The use of green bonds in Peru to help finance power projects may gain traction if there is a modification to the regulatory framework which governs the electricity sector, Inés Vázquez, a Lima-based lawyer with Baker McKenzie, told BNamericas.
The international law firm helped local power company Corporación Transmantaro structure the recent issue of a US$400mn green bond, a first for Peru’s energy sector.
“If you have a wind or solar project your only aspiration to have a PPA is that you participate in an auction and you win it. You cannot contract a bilateral PPA with any company. It’s a regulatory problem, because the system doesn’t recognize you as a firm power,” according to Vázquez.
She said that a change to allow the recognition of firm power may be in place by year-end and this will make the NCRE market much more dynamic and open the door to different financing and not only project finance.
Last week, Peru’s government created a commission to reform the power sector which will address the role of renewables, among other areas.
Alonso Miranda, also from Baker McKenzie’s Lima office, added: “I think we’re heading, probably slower than we all want, to see bond issues for projects and particularly green bonds on the stock market as competition to traditional financing via project finance.”
Source: BNAmericas