Pattern partners with CEMEX on renewable energy development in Mexico

Pattern Energy Group LP (Pattern Development) has signed a joint venture (JV) agreement with CEMEX Energia, a subsidiary of CEMEX S.A.B. de C.V. (NYSE: CX), to develop power projects in Mexico.

The CEMEX Energia/Pattern Development JV envisions advancing development opportunities and acquiring projects from third parties in the early to mid-stages of their development process. The JV expects to build a portfolio of at least 1,000 MW of renewable energy projects over the next five years.

“Through this strategic partnership with CEMEX Energia, we have set a goal of jointly developing 1,000 megawatts of renewable generation in Mexico over the next five years,” said Mike Garland, President and CEO of Pattern Development, in a Feb. 19 statement. “Mexico is a natural expansion market due to our development headquarters in Houston and our team’s experience in developing over 1,000 megawatts of wind projects in California, New Mexico and Texas. We enter the rapidly growing renewable energy market in Mexico with a strong and experienced local partner in CEMEX, a global leader in building materials with a successful track record of developing projects in Mexico.”

“We are very enthusiastic about Mexico’s energy sector future, and we will leverage our experience in developing projects that benefit the country,” said Fernando A. Gonzalez, CEO of CEMEX.

“We are very pleased to sign this joint venture with Pattern Development that will help us leverage the use of our knowledge to continue our industry-leading expertise in the use of clean energy and alternative fuels,” said Luis Farías, CEMEX Vice-President of Energy.

Recent reforms in Mexican energy laws, including a mandate for 35% of generation to come from clean resources by 2024, create opportunities for development of Mexico’s wind and solar resources.

Pattern Development’s affiliate, Pattern Energy Group Inc. (NASDAQ: PEGI) (TSX: PEG), has the right of first offer (ROFO) to acquire the projects it develops. Pattern Energy maintains a list of identified ROFO projects, which represent near-term acquisition opportunities. The ROFO list represents a portion of Pattern Development’s 4,500 MW pipeline of development projects, all of which are subject to Pattern Energy’s right of first offer.

With a long history in wind energy, Pattern Development’s highly-experienced team has developed, financed and placed into operation more than 3,500 MW of wind power projects. Pattern Development has offices in San Francisco, San Diego, Houston, New York, Toronto, Santiago, Chile, and Tokyo, Japan.

Cement company expands into the energy field

CEMEX on Feb. 19 separately announced the creation of CEMEX Energia. CEMEX Energia envisions advancing development opportunities with no significant capital commitments and expects to build a portfolio that aims to supply about 3% to 5% of Mexico’s electricity needs over the next five years.

“We are very enthusiastic about Mexico’s energy sector future, and we will leverage on our experience in developing projects that benefit the country,” said Gonzalez, CEO of CEMEX. “Our new energy division will be led by Luis Farías and his experienced team.”

The first milestone achieved by CEMEX Energia is the signing of the joint venture with Pattern Development, a partner backed by Riverstone Energy Ltd., with strong and proven development expertise that will help to put together a pipeline of renewable energy projects in Mexico and share the development costs, with the objective of creating significant development value. CEMEX Energía will have the option to take minority equity stakes in the energy projects developed by the joint venture.

“We are very pleased to sign this joint venture with Pattern Development. This is a mutually beneficial deal, that will help us leverage the use of our knowledge to continue our industry-leading expertise in the use of clean energy and alternative fuels,” said Farias, CEMEX Vice-president of Energy and now head of CEMEX Energia.

CEMEX will not consolidate any projects from this joint venture and any debt incurred to fund such projects will have no recourse to CEMEX. CEMEX expects to contribute approximately US$30 million into CEMEX Energia over the next five years.

Riverstone Energy is a closed-ended investment company that invests exclusively in the global energy industry, with a particular focus on the exploration and production and midstream sectors. To date, it has invested in nine energy companies spanning conventional and unconventional oil and gas activities in the Gulf of Mexico, the Continental U.S. and Western Canada.

CEMEX, with a foundation in the making of cement, is a global building materials company that provides high-quality products and reliable services to customers and communities in more than 50 countries.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.