DNV GL assessed risks and expected business case for Tokyo Gas’s first international renewables investment – a 50/50 joint venture with ENGIE. Independent technical assessment provides confidence for scalable Asian investment in the attractive Latin American renewables sector. Tokyo Gas required resilient base to enter both renewable energy and Mexican markets
DNV GL, the world’s largest resource of independent energy experts and certification body, has reviewed an almost 900-MW renewable portfolio in Mexico during technical due diligence for the acquisition of a 50%-share of the portfolio by Tokyo Gas Co. Ltd, Japan’s largest provider of city gas. The acquisition is Tokyo Gas’s first investment in the Mexican renewable energy sector.
The portfolio comprises two onshore wind plants and four solar photovoltaic assets, totalling 898.7 MW. Tokyo Gas and ENGIE have created a 50/50 joint venture to develop these renewable energy projects. The investment is a further step in Tokyo Gas’s commitment to make its business both more sustainable and more international.
It also reflects the high interest global investors from a range of industries are showing in the Latin American renewable energy market. In recent years, Latin America has developed as an increasingly attractive market for renewable energy investments. With growing expectations and opportunities for foreign investment, market complexity becomes a challenge for foreign companies, particularly investors from other industries.
The technical due diligence conducted included an independent assessment of the energy production for each wind and solar asset as well as reviews of the design and technology, permit status, available construction and operation agreements, and financial model assumptions. This assessment is key for investors to estimate the risk and return of investments.
“We are very pleased to have this opportunity to actively participate in the Mexican renewable market. This is a landmark achievement for us as it is the first renewable project joint venture that Tokyo Gas will participate in outside Japan. This has definitely built momentum, propelling us closer to our corporate target of ‘Vision 2020’. Mexico is currently one of the fastest growing renewable energy markets with lots to offer: attractive incentives for new companies to invest, an abundance of natural resources and a good human talent pool,” Kunio Nohata, member of the Board, Senior Managing Executive Officer and Chief Executive of the Global Business Division at Tokyo Gas, said.
“This investment by Tokyo Gas highlights Mexico’s position among the world’s 10 fastest growing renewable energy markets in 2018. Fuel oil and hydropower have been the dominant electricity sources in Latin America, accounting for 45% of the region’s electricity mix. But this figure is declining due to constraints caused by social and environmental considerations. And countries like Mexico are rapidly transitioning to a more diversified mix including natural gas, solar and wind. We expect this to encourage further investment from Asia and other parts of the world into Latin America,” added Andreas Schröter, Executive Vice President Central Europe & Mediterranean at DNV GL – Energy.