The developement of renewable energy in Chile with Christian Siemoneit
“Chile became the most attractive renewable energy market in the world and, suddenly, we were part of it.”
This article is published in The Beam #2 — Subscribe now for more on the topic.
Christian Siemoneit co-founded Hansalia in 2011. He holds a Masters Degree in Economics from the Goethe-Universität in Frankfurt. After leaving the investment banking department of Sal. Oppenheim & Cie, he worked for a financial advisory company with a focus on green energy and infrastructure. Within Hansalia, Christian is responsible for business development, finance and partner relations.
The Beam: Christian, you formed the company Hansalia Green Energy four years ago. Can you give us a little bit of your background?
Christian Siemoneit: I had worked in the finance and investment banking world before beginning Hansalia Green Energy. There I was able to become acquainted with the financing mandates required for solar parks in Europe. After projects in Europe had become less attractive due to the decrease of feed-in-tariffs and also some regulatory problems, I co-founded Hansalia together with three partners. Within the group of founding partners we have, besides me, an engineer and two lawyers. This interdisciplinary skill-set was very helpful for starting our company as a project developer.
What were the greatest challenges of building your company?
The most important issue maybe is to get the right people together. This luckily has worked out well within our core team. I would treat is as a coincidence and I am happy about that. I would say that the greatest challenge was and still is to build the bridge between Europe and Latin America in the most efficient and successful way. Continuing challenges for us include communication, the distance between Europe and Latin America, and different mentalities; these are aspects where we can always improve ourselves.
Hansalia is a developer of renewable energy plants with a focus on the Latin American market. How did this company start and how did Hansalia become one of the largest independent power producers in Latin America?
At the beginning, we analysed different countries in the region and used existing relations that my Spanish business partner and the co-founder of Hansalia, Leandro, had already developed. We then received feedback and were offered various sites in Chile, Uruguay, Mexico and others. However, the most attractive opportunity was in Patagonia in southern Chile, so we went there and negotiated a lease contract in order to prepare for the development process.
This was my first trip to Latin America and I was fascinated by the beauty of the country, the nice people, and especially the great framework for working successfully as a developer in Chile. During this first trip we got in touch with a group of local development specialists, which became part of our team over time. This is how it started in Chile.
Back in 2012, Hansalia was one of very few international renewable companies active in Chile with a locally-based corporate infrastructure. Being a developer, you have to be close to the market, you need to have people on the ground in order to work closely on acquiring permits with the local governmental bodies, engineers and others.
The market developed very well, and we benefited from our ‘early-mover’ advantage. Chile became the most attractive renewable energy market in the world and, suddenly, we were part of it.
Why is Chile interesting for renewable energy today?
Over the last years, the Chilean market has really blossomed. More and more projects have not only been developed but also constructed. The market was maturing while the financial conditions improved, and as a result, more and more international actors arrived and set up offices in Santiago in order to get a share.
Chile is interesting for several reasons. First of all, the conditions for solar and wind energy projects are the best in the world. Chile is a country with a good legal framework, an efficient infrastructure, high income per capita and solid economic growth. Also, the energy demand is on the rise, while other energy sources, like nuclear, are not an option due to the risk of earthquakes.
Despite limited energy demand because of a small population (only 17 million people), the Chilean renewable energy market can look to neighbouring countries in order to grow their market and export energy.
How do the governments in countries in South America support the development of renewable energy?
There are no real subsidies in place in Chile. Credit lines are issued from time to time from banks in order to support credits to renewable energy projects. Other countries are also doing this, supported by World Bank and IFC. We believe that the greatest support for our industry is transparency and legal security.
What can other South American countries learn from the policies in Chile?
I believe what other countries in South America, but also anywhere else in the world, can learn from Chile is the importance of transparency, and setting up a highly digitalised, and efficient development process. Behind all of this stands reliability and clear policy targets.
What are the main obstacles to the development of renewable energy today in South America?
The main obstacle, in many countries, is the development of sufficient grid infrastructure. There is a lack of capacity in many grid lines. Improving the capacity of the grid infrastructure usually takes longer than developing a solar park, but it is currently happening in many countries.
On the other hand, countries, for instance Colombia, need to focus on providing a regulatory framework, which supports project developers and helps both national and international capital invest in the realisation of clean energy projects.
What are the difficulties in developing large scale solar parks ( + 100MW)?
The development process of a large scale solar park is basically not more difficult than that of a small solar park. However, the impact of a 100+ MWp solar park on the environment, but also on the overall grid, is bigger; this leads to a more cost-intensive development process. The main difference, though, between a large-scale and small-scale park is that the equity and debt market for construction and long-term ownership is smaller for a small-scale solar park.
Basically, the development efforts are almost the same for large and small scale solar parks, but developing large scale solar is usually more difficult because, for instance, of a shortage of capacity in grid lines.
How difficult it is to raise money for such projects?
It is never easy to raise funds for renewable energy projects in markets with low oil prices and decreasing economic growth numbers. In fact, a lot of money invested in Latin America is from other emerging markets like China.*
*Editor’s note: According to the Chilean Central Bank, investment from the Chinese mainland and Hong Kong reached $477 million between 2009 and 2013. China also committed to a $250 billion investment program in Latin America in 2015 to be doled out over the next ten years. This major promise along with the 71% increase in investments in Latin America by Chinese banks in 2014 points to the long-term plans that China has for its growing influence in the region.
From our experience, the most challenging aspect is raising funds for pre-development project opportunities. If the market is working well, and the project has the right to connect to the grid, at a reasonable cost, raising funds after ‘shovel-readiness’ is much easier.
How do you see the future of renewable energy in Chile and in South America in the next 10 years?
The region is expected to continue to grow, to mature, and I expect it will become the next region for rapid economic growth, especially after new installations in Europe have slowed down.
We expect renewable energy to grow further in the whole Latin American region.
By 2030, 30% of the increase in installed capacity is expected to come from renewable energy, totaling 196 gigawatts. At the same time, the expectation of growth for Latin American economies is encouraging. We, at Hansalia, plans to extend its operations in Chile and expand to other countries in the region.
What are your current projects with Hansalia and what do you wish to achieve with Hansalia in the future?
At Hansalia, we currently have a project pipeline of more than 500 MWp of wind and solar projects in development. Some of the projects are already sold.
We have also been building up a department for commercial rooftop projects. We believe that this is a huge market in which we want to support our clients in saving energy costs and to improve their corporate social responsibility exposure. From a further strategic point of view it is time for Hansalia to move to other countries in Latin America this year. We envision great opportunities in Colombia, Costa Rica and other countries to come. And we will not miss them!
Interview by Anne-Sophie Garrigou
