Interview with Francisco Moya Reina, the Head of Brazil and LATAM at Cubico Sustainable Investments
Few countries are better poised to exploit the renewable-energy potential of wind and solar power than Brazil. Not only is the country rich in both wind and sun, but its size offers economies of scale that promise attractively low margins. Francisco Moya Reina of Cubico Sustainable Investments is well placed to elaborate.
Good day, Mr Reina! It’s an honour to speak with you about sustainability. Before we begin, can you tell us where your interest in renewable energy and investment first started?
My interest in renewable energy projects originated during my time studying civil engineering in Madrid, Spain at a transformative time for energy transition globally. Much of my career since then has involved working in project finance in the renewable energy industry and I’ve spent the last eight years of it at Cubico Sustainable Investments, since the inception of the company when we spun off renewable activity investment from Banco Santander.
What are your expectations regarding the adoption of renewable energy technologies in Brazil and in the wider region, considering the current environment?
Given the country’s generally high irradiance, we at Cubico believe that there is substantial room for growth in solar technology in Brazil, at least in part to help offset the intermittency of wind in the region. North-eastern Brazil tends to be windier at night, so solar energy can play a role in compensating for lower production from wind turbines during the day and reach a much more stable level. So there is a strong future for solar technology in the country.
You mentioned seeing Brazil as a “key player” in the nascent green hydrogen industry. Can you elaborate more on this?
We believe this will be a key technology for Cubico as part of our global strategy to maximise returns for our shareholders. Brazil has been a world leader in decarbonised electricity grids due to the historic preponderance of hydroelectric generation within its domestic energy mix. Most analysts agree that wind projects and solar projects are going to contribute increasing amounts of energy as well. So, in turn, the large amount of renewable energy the country produces will likely mean that there is a very low marginal cost for producing green hydrogen.
In line with this, Cubico also recently acquired Project Sobral, one of the largest solar development projects in the country, with solar PV complexes in Sobral and Santana do Acaraú. What can we expect out of this partnership?
Sobral, and the partnership with ZEG, is a good opportunity for Cubico, since there are various synergies in construction, operation, and financing that we seek to jointly exploit. There are no PPAs yet but one key point of partnership with ZEG is that they have local knowledge, the right capabilities for energy commercialisation, and can help arrange PPA contracts.
Why do you think Cubico is positioned to be a world-leading investor in this market?
We see ourselves not as just another investment fund with a limited time horizon, but fundamentally as a renewable energy company. We develop and own our renewables assets outright, so we think about them differently from other developers who hope to build up assets and then flip them to the highest bidder. The renewable energy transition in Brazil, and indeed the wider world, is not a fad, so a long-term outlook is required. We have this point of view, and decades of experience to back it up.
Cubico Sustainable Investments made early inroads into Colombia’s renewable energy market. What is the reason they entered this specific energy market for the first time in 2022?
The market is now very much alive to discussions about renewable energy, something that was not always the case when we opened our office in São Paulo in 2015. Between then and now, the country suffered the effects of severe droughts, mainly due to the climate phenomenon known as “El Niño” wreaking havoc with the country’s hydroelectric generation capacity. This phenomenon highlighted the benefits of a more varied generation mix, and pointed up the opportunity.
In general, how do you think Latin American project developers have coped with the supply chain issues of 2022, such as polysilicon prices, transportation delays, etc.?
In general, we and most developers have been able to weather the price spikes and delays. But, alongside this, we are also observing more discussions about scaling up the continent’s domestic manufacturing capacity that were not previously occurring, so problems like these may not pose as much of an issue in the future.
How will these issues affect project pipelines in 2023 and the foreseeable future?
Supply chain bottlenecks and price spikes are certain to mean that developers will be more cautious at times, and in 2022 the industry has struggled. It may continue to do so in 2023, but we at Cubico will be pursuing growth in the region throughout 2023 and beyond in both PV and onshore wind.
What are the biggest changes we can expect to happen in renewable energy and investment in the coming decade?
The issues with solar cell and module manufacturers in China are gradually being resolved and we see the industry recovering from 2022 relatively quickly, with solar capacity growing in Latin America and across the world. The Russia-Ukraine war has clarified the climate and energy policy priorities of several national governments, as well as funds’ views of the most resilient investments. We expect cleantech to draw substantial investment as the decade progresses and yield better returns than in recent years.
Francisco Moya Reina, Head of Brazil and Rest of Latam. Francisco is responsible for all of Cubico’s activities in the Latam region, delivering EBITDA targets, managing more than 1,500 MW of wind, solar and hydro operational portfolio, managing relationships with major stakeholders in the region, setting the country strategy, originate, analysing and proposing new investment opportunities, and the management of a team of more than 125 people.
Francisco provides considerable experience in both project finance and equity investment across Europe and America. He has experience in originating, structuring, and executing renewable and infrastructure transactions, including PV, wind, hydro, and transport infrastructure. Previously, Francisco worked in Santander’s Asset & Capital Structuring team and was responsible for the origination and execution activity in Peru and Colombia.
Francisco graduated from the Polytechnic University of Madrid and holds a BSc in Civil Engineering (MSc in Structures and Foundation), an MBA from the Instituto de Empresa in Madrid, and Capital Markets Executive Education from IEB in Madrid.