Norton Rose Fulbright advises on major Mexican renewable energy financings

Business August 16, 2017

Norton Rose Fulbright recently advised the lenders in three major renewable energy project financings in Mexico, which are among the first deals to reach financial closing under Mexico’s new long-term clean energy auctions. The deals included two related solar PV energy plants, Solem One and Two, as well as one wind project, the El Mezquite wind farm. 

Solem solar PV projects

The New York and Mexico City offices represented the Inter-American Investment Corporation (IIC), acting on behalf of the Inter-American Development Bank (IDB) Group, the International Finance Corporation (IFC), the Bank of Tokyo Mitsubishi UFJ Financial Group (MUFG), and Mexican development banks Banobras and Bancomext in the US$230 million financing of the development, construction and operation of the 150 MW Solem One and 140 MW Solem Two solar PV projects, located in Aguascalientes, Mexico. The projects are sponsored by Cubico Sustainable Investments Limited and Alten R.E. Developments America B.V.

The projects are the first solar PV projects to reach financial closing under Mexico’s new long-term clean energy auctions (“Subastas de Largo Plazo”) following the 2014 energy reform. Once completed, the projects will sell the power they generate under 15-year power purchasing agreements (PPAs) for the sale of energy and capacity and 20-year PPAs for the sale of clean energy certificates. Jointly, the Solem projects will constitute one of the largest solar photovoltaic energy projects in Latin America.

“The Solem projects are marquee projects as they are the first to reach financial closing under the new long-term power auctions in Mexico, showing that the PPAs are clearly bankable and that Mexico is on track to achieving 35 percent of energy generated from clean energy sources by 2024. The lenders and the sponsors devoted considerable time and resources to achieve this important milestone, and it wasn’t without its challenges, as this was a first time addressing bankability issues under the new auction PPAs, the interconnection process and merchant risk on the sale of energy and capacity for the last five years of the 20-year PPA for CELs,” said Raquel Bierzwinsky, partner in our New York and Mexico City offices, who led the Norton Rose Fulbright team. 

In addition to Ms. Bierzwinsky, the team included international partner Mario Piana; partner Michael Masri; counsel Lee Gordon and Monika Szymanski; senior associate Heather Behrend; associates Rachel Crouch, David Rajunov, Carlos Campuzano, Dilpreet Minhas, Rachel Rosenfeld and Elizabeth Hernandez; and foreign legal advisor Antonio Rubilar.

El Mezquite wind farm

The firm acted as international counsel to the North American Development Bank, Banobras and Bancomext on the financing of the US$220 million El Mezquite wind farm, located in the State of Nuevo León, Mexico. The project, sponsored by Cubico Sustainable Investments Limited, will provide 250 MW of sustainable energy.

The Norton Rose Fulbright team was led by partner Todd Alexander and included senior associate William Nicholson and foreign legal advisor Antonio Rubilar.

Both the Solem solar projects and the El Mezquite wind farm are expected to be operational by Q4 2018.