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Matrix Renewables

SPAIN - Green Economy

Luis Sabaté

CEO, Matrix Renewables, Spain

Bio

Luis Sabate is CEO of Matrix Renewables. Prior to joining Matrix Renewables in 2021, he was COO of NEXTracker. Prior
to Nextracker, he was VP, CFO and COO of SunEdison’s C&I division in San Francisco. Prior to that, he was COO of the EMEA and Latam region. He holds a degree in Industrial Engineering from Comillas Pontifical University
and a PDD in General Management from IESE Business School. In addition, he graduated from the Centro de Estudios Financieros de Madrid with a Master in
Health and Safety.

"We rank among the top countries globally for investment returns, attracting keen interest from investors worldwide."
TBY talks to Luis Sabaté, CEO of Matrix Renewables, Spain, about energy, new markets, and priorities for the coming years.
How has Matrix Renewables’ journey evolved from its inception to its current status as a global energy platform?

Matrix Renewables began as a renewable energy platform backed by the TPG RISE Fund. Originating within the TPG ecosystem, the Fund identified a gap in the market and initiated Matrix to fill it. Founded in Madrid in 2020, our journey commenced with an anchor 1 GW deal with Trina Solar, establishing our presence in Spain, Chile, and Colombia. Subsequently, we expanded into Italy and the US. Presently active in Spain, Italy, Chile, and the US, we have transitioned from a startup to a robust entity, boasting 1.7GW of operational,under-construction and ready-to-build projects, with a projected reach of 2.6GW by year-end. Our diverse portfolio, totaling 14GW, encompasses photovoltaic, wind, collocated storage, standalone storage and green hydrogen technologies. Recognizing the potential of green hydrogen, we ventured into this domain 18 months ago by creating a separate branch “Hyren”, foreseeing its pivotal role in the future energy landscape.

What criteria do you use to assess opening up to new markets and what strategies do you prioritize?

We focus on Tier One countries with stable economies backed by hard currencies such as the euro or US dollar. Markets like the UK and Germany fit our criteria, whereas countries lacking this currency stability aren’t considered. Our target countries offer stable political support, strong corporate demand for energy and ample financing opportunities, all essential elements for our investment consideration.

What is the status of Spain’s energy transition?

We rank among the top countries globally for investment returns, attracting keen interest from investors worldwide. However, challenges persist in our markets. Lengthy permitting processes remain a concern, with project development cycles now stretching to a minimum of four years, up from two previously. Additionally, Spain faces capacity constraints in accessing the electricity grid, hindering new project deployment. Although the government is addressing this issue, available capacity is currently limited, favoring only previously interconnected projects. Moreover, a decrease in demand has led to lower-than-expected electricity prices, posing short-term challenges for investors. Nevertheless, as the economy transitions toward electrification, we anticipate these challenges naturally resolving over time.

Considering Spain’s emphasis on green hydrogen and solar energy, how does Matrix Renewables align its strategies with government initiatives?

Government policies aim to streamline permit processes, with certain regions in Spain implementing acceleration programs for high-quality projects. Ideally, I envision a system prioritizing higher quality projects for faster progression, though such mechanisms are currently absent. Collaborating with utilities, we offer insights gleaned from our experiences to improve their processes. This proactive approach fosters healthier sector development and we are actively engaged in leading this initiative.

How does Matrix Renewables currently approach storage projects, and what revenue streams do these projects generate?

In the short term, our focus is shifting toward storage solutions, marking a transition from our predominant focus on PV and colocated storage. By 2025-2026, the majority of our projects will center around storage technologies, driven by the pressing need for grid stabilization and market support. Our revenue strategy involves leveraging various revenue streams, including arbitration to mitigate current market challenges in Spain, while also contributing to grid stability through secondary market participation. Although the government’s mechanism for capacity payments is yet to be finalized, we remain confident in the viability of our pricing strategy.

How do you tailor power purchase agreements for large corporations to align with their sustainability objectives, facilitating their transition to sustainable operations?

One of our company’s greatest strengths lies in our ability to forge partnerships with major corporations that will ultimately purchase electricity generated by our plants. We recognize that for these corporations, factors beyond price are paramount. For instance, our successful power purchase agreement (PPA) with H&M exemplifies our commitment to addressing their supply chain concerns. By proactively engaging with suppliers and ensuring specific criteria are met, such as sourcing silicon from guaranteed origins and maintaining worker standards, we secured H&M’s trust in our product. This pioneering approach exemplifies our dedication to meeting the unique needs of our corporate partners and underscores our pride in cultivating such relationships. We have also cultivated a valuable partnership with Amazon, starting with a modest PPA that expanded significantly due to our ability to offer more than just competitive pricing. Our approach focuses on understanding the holistic needs of corporate clients beyond just cost, resulting in tailored solutions that resonate with them. As we venture into new markets, we prioritize companies seeking comprehensive energy solutions, reinforcing our commitment to delivering value beyond pricing alone.

What are the details of the company’s partnerships with Merck and BBVA on photovoltaic projects, as well as Banco Sabadell for the construction of a solar plant?

Merck seeks specific features beyond pricing in their projects. Banks with ample capital and debt, prioritize investing in sustainable ventures, often offering green loans. These leading banks, renowned for financing green projects, are drawn to our initiatives due to their alignment with predefined green loan criteria, ensuring our projects meet their sustainability benchmarks.

How do you assess the company’s performance in terms of ESG standards and operations?

We take great pride in our strong ESG commitment, which is ingrained in our company’s DNA, thanks to our funding from the TPG Rise Fund. Our investments prioritize environmental and social considerations, extending beyond mere compliance with regulations. By surpassing conventional ESG standards, we have demonstrated tangible benefits, such as increased economic returns and enhanced community relationships. Through various projects, we have proven that integrating ESG principles not only contributes to positive societal impact, but also improves financial performance. This approach fosters investor confidence, but also garners support from governments, serving as a catalyst for our business growth.

What are Matrix Renewables’ goals and priorities for the upcoming year?

Our key priorities include continued portfolio expansion, with 1.7GW operational and under construction and aiming for 2.5GW by year-end. We are focused on deepening our investments in battery storage and the green hydrogen economy while optimizing our capital structure to enhance investor returns. Transitioning from a growth-centric approach, we are now prioritizing efficiency and investor value, marking a strategic evolution in our business direction.

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