VIEW FROM THE TOP
STRUCTURING PROJECTS FOR SPECIFIC APPEAL RAÚL SOLÍS Deputy Director of Investment Banking at NAFIN
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Q: How has NAFIN benefited from working with multilateral
developmental banking or the private sphere on their own.
development banks (MDB)?
NAFIN is acting as a catalyst for outside funding to cover
A: NAFIN is a development bank that does not receive
this necessity. Many foreign banks from around the world
public funds. It goes to the market daily with the objective
have answered the call and want to participate directly in
of raising funds to allocate in short, mid and long-term time
this transformation. By far, the most significant disruption
frames. MDBs offer funding primarily with a long-term scope.
for the electricity sector comes from transitioning from a
These financial entities are manifesting a strong interest
long-term market to a merchant, short-term market, posing
in renewable energy projects for Mexico, to the point of
an additional financing challenge for Mexico’s electricity
sometimes offering financing under preferential conditions.
system in financing short-term sales with long-term
One of our departments is focused on channeling this
financing conditions.
awarded capital, outlining the conditions under which it is given, while we take care of structuring projects in a way
Q: How does NAFIN integrate its renewable projects
that the benefits inherent to these financing sources are
portfolio and financing decisions?
allocated in the largest proportion possible. We structure
A: It is a matter of costs, yields and the project's financial
the project to appeal to a particular financial entity on a
solidity. Electricity generation costs using solar power
case by case basis.
technologies have decreased fivefold since 2010. Wind power and natural gas are also witnessing downward
Q: How has project finance changed since NAFIN's first
trends. Since December 2012, NAFIN has multiplied its
financed wind farm in 2010?
financing portfolio fivefold and grew consistently 100
A: The depth of the change is considerable. In 2010, the
percent per year. NAFIN will continue working toward
innovative aspects of a renewable energy project in Mexico
further consolidating the Energy Reform’s positive
scared away potential investors and NAFIN stepped up to
momentum. So far, NAFIN has financed 13 wind farms, two
echo the country’s public policy. The idea was to find the
solar parks, two small-scale hydroelectric plants and one
best financing option for the project, make it bankable and
cogeneration plant.
foster the participation of commercial banking. In 2014, as the Energy Reform was enacted, the trend in which
Q: What are NAFIN’s objectives for 2018?
the public sector absorbed the entirety of a project’s
A: NAFIN's electricity portfolio has over 70GW nationwide.
risk and financing requirements, especially in the oil and
Two precise objectives are on the table. First, duplicating
gas sector, was disrupted. Now, the private sector has
this portfolio by 2030, meaning billion-dollar investments
a preponderant role, both in project development and
to ensure Mexico’s energy availability under the best
financing. Unlocking the value chain to private initiative also
possible conditions to compete globally. Second, 35
disrupted the financial system under which it previously
percent of the energy produced must come from clean
operated. The amount of resources required to bring utility-
energy by 2024. We are on track as a country and NAFIN
scale projects to their successful conclusion and meet the
will continue assisting all efforts to support the Energy
country’s energy needs are estimated to be near US$250
Reform, particularly in its renewable energy component.
billion. This cannot be provided by either commercial or
The good news is that renewables are here to stay and we are leaving behind a better world as we detach our electricity system from fossil fuels. The challenge will be
NAFIN is a Mexican development bank that financially supports
dealing with PV and wind power’s intermittency. To date,
small and medium companies with the federal government,
the fundamental solution is relying on natural gas for grid
primarily through guarantee programs with commercial banks
stability and we are expecting the technological disruption
to foster their growth, both locally and internationally
of battery-based storage systems.
