Transitioning to clean energy has taken on a sense of urgency as hurricanes, floods and massive forest fires destroy communities and natural resources, and take a toll on economies worldwide. However, Arlington, Va.-based power generation company AES Corp. has been on the forefront of providing clean energy for a few decades.
“We believe we should be catalysts for a better world,” says Oscar Batres, Treasurer of AES Mexico, Central America & Caribbean region. “Climate change is real, and we need to take action with respect to creating a solution that is permanent.”
On its website, AES states it is committed to net-zero carbon emissions by 2050 for all business scopes, as well as those associated with the use of its energy products. “Today, carbon-free electricity represents roughly 7% of global primary energy demand. In 2050, we believe that will shift closer to 90% as renewably generated electricity becomes the primary energy source for virtually all activities,” the company said.
That’s a goal that aligns with Scotiabank’s Climate Change Strategy, which will see the Bank mobilize $100 billion by 2025 to reduce the impacts of climate change through lending, investing, financing and advisory, and to decarbonize its own operations.
For the past decade, Scotiabank has supported AES across every country in which the companies both have a presence in the Americas, said Marc Chouchani, Managing Director and Head, Power and Infrastructure Finance, Latin America & Caribbean, at Scotiabank. “We have very complementary views on both our approach to the sector and, going forward, carbon reduction, renewables investments and sustainability.”
The latest deal saw AES Dominicana and Scotiabank sign a US$36-million, five-year financing agreement in June for the construction of a photovoltaic (PV) project in the Dominican Republic. The Santanasol solar facility, AES’s second on the island, is expected to generate 50 megawatts (MW) of power and reduce CO2 emissions by an estimated 90,000 tonnes a year. The first one, Bayasol, is expected to come online in the next few months, contributing up to 50 MW to the National Electric System and reducing CO2 emissions by 81,000 tonnes a year, and should be quickly followed by Santanasol.
“That’s a reduction of 160,000 tonnes of CO2 a year once the two plants become operational in the next 12 to 18 months,” Batres said, noting that when you add in the company’s liquefied natural gas (LNG) production, CO2 emissions reductions will be about 1.1 million tonnes and represent savings of about US$300 million a year.
“The electricity matrix is a bit behind, that’s normal in developing countries. In the end, you need to have a reliable, baseload, efficient, cheap source of electricity that can complement the renewables,” Batres said.
That’s where LNG comes in. Baseload demand, which refers to the minimum level of electrical demand on a grid over a period of time, is usually satisfied by the most cost-effective power plants that can operate continuously with high reliability in the associated jurisdiction, including coal, heavy fuel oil, nuclear, and natural gas. For the past 25 years, AES has been contributing to power generation in the Dominican Republic primarily using LNG, and thus helping reduce the consumption of fuel oil. The company expects that sometime next year the country’s electricity grid will be operating on 70% natural gas.
“We believe it’s important for island nations to have a good mix of assets to provide stability and reliability across the country. With renewables, reliability is always a challenge because you depend on the sun and the wind,” Batres said.
The Dominican Republic has been moving away from more polluting sources of energy such as coal, heavy fuel oil or diesel to LNG, and AES has two of the largest and more-efficient LNG baseload plants there, Chouchani said. “It’s still fossil fuel, but it’s an important component of the transition to a more fully renewable power market. The evolution into solar and other renewables is the continuation of the process.”
AES contends its three-prong approach using renewables, LNG baseload plants and increased storage capacity will help the Dominican Republic, which is a signatory to the Paris Agreement, meet its Sustainable Development Goals to cut its greenhouse gas emissions 25% by 2030 from its 2010 levels. Over the next two years, AES plans to install more than 300 MW of renewables, while adding battery storage to complement its LNG-based capacity and help regulate frequency and reliability.
AES isn’t just adding renewable power sources in the Dominican Republic, Batres said. The company has 1.2 gigawatts of renewable projects planned or operating in Mexico, Central America and the Caribbean, with 538 MW constructed or acquired in the past four years. “We’re aggressively looking to expand our renewable footprint in the region as part of our global mandate,” he said. AES expects that by 2050 its global renewable portfolio will have increased to five times its current size.
“In every country, sustainability initiatives have a unique dynamic and progression. Whether it’s on hydro, wind, or solar, we’re working with AES to help them meet their sustainability objectives and be a financial partner,” Chouchani said.