China Stakes Its Claim in Latin American Energy:

In Argentina, for example, CHEXIM financed 85% of a $390 million solar plant in 2019. Latin America thereby benefits from the influx of low-cost, Chinese equipment. This arrangement helped countries like Mexico develop a distributed market without subsidies. For instance, in a 2019 Colombian auction, China’s Trina, one of the largest solar module manufacturers, won 100% of the solar share allocated to the auction (nearly 350 megawatts - MW) at record-low prices, and with PPAs valued in the local currency. Valuing PPAs in Colombian pesos was a risk worth taking for the solar Chinese manufacturer, which will ship millions of panels to Colombia in coming years. China also has been increasing its presence in renewables and electric power. For example, as Latin America’s leader in large-scale solar projects, Chile saw its growth in solar generation hindered by a lack of transmission lines. In 2019, China’s Southern Power Grid purchased a 27.7% stake in Chile’s largest transmission company, Transelec., 8 a move that will help link solar plants to an expanding national grid. Similarly, in late 2020, China’s State Grid Corporation (State Grid) agreed to pay $3 billion to buy control of Compañia General de Electricidad SA (CGE), a Chilean company founded in 1905 that distributes electricity to

2.3 million customers 9 . If this deal obtains regulatory approval, State Grid will control 57% of Chile’s power distribution. In June 2020, State Grid also completed its purchase of Sempra Energy’s 100% stake in Chilquinta Energía, the third-largest distributor of electricity in Chile. In its first advance in Mexico, a subsidiary of China’s State Power Investment Corp. (SPIC) acquired Zuma Energía for an undisclosed amount. Zuma owns wind and solar farms and describes itself as Mexico’s largest renewable power producer. SPIC also has renewable operations in Brazil and Chile.

China made this commitment in Mexico despite the López Obrador government´s move to slow down new private and foreign investments in renewables and strengthen the role of the Comisión Federal de Electricidad (CFE), the state-owned electric utility. 10

INSTITUTE OF THE AMERICAS

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