K&M’s Cooperation with CSIS: Turning Up the Heat on Geothermal Energy Development in Latin America
Congratulations to our colleagues Kathleen Cohen and Alfonso Guzman for co-authoring with CSIS a paper on unlocking the geothermal potential of Latin America and analyzing the challenges and opportunities.
The article discusses the potential for geothermal energy development in Latin America and the challenges that need to be addressed for its successful implementation. The region has significant untapped geothermal potential that could help meet its growing energy demand while reducing greenhouse gas emissions. However, the lack of a regulatory framework, financing options, and technical expertise has hindered the development of geothermal projects.
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K&M is excited to announce its engagement with the Water and Sewerage Corporation of The Bahamas.
The general objective of this consultancy is to prepare a Corporate Business Plan for the corporation. The plan is for the period from 2023 to 2027 and covers elements related to the quality of service, operations, finances, capital investments, and the legal and regulatory framework.
K&M is tasked with a wide range of activities in this assignment. These activities include developing a financial model, conducting a cost-of-service study, creating an action plan for tariffs, advising on water supply contracts, and establishing a prioritized capital investment plan, which will increase operational efficiency and quality of service and improve resilience. In addition, K&M will advise on changes to government policies and the legal and regulatory framework. In addition, K&M will lead several stakeholder engagement fora and present recommendations to WSC’s Board and the government.
K&M expands Caribbean resilience work with a new engagement, building on past mandates to assess the impact of extreme weather events on power systems.
The Caribbean has been experiencing increasingly severe weather systems due to climate change globally. These extreme weather events threaten critical infrastructure, creating more severe damage and lengthening the recovery and restoration times. Many utilities worldwide are studying the impact of more severe events on grid infrastructure and the improvement of overall resilience to these events.
A utility in the Eastern Caribbean engaged K&M to review its grid infrastructure and develop a method of measuring current grid resilience. The study aims to identify a pipeline of projects that will increase the resiliency of the transmission and distribution networks, generation, and renewable energy assets and set annual resilience targets.
A resilience event is defined as a low probability, high consequence event. A resilience metric aims to establish a baseline for comparison of the improvements resulting from implementing resilience projects. Based on the research conducted by the advisory team, there is no industry standard for resilience metrics. Reliability metrics (SAIDI, SAIFI, CAIDI, and CAIFI) are widely used to measure the system interruptions and durations of interruptions; however, these are reported yearly and not on a per-event basis.
The two main approaches to resilience are as follows:
- 1. Set resilience targets to strengthen the grid to the point where the grid absorbs the event with no interruption.
- 2. Accept that there will be damages and set resilience targets to reduce the time required for restoration work by quickly identifying the location and type of damages and prioritizing the restoration efforts so the most critical parts of the infrastructure are restored first.
K&M is working with the utility to develop a resilience metric that allows utilities to measure their progress in improving system resilience, identify climate resilience projects, and prioritize these projects to build a specific grid resilience improvement plan.
Building on its successful track record advising on renewable and conventional electricity generation projects, K&M is expanding its footprint to energy storage solutions. Having advised large energy users in Brazil, Colombia, Kenya, and other countries on adopting Battery Energy Storage Solutions (BESS) to improve supply reliability and reduce energy costs, K&M is now advising power utilities on adding BESS to replace thermal spinning reserves and provide frequency regulation and black start services. K&M was recently engaged by a power utility to perform conceptual design and procurement for a BESS.
The K&M team reviewed previous studies conducted in the region on unit commitment and generation dispatch, dynamic simulations, and the impact of adding BESS on power system operation. Our team evaluated various BESS use cases to identify the BESS beginning-of-life sizing and augmentations that meet our client’s requirements at the least cost. In addition, we aided with deciding how to procure the BESS and prepare a detailed procurement plan. K&M will soon commence preparation of the Request for Proposal (RFP) for procuring the BESS and will then assist the client in managing the procurement process.
K&M is proud to begin expanding its services into Electric Vehicle Charging as part of its commitment to supporting a clean energy transition. Now is the time to reduce the use of fossil fuels and replace them with clean energy.
K&M was retained by Water en Energiebedrijf Aruba (WEB) to assist with the identification and evaluation of business models for WEB’s involvement in the electric vehicle charging business in Aruba. In fulfillment of this objective, K&M will perform the following:
- Review electric vehicle regulations and business models in comparable countries.
- Identify business models for electric vehicle charging in Aruba, including models in which WEB is involved in the financing, construction, and operation of electric vehicle charging stations.
- Develop an economic model to analyze each business model and identify any new regulations required to enable these models.
- Provide recommendations to WEB for how to proceed with an electric vehicle charging business.
K&M Advisors was pleased to lead the Pre-conference workshop on CWUIC SP at the 2022 CWWA Conference in The Bahamas, where twelve Caribbean water utilities expressed their strong support for its establishment in the region. CWUIC SP, as a center of excellence for disaster risk finance and management, will support water utilities in the Caribbean in increasing their resilience to natural hazards. It will pool water utilities to create economies of scale with diversified geographic risk to cover natural hazard risk. As a segregated portfolio (SP) under CCRIF SPC, CWUIC SP will be a first-of-its-kind facility providing Caribbean water utilities with access to a formalized response program and emergency preparedness training, parametric insurance, and funding for investments in priority resilience projects. CWUIC SP is the direct response to the request from utilities in the region for support in managing their increased risk to natural hazards in the face of climate change.
Climate research projections for the Caribbean estimate that there will be a significant increase in the intensity and frequency of extreme weather events (for example, hurricanes, windstorms, tidal waves, and tropical depressions) in the twenty-first century that have the potential for substantial damage. Caribbean jurisdictions are among the most heavily exposed locations on earth to natural hazards. Infrastructure and services, including water utilities, in the Caribbean have suffered tremendous losses from disasters, and climate-induced events will exacerbate damages as Caribbean territories face the cumulative impact of multiple events.
In the wake of disasters, the recovery of water utilities in the Caribbean becomes critically important to safeguarding the health and to the economy. However, the insurance currently available to water utilities in the Caribbean to help them recover from natural hazards is often not affordable and typically provides insufficient cover. Currently, water utilities in the Caribbean face the following:
- Insurance premiums are expensive and low amounts of natural hazard coverage are currently available for water utilities from existing insurance providers
- Few utilities purchase insurance, effectively “self-insuring” for losses of this kind
- Forecasted intensity/severity of tropical cyclones and other events are likely to increase
- There are increasing costs to repair the damage.
While different levels of vulnerability across the jurisdictions exist, water utilities in the Caribbean are exposed to common natural hazards. CWUIC SP will benefit from economies of scale and provide insurance on improved terms versus what utilities could obtain individually on their own. Additionally, technical assistance support from CWUIC SP will support water utilities in the Caribbean in increasing their resilience to natural hazards.
CWUIC SP’s primary objective is to help utilities recover from natural hazards. To accomplish this, CWUIC SP will have three components. Together, these components will build the resiliency of the water utilities and the communities they serve. These three components are:
- Component 1: The CWUIC Response Program will provide support for preparedness planning and early recovery assistance among participating water utilities.
- Component 2: Parametric insurance will provide coverage against natural hazards and provide quick liquidity after a qualifying disaster event.
- Component 3: The CWUIC Resilience Program will facilitate access to funding from development banks and other financial institutions for priority resilience projects.
Renewable energy is a growing and ever-changing industry. Despite the complexities and nuances of the field, K&M’s team continues to expand its presence in the fastest-growing energy source, providing a comprehensive range of technical and commercial advisory services to diverse renewable energy projects. K&M has worked on over 3,900 MW of renewable energy due diligence in emerging markets, including over 110 technical, commercial, and market due diligence assignments globally.
Along with other technologies, our recent focus has been on wind power. We understand its advantages as a clean and renewable energy source and its cost-competitiveness with conventional thermal power generation. K&M has advised clients on planning, developing, or acquiring wind energy projects. K&M’s wind generation clients include utilities, investors, developers, and multilateral agencies in Latin America, the Caribbean, the Middle East, and Sub-Saharan Africa. Services provided to these clients include building or reviewing financial models to calculate LCOE or project and equity returns, estimating emissions reduction, reviewing project agreements (PPA, EPC, O&M) to identify and assess technical and commercial risks, regulatory review or development, technical advisory (site visits, wind resources, technical configuration assessment), market and dispatch analysis, and more.
Unlike traditional consulting firms, many of our staff have designed, built, owned, and operated power generation assets in developing countries. K&M is keenly aware of the consequences of projects that lacked thorough assessment and appropriate risk mitigation since inception. K&M conducts due diligence with the same excellence and attention to detail as we would for our projects.
Hence, K&M projects have concluded with significant achievements, such as bankable contract terms, calculating LCOE and emission that demonstrate the role of wind generation in least-cost generation expansion planning, identifying technical and commercial project risks and mitigation measures, and in general, giving solid arguments to investors, lenders, utilities, governments and regulators to support wind generation projects.
K&M is proud to announce that it has been ranked highly among global leaders by Project Finance & Infrastructure Journal Global (IJ Global). This ranking includes regional power and infrastructure project advisors, development banks, and legal experts. K&M has been recognized as one of the top financial advisors in 6 separate categories.
IJ Global League Table Report K&M Rankings:
#4 (tied) – Power Project Finance Financial Advisors
#10 (tied) – Power Infrastructure Financial Advisors
#7 – Renewables Project Finance Financial Advisors
#14 – Renewables Infrastructure Financial Advisors
#16 – APAC Project Finance Financial Advisors
#16 – APAC Infrastructure Financial Advisors
K&M is excited to be acknowledged as a leader in the power and renewables industry. We look forward to continued growth with our clients and beyond.
K&M is excited to welcome Mrs. Cristina Cano Sokoloff to the K&M team as Director, Policy and Regulation.
Mrs. Cristina Cano is a financial specialist and industrial engineer with 14 years of experience advising private investors, governments, international financial institutions, and public and private utilities on the economic, financial, transactional, and institutional aspects of infrastructure projects. Mrs. Cano has extensive experience building financial models used for project structuring, valuation, tariff design, business planning, and feasibility of energy, water, and transport projects. She has developed financial models for large transactions and conducted financial and economic analysis of projects and investments in over 20 countries in Latin America, the Caribbean, and Africa. Mrs. Cano has a graduate degree in Finance from ESADE Business School, Universidad Ramón Lull in Barcelona, Spain, and an undergraduate degree in Industrial Engineering from the Universidad de los Andes in Colombia. Born in Colombia, she is a native Spanish speaker, and fluent in English.
K&M is pleased to welcome Ms. Natalie Tsukano to the K&M team as Senior Analyst, Transaction Services.
Ms. Natalie Tsukano is a Senior Analyst on the Transaction Services team, where she provides economic, financial, and market analysis for energy projects. Prior to K&M Advisors, Ms. Tsukano was a Senior Consultant at Deloitte, where she provided economic and financial analysis for multinational companies for cross-border tax compliance, M&A, and business restructuring. She received her Master’s degree in Energy, Resources, and Environment from the Johns Hopkins School of Advanced International Studies and holds a Bachelor’s in Transcultural Studies from Waseda University.