Latin Finance - October 2008 - 29

endesa interview Endesa Shuffles the Deck by Ben Miller verheating LatAm economies demand greater amounts of electric power, and governments and regulators require efficiency, security and a generation mix – including renewables – that better resembles North America and Europe. Such a shift will not be cheap. Arguably no provider in the continent has as much at stake as Endesa, whose LatAm units generate 12,900 megawatts at 51 plants in five countries. Endesa will spend about $700 million a year for the next five on about 2,000 megawatts of new generation. It has macroeconomic improvements across the region to thank for rising demand. “One of the lessons we have learned is that you need to be diversified,” says Ignacio Antoñanzas, CEO of Enersis, the Endesa subsidiary holding the controlling stakes of units in Chile, Peru, Colombia, Argentina and Brazil. With artificially low prices in an unstable Argentine market now accounting for less than 10% of its generation business, the focus has shifted to the growing economies of Peru and Colombia, and even Brazil. Enersis needs to capitalize on growth potential beyond the stable Chilean market, where demand may soon peak. For example, in the fastest growing LatAm market, Peru, the energy and mines ministry forecasts double-digit increases through 2015 and a need for 300-400 megawatts per year in new generation to keep up with demand. The 200-megawatt Santa Rosa gas-fired plant for Endesa’s Peruvian unit Edegel is due online in 2010. The country’s Camisea region holds some of the continent’s best gas reserves, but O Endesa’s LatAm units are striving to keep a lock on their continental lead as markets expand. Amid increased demand for power, the firm is boosting renewables output. Endesa is looking to raise its production of renewable energy Endesa is also eyeing a greater renewable generation buildout there. “Peru has more gas but there are limits on the transportation,” says Mario Valcarce, president of Endesa Chile, which operates generation for all of the company’s units in the region. “Demand for gas will rise though, and we need to establish a good base for supplying it.” significantly alter its generation mix. The hydro resources, Valcarce explains, can support much more generation than the country has operating at the moment. In an attempt to stabilize the grid, Colombia’s government has implemented a series of capacity auctions where generators, utilities and private equity interests can bid to provide power at a set price. If the government can keep a stable regulatory environment, Valcarce says, it stands to significantly boost the percentage of hydro power, from 5% this year. “We are living in a situation where On the Path to Renewables In 2013, the Emgesa subsidiary’s 400 megawatt $700-800 million El Quimbo hydroelectric project is set to come online in southern Colombia. The country represents the market where Endesa is pushing hardest to October 2008 LATINFINANCE 29

Latin Finance - October 2008

Table of Contents for the Digital Edition of Latin Finance - October 2008