Jacaranda solar plant, which was also financed by IDB Invest and DNB Bank ASA. It also falls under Atlas’ Green Finance Framework – a testament to the company’s commitment to developing projects that protect and preserve the environment while adhering to the highest standards of social and environmental engagement. 100% of the photovoltaic solar modules that will be installed in Lar do Sol- Casablanca will use bifacial technology, increasing project performance with the aim of making electricity production more efficient through solar energy.

Furthermore, in line with Atlas Renewable Energy’s commitment to an ambitious social engagement agenda, the company will be implementing social programs in the local community that actively promote diversity and inclusion. To achieve this, the company will expand its program “we are all part of the same energy” to Lar do Sol – Casablanca’s construction site, an initiative created to train and develop technical skills and knowhow of over 200 women who live in the neighboring communities.

The program also entails promoting women who participate in trainings to have the opportunity to opt for skilled jobs within Lar do Sol – Casablanca’s construction program. The company established a goal to integrate at least 15% of female representation within the total workforce, which aims to quadruplicate the number of women performing technical jobs in solar projects within the region. To that end, actions have been taken to ensure that women are not deterred from working at the project site due to family responsibilities. Among other things, the company will grant working mothers with children between the ages of 0-12 years old a financial incentive to cover childcare expenses. In addition to involving women in the construction process, Atlas has mobilized all contractors in the project to prioritize local minorities in the hiring process, looking to include at least 30% of afro-descendants within the number of women hired and at least 40% within the number of men hired. These goals are part of the company’s approach to ensuring diversity and inclusion within the energy industry and promote equalitarian practices by empowering minorities across all its operations.

“We are pleased to achieve another successful financial close alongside IDB Invest and DNB Bank ASA, two institutions that have become important allies in structuring innovative financing solutions to help consumers transition to renewable energy. Moreover, we are extremely proud of our partnership with IDB Invest in creating a unique and ambitious social responsibility program that directly addresses diversity and inclusion within our value chain. We believe that clean energy should be responsibly sourced, therefore we are committed to tackling social inequalities and cultural biases from our line of work,” said Carlos Barrera, Atlas Renewable Energy’s CEO. “We look forward to continue accelerating the Brazilian market’s renewable energy potential in a sustainable manner, while providing the best-in-class solutions to large energy consumers.”

“This financing demonstrates IDB Invest’s commitment to investing in clean energy and for helping companies dedicated to implementing decarbonization programs in their businesses,” said Gian Franco Carassale, Head of Infrastructure and Energy Division at IDB Invest. “In addition, our institution is proud to work together with Atlas Renewable Energy to support programs where the inclusion of women and minorities is a priority. We hope to have more opportunities like this in the future.”

“We are very proud to once again support Atlas Renewable Energy with this new financing in Brazil through IDB Invest,” said Emilio Fabbrizzi, Managing Director and Head of renewables and infrastructure for the Americas at DNB Markets, Inc. “Apart from implementing a long-term and innovative structure for Brazil, we highlight that it is also aligned with Atlas Renewable Energy’s Green Finance Framework, which was executed through DNB Markets, Inc. in 2019.”

About Atlas Renewable Energy

Atlas Renewable Energy is a renewable energy generation company that develops, builds, and operates renewable energy projects with long-term contracts across the Americas. The current company portfolio is 2.2GW of contracted projects in development, construction, or operational stages, and aims to expand by an additional 4GW in the next years.

Launched in early 2017, Atlas Renewable Energy includes an experienced team with the longest track record in the solar energy industry in Latin America. The company is recognized for its high standards in the development, construction, and operation of large-scale projects.

Atlas Renewable Energy is part of the Energy Fund IV, founded by Actis, a leading private equity investor in the energy sector. Atlas Renewable Energy’s growth is focused on the leading emerging markets and economies, using its proven development, commercialization, and structuring know-how to accelerate the transformation toward clean energy. By actively engaging with the community and stakeholders at the center of its project strategy, the company works every day to provide a cleaner future.

To know more about Atlas Renewable Energy, visit: www.atlasrenewableenergy.com

About IDB Invest

IDB Invest, A member of the IDB Group, it is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social and environmental development in the region. With a portfolio of US $ 13.1 billion in assets under management and 385 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that respond to the needs of its clients in a variety of sectors.

About DNB Bank ASA and DNB Markets, Inc.

DNB is Norway’s largest financial services group and one of the largest among the Nordic countries in market capitalization. DNB Markets, Inc. is a subsidiary of DNB Bank ASA, and is a registered a U.S. broker-dealer and a member of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”).The Group is among the world’s leading banks in transportation, energy and seafood. The bank has a selective global focus on renewable energy, with a special emphasis on hydroelectric, wind and solar technologies and is committed to supporting sustainable initiatives with green solutions.

Miami, FL, April 21, 2021 – Atlas Renewable Energy, a leading renewable energy company in the Americas, announced today that it has signed a Collaboration Agreement with Hitachi ABB Power Grids, to jointly develop and execute Battery Energy Storage Systems (BESS) at a utility scale level for Atlas’ renewable projects.

This agreement will allow Hitachi ABB Power Grids to assist with the development of the best technical solutions regarding BESS and their interconnection during the development of a new project. Hitachi ABB Power Grids will be invited to participate in the tenders launched by Atlas Renewable Energy for the Engineering Package of the projects.

The main objective behind this agreement is to ensure that these energy storage systems can be successfully integrated into the design of new projects during the early development stage as an add-on to the plant depending on the needs it will serve. To do this, Atlas Renewable Energy has taken a more holistic approach by partnering with a company such as Hitachi ABB Power Grids, known for its capabilities in developing technical solutions regarding BESS and its expertise in rendering assistance for the integration of such technology in utility scale energy projects.

“We are very proud to count on Hitachi ABB Power Grids’ team of engineers once again, but this time during the development process of our pipeline. In the past, we worked together on introducing the first digital substation installed for a solar plant in Latin America. Now, we are going a step further into ensuring that all our new projects’ design will have the added value of being conceived with the best BESS and interconnection solution,” said Fabian Gonzalez, Director of Innovation and Operational Efficiency at Atlas Renewable Energy.

“Through this collaboration, Atlas Renewable Energy guarantees that the most optimal storage system is chosen and adopted into our renewable projects. Usually, choosing and installing the most appropriate BESS solution is an intricate and highly technical process, but if it is formulated from the start with proper planning and led by experts in integrated solutions, we will be able to ensure a more flexible, reliable and efficient battery implementation for our projects fleet,” added Gonzalez.

“At Atlas, we strive to be at the forefront of innovation, always looking to explore new ways to achieve the best results. Introducing batteries is an important step in further elevating our projects’ technological edge, but our main priority is to have a successful integration. That is why we decided to find an all-encompassing approach with Hitachi ABB Power Grids,” said Juan Jose Bonilla, Head of Business Development and O&M at Atlas Renewable Energy.

“We aim to provide an even more tailored solution for our large energy consumer clients, whose energy needs may differ and intermittency of renewables can still be a major concern. Offering clean energy with a unique storage solution for each one of our projects provides a differentiated value that gives significant reliability and efficiency to our clients,” added Bonilla.

“We look forward to collaborating on projects together with Atlas Renewable Energy that build on their deep experience with utility-scale renewable projects in Latin America and our own global Grid Edge Solutions footprint of more than 500 megawatts (MW) and 200 references,” said Maxine Ghavi, Head of Grid Edge Solutions at Hitachi ABB Power Grids. “Our proven technologies have enabled customers to create economic, social and environmental value by unlocking new revenue streams, maximizing renewable integration and lowering carbon emissions. As we look toward the future, we anticipate more need for more systems that support renewable smoothing and ancillary grid services.”

This is not the first time that Atlas Renewable Energy has partnered with a major supplier or technology provider to enhance the quality and efficiency in its projects. Just two years ago, the company announced that it would be the first generator in Latin America to roll-out the TrueCapture system developed by Nextracker throughout most of the company’s operating fleet. With the use of TrueCapture, the company’s solar plants tracking system has been optimized to the modular level resulting in an increase of the plants’ overall performance and efficiency.

Atlas Renewable Energy has also helped advance the region’s solar innovation by being one of the first developers to test bifacial modules and to introduce this technology on large scale withing its current projects under construction, which account for almost 1GW of capacity being generated with this cutting-edge panel technology.

These, among other technologies will enable Atlas Renewable Energy to build state-of-the-art renewable energy plants across the Americas and continue elevating the efficiency of solar energy, making this source of energy an even more reliable option to serve large energy consumers throughout the region.

About Atlas Renewable Energy

Atlas Renewable Energy is a renewable energy generation company that develops, builds and operates renewable energy projects with long-term contracts across the Americas. The current company portfolio is 2.2GW of contracted projects in development, construction or operational stages, and aims to expand by an additional 4GW in the next years.

Launched in early 2017, Atlas Renewable Energy includes an experienced team with the longest track record in the solar energy industry in Latin America. The company is recognized for its high standards in the development, construction and operation of large-scale projects.

Atlas Renewable Energy is part of the Energy Fund IV, founded by Actis, a leading private equity investor in the energy sector. Atlas Renewable Energy’s growth is focused on the leading emerging markets and economies, using its proven development, commercialization and structuring know-how to accelerate the transformation toward clean energy. By actively engaging with the community and stakeholders at the center of its project strategy, the company works every day to provide a cleaner future.

To know more about Atlas Renewable Energy, visit: www.atlasrenewableenergy.com

Miami, FL, March 31, 2021 – Atlas Renewable Energy, an international renewable energy developer with operations across the Americas, was awarded Latin America Sponsor of the Year by Proximo Awards on March 30, 2021, for its overall performance and commitment to accelerate the region’s transformation toward 100% clean energy. The company also took home the Latin America Solar Deal of the Year Award for its New Juazeiro Financial Deal, an innovative financing solution that comprises the construction of the Jacaranda solar plant in Brazil.

These two awards reiterate Atlas Renewable Energy’s great achievements and fast growth in the region. Recently, the company was also ranked as the top clean energy developer for Corporate PPAs in Latin America according to Bloomberg NEF’s 1H 2021 Corporate Energy Market Outlook, as well as occupying the sixth place globally with over a half of gigawatt contracted for private offtakers in the region.

Latin American Deal of the Year

Atlas Renewable Energy’s New Juazeiro Deal has been awarded Latin America Solar Deal of the Year for its unique pioneering financial structure marking the first time a Brazilian solar project has been fully financed in US dollars. This forward-thinking deal was possible through the collaboration with IDB Invest and DNB Markets, two great allies who have helped transform Latin America’s energy industry into a cleaner and more sustainable business. The deal also counted on the expert advice from White & Case and Machado Meyer Law Firms.

“We are very honored and proud to be awarded Solar Deal of the Year,” said Michael Shea Head of Structured Finance at Atlas Renewable Energy. “We’d like to thank IDB and DNB Markets for their support in creating such an innovative financial structure that will certainly prompt other international investors to see the opportunities that are not only offered in the Brazilian market, but in Latin America in general.”

“With this, we hope to continue exploring unique, tailor-made solutions to make clean energy attainable for large energy consumers in the Americas and continue building a more sustainable future for the region in alliance with reputable financial institutions that see Atlas Renewable Energy as a trusted and capable partner,” Michael added.

The New Juazeiro deal will finance the construction of Atlas Renewable Energy’s Jacaranda solar plant located in the municipality of Juazeiro, State of Bahia, Brazil. The project has been contracted under a Corporate PPA with the Brazilian subsidiary of Dow Chemical to provide clean energy to one of Dow’s largest production sites in the country. The plant has a capacity of 187 MWp and will generate about 400 GWh per year, which is enough to supply power to a city of over 75,000 inhabitants and will avoid approximately 35,000 metric tons of CO2 emissions.

Sponsor of the Year

Atlas Renewable Energy was also recognized as Sponsor of the Year due to the company’s notable growth in the region, accelerating the adoption of cleaner sources of energy and the relevance of the agreements signed during the year with major corporations in the mining and chemical sectors. These collaborations allowed Atlas to grow and double its capacity of contracted projects to 2.2 GW, of which a large portion have been enabled through corporate PPAs with private offtakers.

Furthermore, during 2020, Atlas Renewable Energy secured important financial deals in partnership with reputable institutions such as IDB Invest and DNB Markets to finance projects in Brazil, Mexico and Chile.  Most of them fell under the company’s Green Finance Framework sponsored by DNB Markets – a testament to Atlas’ commitment to developing projects that protect and preserve the environment while adhering to the highest standards of social engagement.

In collaboration with IDB Invest, Atlas developed one of its most ambitious social initiative: the female workforce program “We are all part of the same energy” in which the company is committed to train almost 700 women in the communities close to the company’s sites under construction and has established the target to hire 4 times more female labor during the execution of these projects.

“Apart from thanking Proximo for such recognitions, I would like to congratulate our team for their motivation to always strive for excellence; and recognize the financial institutions that have worked with us for not only partnering with Atlas in finding innovative financial solutions for our projects, but for also becoming our allies to earnestly address social issues and promote high standards and sustainable practices,” said Javier Barajas CFO of Atlas Renewable Energy. “It is a great honor for us to receive this award and hope it serves as evidence of Latin America’s thriving renewable energy market.”

###

About Atlas Renewable Energy

Atlas Renewable Energy is a renewable energy generation company that develops, builds, and operates renewable energy projects with long-term contracts across the Americas. The current company portfolio is 2.2GW of contracted projects in development, construction, or operational stages, and aims to expand by an additional 4GW in the next years.

Launched in early 2017, Atlas Renewable Energy includes an experienced team with the longest track record in the solar energy industry in Latin America. The company is recognized for its high standards in the development, construction, and operation of large-scale projects.

Atlas Renewable Energy is part of the Energy Fund IV, founded by Actis, a leading private equity investor in the energy sector. Atlas Renewable Energy’s growth is focused on the leading emerging markets and economies, using its proven development, commercialization, and structuring know-how to accelerate the transformation toward clean energy. By actively engaging with the community and stakeholders at the center of its project strategy, the company works every day to provide a cleaner future.

To know more about Atlas Renewable Energy, visit: www.atlasrenewableenergy.com 

In recent years, reducing carbon emissions at the pace necessary to mitigate the impacts of climate change has emerged as a key challenge for policymakers around the world. While there are several approaches, one – carbon pricing – is gaining in popularity, and the indicators show that it will soon be widespread.

WHAT IS CARBON PRICING?

In short, carbon pricing is a means by which carbon pollution is given a cost that is then passed on to CO2 emitters through a tax or fee. It’s a simple economic principle: making something more expensive discourages its use. The idea behind carbon pricing is, at its heart, to give companies a financial incentive to lower their emissions.

The most basic form of carbon pricing is a carbon tax, which is a fixed levy per ton of CO2 equivalent (tCO2e) on the amount of carbon dioxide produced. Other initiatives include emissions trading systems (ETSs), which create a market in tax credits so that emitters can trade emission units with non-emitters. Meanwhile, offset mechanisms allow emitters to avoid carbon tax if they make parallel efforts to remove carbon elsewhere from the environment.

For its proponents, carbon pricing is the most efficient approach to cut emissions, as it immediately encourages cutbacks on any activity that emits carbon, and forces innovation of less-polluting alternatives. Set at the right level, a carbon tax on energy would quickly create an economic preference for natural gas, for example, over oil and coal, and for renewable energy over fossil fuels, thus driving forward the clean energy transition around the world.

That isn’t to say that everyone agrees with the concept. In many countries, from the United States to Australia and beyond, carbon tax proposals have been met with opposition. However, the number of jurisdictions that are putting a price on carbon, either via a carbon tax or through an ETS, is growing. Today, 46 countries and 32 subnational jurisdictions have implemented carbon pricing initiatives, up from 42 countries and 25 subnational jurisdictions in 2017. These include most of Europe, China, Canada, and South Africa, as well as the U.S. state of California.

The Latin American perspective

In Latin America, carbon pricing initiatives are currently in their infancy. As we see in the following graph, Mexico, Chile, Argentina, and Colombia already have carbon tax schemes underway, but they put a fairly modest price on each tCO2e of carbon – lower than Canada’s and South Africa’s and a fraction of the US$40-80 per tCO2e called for by the High-Level Commission on Carbon Prices to cost-effectively reduce emissions in line with the temperature goals of the Paris Agreement.

Because current climate change mitigation plans both in the region and globally still don’t add up to the emission-reduction levels needed to keep the global temperature increase below 2˚C, we believe that more and more governments will start to implement carbon pricing in the upcoming years and carbon taxes will most likely increase.

CORPORATE SUPPORT

Although carbon pricing has a direct, negative impact on corporate polluters’ profits, an ever-increasing number of companies are calling for it, as growing pressure from investors and consumers drives them to start taking emissions reduction seriously.

In the US, the Business Roundtable (BRT), an association of chief executive officers from more than 200 leading companies, has endorsed market mechanisms, including carbon pricing, to advance action on climate change. Even oil companies, including ExxonMobil, Shell, and BP have called for carbon taxes to be implemented, while Spanish multinational Repsol has gone so far as to establish its own internal carbon pricing of US$25 per tCO2e for new investments, going up to US$40 per tCO2e from 2025 onwards.

In fact, around the world, about 1,600 companies currently use internal carbon pricing to prioritize low-carbon investments and prepare for future regulation, or anticipate doing so within two years, according to a survey carried out by the Carbon Disclosure Project, an international non-profit organization. In many cases, they are using the proceeds to fund emissions reduction efforts: Microsoft, for example, uses the revenue from its internal carbon fee to fund renewable energy and is aiming to hit 100% renewable energy usage by 2025.

In June 2020, Bernard Looney, the CEO of BP, more than doubled his company’s carbon price forecast to $100 for the year 2030, stating that he believes countries around the world will ramp up the aggressive transition away from fossil fuels toward cleaner alternatives by the end of the decade.

Therefore, for those companies who don’t already have their own internal carbon pricing initiatives, or who haven’t taken into account the likely impact of carbon taxes on their bottom line, it is clear that it’s time to take action.

THE COST OF CARBON PRICING

As the world’s largest emitter, the energy sector is the most impacted by carbon pricing. We’re already starting to see the commercial failure of thermal energy generation as a result. Most recently, a planned 450MW expansion of Bosnia and Herzegovina’s state-owned thermal power plant – financed by a €614 million loan approved by China Eximbank – was described by the European Union’s Energy Community Secretariat as an “economic disaster”, since it was planned against a carbon price of €7 per tCO2e, whereas the current price in the EU is €25. 

Bosnia and Herzegovina is not an EU member state and does not yet apply carbon pricing. However, the European Commission is now preparing a carbon border tax, which will apply to the Western Balkans as well, thus making the financial success of the plant untenable.

However, it is not just utility companies and power producers that will be impacted by a price on carbon. Any price increase related to power generation will inevitably be passed downstream to customers, raising prices that businesses – and households – ultimately pay.  

The impact on large energy users

For energy-intensive industries, this presents a dual-threat. Chemicals manufacturers, textiles producers, and large industrial firms will not only be paying an additional tax based on their own emissions but will also be paying higher energy costs, as their electricity providers hike up prices to cover their own carbon taxes. According to a recent study by EY, the estimated impact of a carbon tax on overall industry production costs at a carbon price of US$25 per tCO2e will be an increase of 1.1%, with the bulk of this – 0.7% – made up by indirect costs, ie higher energy input prices.

Historically, studies have found that when the cost of energy comprises a larger fraction of the cost of production, companies find new ways to reduce energy costs, and this time will be no different. So far, 284 global brands, from ING to Unilever, AB Inbev, and the Kellogg Company have taken the step towards accelerating the transition to zero-carbon energy by committing to obtaining 100% of their power from renewable sources.

These companies can see what is coming over the horizon and are taking steps to reposition themselves. We believe this is a sensible decision: as the case of Bosnia and Herzegovina’s power plant shows, waiting until carbon pricing is implemented in their home nation may be too late, as decisions taken by other jurisdictions can very easily have a cross-border impact. 

BE PREPARED

While initial conversations around carbon pricing framed it as simply a regulatory imposition, it has become clear that not only are corporations behind the idea of reducing carbon emissions but so, too, are the general public. In a recent international survey of over 10,000 consumers in France, Germany, Italy, the Netherlands, Spain, Sweden, the UK, and the US, fully two-thirds of consumers said they wanted to see carbon labeling on products. 

As consumers around the world become more informed about the carbon footprint of the products they buy, and start to vote with their wallets, this isn’t a trend to be ignored. Fortunately, solutions to reducing reliance on fossil fuels are at hand. One example is through the power purchase agreement (PPA) structure, which means that corporate energy consumers can take advantage of better strategic energy sourcing decisions with the assistance of a knowledgeable and capable partner. This is the perfect opportunity to reduce the near-inevitable risk of carbon pricing initiatives on large energy users’ bottom lines. What’s more, in many markets, there are immediate cost savings to be had already, thanks to the competitive pricing of renewable energy. 

Carbon pricing, in our view, is inevitable, but fortunately, there are many ways companies can prepare to ensure they’re ready when the time comes.

On International Women’s Day and every day, Atlas Renewable Energy places diversity and inclusion at the forefront.

At Atlas Renewable Energy, we want to lead our sector in terms of gender balance, diversity, and inclusion (D&I). We’re pushing to challenge stereotypes, fight bias, broaden perceptions, and change attitudes – in our industry, our offices, and in the communities where we operate. We understand that to make a difference we need to go beyond awareness raising to addressing the issues from a more tangible perspective. Although there is still much to be done, here we present some of the initiatives we have developed to contribute toward equal opportunities.

CREATING CHANGE FROM WITHIN

When we launched in early 2017, we were immediately aware that we had key imbalances in regard to gender, with a small percentage of women and even less representation in the technical, managerial, and decision-making levels. And the problem wasn’t ours alone: across the wider renewable energy sector as a whole, women make up only a small percentage of the workforce. According to a study conducted by the International Renewable Energy Agency (IRENA) in 2019, women represent only 32% of full-time employees of the renewable energy workforce globally.

We believe that the fact that we operate in a male-dominated industry is no excuse. So we set about creating an internal culture that embraced inclusiveness and diversity right from the start, and we began to look for ways to transform our company into one that could be characterized by equality.

Our first step was to make our recruitment process more inclusive. We insisted that there should be at least one female candidate in every recruitment shortlist and that the overall candidate pool should be as diverse as possible. To avoid any kind of hiring bias, we asked our recruiters to present us with blind resumes, which mask not only the gender of candidates, but also their age, ethnicity, and location. 

Atlas Renewable Energy corporate employees working in the Santiago, Chile, office.

Our efforts have paid off: today, our corporate total headcount is 40% female, versus just 11% four years ago.

BREAKING DOWN STRUCTURAL BARRIERS

But simply getting more women into the company isn’t enough. In order to be truly gender-responsive, we implemented a series of measures to create a corporate culture based on equal opportunities, non-discrimination, and respect for diversity.

These include our unconscious bias training and D&I immersion program, which is provided to all staff members and focuses not only on gender distinctions but also seeks to challenge prejudiced ways of thinking that could unfairly influence decisions.

We also looked at the structural barriers preventing greater female participation in the workforce. The linkage between family responsibilities and decreased female labor force participation has been well-documented, and as job-protected maternity leave entitlements have been proven to keep women in work, we looked at international best practices and put in place maternity leave of six months at full salary. This initiative has been implemented in all countries in which Atlas is present, going in many cases further than what local regulations would require.

To avoid creating a bias against hiring women as a result, we also extended one month of parental leave to men – compared to the minimum paid paternity leave of five to eight days in many of the markets in which we operate.

Furthermore, in order to ensure we take into account all types of families, we also implemented adoption leave for our employees. 

Another structural barrier is around childcare. We don’t believe women or men should have to choose between caring for their children or prioritizing their own careers, so we implemented a monthly childcare allowance for children up to age three, which enables team members who choose to return to the workforce after having or adopting a child to do so.

When building diversity and inclusion policies, we believe that it is vital that they are consistent across the board. So, no matter whether our employees are based in Chile, Mexico, Brazil, or in the U.S., our structure remains the same to ensure that our commitment to equality is clear everywhere.  

WOMEN CANNOT BE WHAT THEY CANNOT SEE

The next part of our journey is around enabling Atlas’ female employees to advance in their professional and personal growth. To build on this, we have put in place a talent and mentoring program  to support their personal and professional growth, ensuring that we create a strong pipeline of female leaders for the future.

GOING BEYOND OUR OFFICES TO MAKE  A POSITIVE IMPACT IN LOCAL COMMUNITIES

Participants of the Female Workforce Program “We Are All Part of the Same Energy” in Maria Elena, Antofagasta Region, Chile.

Because of our geographical footprint and the impact we can make in the communities where we operate, we are in a strong position to mobilize our own contractors and work with local communities to promote similar values in female representation, and so we have embarked on a diversity and inclusion journey through an ambitious female workforce program, in partnership with local institutions and governments.

Under the name ‘We are all part of the same energy’, the program aims to improve local women’s access to employment and entrepreneurial opportunities by leveraging the economic development potential of the areas in which we are building renewable energy projects in order to create jobs.

So far, we are well on the way to upskilling at least 700 women from nearby communities into our assets currently under construction in Mexico, Chile, and Brazil. Using market studies, we identify skill gaps and job opportunities and then design our training to meet those needs. We then work to include a proportion of the women trained either into our own supply chains and mobilize our contractors to prioritize their inclusion in their hiring process or facilitate linkages with other industries in our area of influence.

It isn’t only gender equality that we are addressing in our markets. In many cases, we will be a neighbor to local communities for decades, so we have also implemented additional inclusion policies to ensure that everyone has access to the opportunities our projects can provide. We operate across diverse markets, and as a result, we are cognizant of the need to tailor our approach to the societal backdrop of the area in which we operate in order to have the greatest impact.

For example, at our Jacarandá project in Brazil, our hiring policies have been structured to ensure that at least 35% of the total workforce is made up of people of color, who are often excluded from employment opportunities because of racial discrimination. To date, 74% of the women and 79% of the men currently  employed at Jacarandá are of Afro-Brazilian descent, and overall, 56 women are employed in the construction of this project, accounting for fully 15% of the total workforce.  

Graduates of the Female Workforce Program “We Are All Part of the Same Energy” working in our Jacaranda Solar Plant in Juazeiro, State of Bahia, Brazil.

Meanwhile, as of the beginning of March, we have hired 95 women in our project in Sol de Desierto in Chile, representing 14% of the total workforce, and in Mexico, we have set up a training program to equip close to 300 women with a variety of skills, which we intend to replicate in Lar do Sol – Casablanca, an Atlas solar plant in Minas Gerais, Brazil.

A SYSTEMIC VIEW

At Atlas, our goal is to continue moving forward to become a benchmark in equality for our sector, and for the wider infrastructure and energy industries. 

Although the progress we have made so far is significant, there is still much work to be done. But by acknowledging the gaps and looking for tangible solutions, we aim to build a more equitable future, that allows everyone, irrespective of gender, ethnicity, age, background, or ability, to access equal opportunities.

The Biden administration aims to transform the United States into a 100% clean energy economy by 2050. We take a look at what this means for the renewables sector.

“At this moment of profound crisis, we have the opportunity to build a more resilient, sustainable economy – one that will put the United States on an irreversible path to achieve net-zero emissions, economy-wide” – President Joe Biden.

Upon taking office on January 20, President Joe Biden immediately got to work on his campaign pledge to shift the US towards a green future. Signing a series of executive orders, he ordered federal agencies to procure carbon-free energy, drive the development of clean energy technologies, and speed up clean energy generation and transmission projects. His administration wants to eliminate pollution from fossil fuel in the power sector by 2035 and from the wider US economy by 2050 and intends to spend US$2tn over four years to make that happen.

The climate plan proposed by Biden is set to result in significant changes in energy policy in the US. Here’s what to expect.

NO MORE ASSISTANCE TO FOSSIL FUEL DEVELOPMENT

The heavily fossil fuel powered grid generates 28% of US emissions, and the new president seeks to get this to zero, fast, by pausing oil and gas leasing on federal land and targeting subsidies for those industries as well as establishing aggressive methane pollution limits for new and existing oil and gas operations, which will likely drive up costs for already marginal US oil and gas drilling operations.

PRICING CARBON OUT OF THE MARKET

In a written statement to Senate Finance Committee members’ questions, Janet Yellen, President Biden’s nominee to run the Treasury Department, said: “We cannot solve the climate crisis without effective carbon pricing. The president supports an enforcement mechanism that requires polluters to bear the full cost of the carbon pollution they are emitting.”  A national carbon tax is expected to be implemented within the US, creating a direct negative impact on corporate polluters’ bottom line, and resulting in clean renewable energy becoming more competitive than traditional fuels. 

A RETHINK OF TRADE POLICY

In 2018, the Trump administration imposed a four-year, 30% tariff on imported solar panels, which prevented the deployment of 10.5 gigawatts of solar that would otherwise have been built, according to analysis from the Solar Energy Industries Association, the industry’s largest trade group. It has called upon President Biden to remove these tariffs, to help bring down prices in order to achieve its goal of providing 20% of US electricity by 2030, up from just 3% currently. While the new US administration is yet to make a move in this regard, pressure from US industry bodies is growing, and it’s likely that President Joe Biden will look to review the solar import tariffs in short order.

NEW INCENTIVES FOR RENEWABLE ENERGY

Extensions to existing tax credits for renewable energy are expected as the US government seeks to make its plan operational. As part of former President Trump’s Taxpayer Certainty and Disaster Tax Relief Act of 2020, the expiry of the production tax credit (PTC) for wind and certain other renewable energy technologies was pushed out a further year, to the end of 2021, while the phasing down of the investment tax credit (ITC), which is applicable to solar and certain other renewable energy projects, was frozen for two years.

As these credits remain vital for the development of the renewable energy industry and the continued potential for growth in the US as it seeks to recover from the economic impact of the pandemic, further fiscal incentives can be expected, with the potential for refundable credits being able to be leveraged in financing structures for renewable energy investments.

THE NUMBERS ADD UP…

Beyond policy implications, the practicalities of greening the grid of the world’s largest economy in just 15 years make this no mean feat: developers of renewable capacity will have to triple their installation pace from 2020’s rate immediately in order to hit Biden’s goal, according to a study from the University of California at Berkeley’s Goldman School of Public Policy. 

However, the researchers found that the continued decrease in the price of both solar and wind energy will mean that removing around 90% of the grid’s emissions by 2035 would lower wholesale electricity prices 10%, while improved battery storage will ensure the reliability of the US’ new, cleaner grid. In effect, President Biden’s plan is both financially and economically viable.

… FOR AN IMMINENT ENVIRONMENTAL INFRASTRUCTURE BOOM

Beyond academic research, capital market activity also indicates that positive sentiment is building behind President Biden’s plan. In the week before the president’s inauguration, alternative energy funds saw an inflow of US$4bn, according to Lipper data, as investors bet on a bright outlook for renewable energy firms. To put this into perspective, for the full year 2020, total inflows were just US$17.1bn.

AMBITIOUS PLANS

The scope and reach of the new administration’s clean energy agenda is certainly ambitious, but we believe that it demonstrates an alignment between the government and growing numbers of influential, globally recognized US companies, who have committed to 100% renewable power as part of the RE100 initiative. These companies, which include Apple, American Express, Facebook, General Motors, and Google, have already signed PPAs for renewable energy in numerous countries, inspiring many others to follow suit

Until now, however, the US was cited by RE100 members as a “challenging market” for corporate sourcing due to “a lack of leadership by the federal government”. With the Biden administration’s new climate policy, this is likely to change, and we expect to see a surge in demand from corporations across numerous industry verticals – from retail to manufacturing, heavy industry, and beyond.

It isn’t only corporate America that supports the energy transition: 90% of Americans, regardless of political beliefs, support solar, according to research done by the Solar Energy Industries Association (SEIA). 

The Biden administration’s climate and energy goals are bold, but the American Clean Power Association (ACP), a newly formed trade group, has stated that the renewable power industry is ready to help the country meet them, and at Atlas Renewable Energy, we are adding our voice to that of our colleagues in the US. 

Since 2017, we have developed, built, and operated large-scale renewable energy projects that have enabled the energy transition across Latin America. We were the first to implement a solar private PPA in Chile some eight years ago, and we’ve since continued to advance the adoption of renewable energy by large energy consumers. With one of the largest solar asset bases in the region, we signed a record 660MW in corporate PPAs in 2020, making us Latin America’s top developer in the region by contracted volume, according to Bloomberg. We’re already a trusted partner for US multinationals like Dow and Anglo American, and we look forward to supporting a growing number of companies to lower their CO2 emissions for a greener future across the region.

Around the world, consumer behavior is undergoing a dramatic change. Purchasing has become a political act, with those brands that seek to make the world a better place being rewarded by growing sales and increased customer loyalty. In this focus on Latin America, we look at how, as the region’s population seeks to buy the change they want to see for the future, companies must improve on sustainability and environmental issues – or risk losing out.

THE EVOLUTION OF THE GREEN CONSUMER

In recent years, shoppers worldwide have begun to understand that their purchasing power can make change happen. Consumers are calling for businesses to put their values on display, and rewarding those who align with their values.

This is a paradigm shift from the consumer activism of yesteryear when brand boycotts were a means of applying pressure on big firms. In a recent report by research firm Weber Shandwick on this changing landscape, it was found that 83% of consumers now prefer positive activism – showing support for companies by buying from them, rather than avoiding those whose practices they disagree with.

In today’s hyperconnected world, where purchasing decisions are influenced as much by social media as by advertising, the impact of consumer support on a brand’s reputation is immense. And while consumer activism takes many forms, it is increasingly a companies’ environmental and sustainability performance that shoppers are honing in on, with consumer insights company Nielsen calculating a near-50% jump in sustainable product sales in 2021, as compared to 2014. 

LATIN AMERICA TAKES THE LEAD

In its 2019 report, Nielsen found Latin America to be ahead of the global curve when it comes to sustainable consumption. Fully 85% of Latin American consumers said that they would definitely or probably change their consumption habits to reduce their impact on the environment – versus just 73% globally.

While the majority of consumer efforts are still focused on tangible gains – such as selecting products with recyclable or less packaging, a growing trend has emerged with consumers seeking out companies who go even further

In 2018, Colombian food company Tosh became the country’s first major brand to become certified as carbon neutral, offsetting 17,000 tons of CO2 each year and overhauling its branding to demonstrate its sustainability credentials to customers. Meanwhile, Brazil’s largest cosmetics multinational, Natura, strictly controls and monitors all carbon emissions relating to its packaging, logistics, production, and transport processes. And a few years ago Chile became the home of the world’s first carbon-neutral wine.

This focus on carbon neutrality is also starting to filter through to corporate energy consumption. In the face of consumer pressure to go green and reduce their impact on the environment, multinational consumer goods brands and manufacturers that have set up bases in Latin America must change their approach and rethink where they source their electricity needs from.

This is the beginning of an unstoppable transformation. Consumers no longer simply want sustainable products – they want the companies they are buying from to be sustainable all the way through their corporate operations. In fact, this trend is even more evident in Latin America than in other global regions, largely because the impact of climate change is already making itself felt – from melting Andean glaciers to extreme weather events. When asked by LAPOP’s AmericasBarometer how serious a problem climate change is in their country, 75% of South Americans and 82% of Mexicans and Central Americans characterized it as “very serious” – compared to just 40% in the United States and Canada.

This is also a generational shift – the latest Global Sustainable Shoppers Report carried out by Nielsen showed that 85% of Latin American millennials (those born in the 1980s and early 1990s) are concerned about how sustainable companies’ production processes are, versus 72% of their parent’s generation, the baby boomers. And if the upswing in climate activism we have seen from generation Z so far is anything to go by, this trend will only continue.

THE EVENTS OF 2020 ACCELERATED THE TREND

There is, of course, another factor driving increased consumer consciousness around sustainability. The COVID-19 pandemic has demonstrated unequivocally the relationship between humans and the natural world, as well as the degree to which everyone on earth is interconnected. As a result, for consumers, the sustainability agenda has taken on new importance. 

A recent survey by consulting firm BCG found that nine-tenths of consumer respondents said that they were equally or more concerned about environmental issues in the wake of the virus outbreak, and nearly 95% said they believed their personal actions could help reduce unsustainable waste, tackle climate change, and protect wildlife and biodiversity. Almost a third said that this belief had strengthened as a result of the crisis.

However, as companies continue to struggle with the lingering impacts of movement restrictions, supply chain disruptions, and slumping demand caused by the pandemic, prioritizing sustainability and environmental performance is, for many, last on the list.

We believe that would be a mistake. Consumer pressure isn’t going away – it’s only increasing. Companies that sideline their efforts now are likely storing up risks for the future, while those that choose to re-engage with sustainability initiatives will gain a distinct competitive advantage.

RENEWABLE ENERGY – A SOLID STRATEGY

A pragmatic way to achieve the kind of sustainability that consumers increasingly expect is to look at what can garner the greatest impact on carbon emissions. For the vast majority of companies, that’s their energy consumption, which is why, right across the region, a growing number of firms are shifting to renewables, and civil society is stepping up to support them.

Indeed, companies in Latin America are at a comparative advantage versus many of their counterparts around the world. Ample renewable resources along with an enabling regulatory framework in many countries have paved the way for more and more corporate energy users to go green. 

This growing interest has driven a surge in the number of corporate power purchase agreements (PPAs) for renewable energy, with 2019 witnessing a threefold increase in deals signed. A tailor-made contract between a corporate off-taker and a power producer, renewable PPAs allow companies to purchase or generate enough renewable energy to match 100 percent or more of their electricity use over the course of the year, allowing them to ensure the very basis of their operations is sustainable. 

Our team, for example, was the first to implement a solar private PPA in Chile some eight years ago, and we’ve since replicated this success in Brazil and Mexico. In 2020, Atlas Renewable Energy signed over 660MW in corporate PPAs in Latin America, making us the top developer in the region by contracted volume, according to Bloomberg. As companies adjust to new consumer demands, we’re seeing an increasing number of inquiries by business leaders asking how they can harness renewable energy to meet their ESG objectives. The numbers are clear: According to a recent study by Stanford University which looked at the impact on companies’ carbon emissions by switching to renewables, a 100% solar strategy would reduce annual carbon emissions by as much as 119% of a company’s carbon footprint – leading to a huge leap forward in its environmental performance. 

The new green consumer of today doesn’t just want to know the origins of what they buy, or how it’s packaged. They want to see real commitments by companies that they are doing everything they can to minimize their impact on the environment. Sustainability is no longer an add-on, and we believe that a solid energy strategy with renewables at its core should be a foundational pillar of a companies’ efforts to respond to consumer demands.

Even as the Covid-19 pandemic drove the global economy into a recession, 2020 was a good year for renewable energy as an asset class. With new tailwinds promising to bolster the sector, we believe that 2021 will see an even greater upswing of interest from the capital markets.

Despite numerous headwinds, the global economy continued its transition toward renewable energy in 2020, with a record amount of new installed capacity around the world. The health of the sector stood in sharp contrast to both infrastructure and fossil fuels, and the subsequent flight to quality translated into floods of capital as installations continued to rise in spite of the economic and social disruptions caused by the coronavirus pandemic.

Overall, low-carbon investments – which cover renewable power and other technologies that reduce reliance on fossil fuels – increased by 9% in 2020, according to an analysis by Bloomberg New Energy Finance (BNEF). And this upward trend looks set to continue. According to a recent survey by Octopus Capital, global institutional investors plan to increase their allocation to green energy from 4.2% of their overall portfolio to 8.3% in the next five years, and 10.8% in the next decade. 

AN ATTRACTIVE OPTION

One of the key drivers behind this is the surging demand for clean energy amid political pressure to meet the ambitious objectives of the Paris Agreement, an international climate commitment to keep the global temperature increases below 2%. According to Goldman Sachs, meeting those commitments will require up to US$30tn in clean-energy infrastructure investments by 2040 alone. The investment bank expects this clear growth trajectory to push spending for renewable power projects above spending on upstream oil and gas this year – the first time in history that this has been the case.

PREDICTABLE, STABLE, AND COMPETITIVE

But beyond growing demand for renewables, there are numerous other factors at play that are driving greater numbers of investors to enter the sector. The first is its stability. Traditional energy producers rarely enter pricing contracts that span decades. Renewables producers, on the other hand, can, thanks to the inexhaustibility of their energy sources.

The Octopus Capital poll, which covered investors from across the globe with combined total assets of US$6.9tn, found that more than half of respondents view the predictability of green energy as a reason to capitalize on the market. Historically, and as was best illustrated with the unprecedented day in 2020 when the oil price turned negative, prices of fossil fuels, and by extension, fossil fuel-based electricity, have been wildly volatile. 

The cost of renewables, meanwhile, has become increasingly competitive with fossil fuels, as new technologies including bifacial solar panels and trackers are helping improve efficiency. Consequently, the levelized cost of energy (LCOE) from solar has plummeted from US$359 in 2009 to an average of US$40 a decade later – an 89% drop. According to Marcel Alers, UNDP head of energy, “It is now cheaper to go solar  than to build new coal power plants in most countries, and solar is now  the cheapest electricity in history.”

Investors are also being drawn in by the promise of outsized government spending and tax breaks for green projects, as economies worldwide seek to return to growth. For example, upon taking office, newly-elected US President Joe Biden unveiled a US$2tn clean energy investment plan, aiming for 100% clean electricity by 2035. Meanwhile, on the other side of the Atlantic, the European Union’s Green Deal includes US$572 billion earmarked for spending on green projects, among them renewable energy generation. 

RISK VERSUS REWARD

Another factor is the risk involved in fossil fuels versus renewables. A recent study by the University of Oxford’s Institute for Energy Studies asked institutional investors including asset managers, hedge funds, and private equity investors in the US and Europe what the minimum hurdle rate they would require to invest in different energy projects, and found that investors are now expecting higher risks in oil and gas projects in comparison to solar and wind projects. 

Indeed, for 2021, Goldman Sachs puts the hurdle rate for today’s fossil fuel projects at up to 20%, versus just 3-5% for renewables, demonstrating not only that issues such as the potential for stranded fossil fuel assets have become a key concern, but also that renewable energy is no longer seen as a fringe bet, but rather a mainstream asset class.

The macroeconomic outlook also favors renewables. As governments continue to implement Covid-related financial packages, interest rates are set to stay lower for longer. Meanwhile, stalled economic expansion has resulted in a general scarcity of high-yielding investment opportunities, leaving investors seeking out long-term, low-risk investment – which renewable projects, and solar in particular – offer in spades.

As a result, half of the investors surveyed by Octopus Capital said they expect renewable energy to generate market-beating net annual returns of 5-10% over the next 12 months, and fully 80% saying they plan to increase allocations in this sector over the next three to five years.

In Latin America, we are seeing a similar trend play out as investors seek out opportunities in renewables to meet their quest for yield. In particular, projects with revenue opportunities that are contracted for longer periods of time, and for a greater proportion of generating capacity, are becoming increasingly attractive.

GOING GREEN HAS BECOME AN IMPERATIVE

The near-inevitability of carbon pricing as well as growing pressure on firms to report on climate risk have also seen investors begin to refine their portfolios in order to avoid future losses, shifting away from fossil fuels, both upstream oil and coal, and replacing these with green plays. 

According to BlackRock, the world’s largest asset manager, from January through November 2020 investors in mutual funds and ETFs invested US$288bn globally in sustainable assets, a 96% increase over the whole of 2019. In his recent 2021 letter to CEOs, Larry Fink, the firm’s chairman, and CEO announced the firm would now implement a “heightened-scrutiny model” in its active portfolios as a framework for managing holdings that pose significant climate risk, including flagging holdings for a potential exit.  

Certified green investments in line with standards such as the Green Bond Principles and Green Loan Principles are also taking hold within the market. At Atlas, we have implemented our Green Finance Framework in our recently announced projects, and we are seeing a growing trend in the number of investors who seek to participate in green finance instruments, including bonds and loans.

Accordingly, as investors take stock of the extent to which climate risk is investment risk, renewables projects have become an attractive alternative for infrastructure and energy investors alike.  

A BRIGHT FUTURE

Against all odds, the global shift to renewables continued apace last year, and this trend shows no signs of slowing. Given all the growth ahead, we believe that renewable energy offers the potential for market-beating returns in the months and years to come, and we expect to see no shortage of interest from investors looking for stable, predictable investments that align with their ESG-related goals.