By the Potencia correspondent
One of the biggest news stories in the Latin America's electric market of recent weeks has been the switch of Spain’s Iberdrola focus towards the Latin American region, away from its domestic market - a strategy the company expects to follow until at least 2016.
Iberdrola's chairman Ignacio Sanchez Galan has been highly critical of the Spanish government's energy policy, especially after sources close to Prime Minister Mariano Rajoy said that there were sufficient investments being made in energy production and grid in the country.
Sanchez Galan even claimed that Iberdrola – whose main headquarters is in Bilbao - now feels "more Mexican than Spanish". A sentiment that El Pais newspaper says is unsurprisingly in a recently published article that shows Iberdrola is Mexico's largest private power producer.
According to the same newspaper, Iberdrola will invest approximately EUR9.6 billion ($13.2 billion) between 2014 and 2016. In the region of EUR4.4 billion will be used to construct new energy infrastructures, with the remaining EUR5.2 billion reinvested in maintaining and improving existing power generation assets.
Iberdrola will not increase its investments in Spain until conditions become more favourable. This is a significant development when you consider that in the early years of this century the company made 75 per cent of its investments in its home country.
As announced, Mexico will become one of the most important markets for Iberdrola’s projects. Mexican news agency Notimex expects the Spanish company to invest about $1.2 billion in the North American country over the next three years.
Among Iberdrola's plans in Mexico is the Baja California III, natural gas-fired combined-cycle power plant, which according the company's website will have an installed capacity of 300 MW.
In addition there are the Baja California IV and Norte III projects and the extension of the Monterrey V power plant. They all are combined-cycle stations and together will raise Mexico's installed capacity by 32 per cent by the end of 2016.
Over the course of this year, Iberdrola will invest $430 million to extend the Enertek cogeneration plant, located in the state of Tamaulipas. In 2015, the company will invest $580 million and the following year will spend $200 million.
The recent reform to the energy sector approved by the Mexican government is said to have made it easier for Iberdrola to increase its investments in the country.
Spanish news agency Efe claims Iberdrola's investments in Latin America will make-up 23 per cent of its portfolio. The UK will be the company's main market (41 per cent) but the interest in Latin America seems to be gathering momentum.
Apart from Mexico, Brazil's electricity market is another of Iberdrola's priorities.
Other Spanish companies, as well as those from other European countries are showing more and more interest in Latin America's energy markets. Endesa's portfolio is a good example.
The Spanish company will spend EUR1.4 billion during 2014 in several Latin American countries. According to Spanish economic newspaper Cinco Dias, Endesa will increase its investment in new projects in Latin America to EUR1.5 billion by 2016.
Another company with its eye on the South American energy market is Italy's Enel, which plans to invest approximately $4 billion in different nations of the region. For example, it plans to develop two hydropower projects in Colombia - Quimbo (400 MW) and Salaco (145 MW).
Enel also has plans in Chile, including the conversion of gas-fired simple-cycle Taltal plant into combined-cycle (130 MW), and constructing the 150 MW Los Condores hydropower plant.
By 2018, Enel is aiming for Latin America and Eastern Europe to constitute 60 per cent of its portfolio.
Latin America continues to be attractive for European companies and everything points to that continuing over the coming decades.
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