About

Number of years practice:

30+

Principal practice areas:

Project Finance, Project M&A, Project Development, (all focusing on wind, solar and other renewable technologies)

Bar admissions:

California

Languages spoken:

English

Jeffrey Chester, global head of energy project finance, has deep experience handling transactions related to renewable energy, having closed more than 100 wind and solar power projects throughout the United States and Mexico. Chester has been centrally involved in the development of the equity, debt, and capital markets for renewable energy projects, and represents developers, sponsors, lenders, and investors in a wide variety of energy finance transactions. He counsels a broad range of participants on renewable energy finance transactions involving construction and term debt, back leverage, tax equity (partnership flips and sale leasebacks), and private equity capital financings. He also regularly negotiates on behalf of clients in renewable energy development matters, including power purchase agreements, turbine and solar panel supply agreements, EPC agreements, hedges, and other off-take arrangements. Additionally, he assists clients in addressing an array of development issues including transmission and interconnection, real estate procurement, and environmental issues.

Notable representations include representing Oak Creek Energy Systems, Inc. on the development and sale of Mesa la Paz, a 300 MW wind power project in Tamaulipas, Mexico. That project has a bi-lateral PPA with Penoles and Vestas-supplied wind turbines. The project was sold to EnerAB, a joint venture between Grupo Bal and AES, and the project is currently under construction with COD expected before the end of the year. Another notable case concerned Tres Mesas 3, a 50 MW wind project located in Tamaulipas, Mexico, which won a PPA in the second CENACE auction and was sold to Engie Mexico with construction beginning in August 2019. He is also involved with a case concerning Tres Mesas 4, a 100 MW wind project, also in Tamaulipas. This project equally won a PPA in the third CENACE auction and was sold to Engie Mexico. Construction is expected to begin before the end of the year with COD scheduled for 2020.

What differentiates your Mexico-facing practice from those of your US competitors and peers?

I represent developers in Mexico in connection with the development, financing, construction and sale of wind and solar projects. I have been active in importing US legal and financial technology into the Mexican market and designing structures and products that are unique to this market. For example, I designed and implemented the first common facilities trust in Mexico that allows the sharing of common infrastructure among projects with different ownership and financing structures. I was also responsible for designing a multi-project financing with offtake and borrowings in Mexican Pesos and US Dollars with many unique features including aggregating MXN and USD for purposes of meeting DSCR’s and increasing debt size.

What are the advantages and disadvantages of advising Mexico-based clients from an office in the United States?

Advantages include intimate familiarity and expertise in NY law which governs most financing and M&A transactions involving US investors of financing parties, as well as intimate knowledge of US market practices which are being imported and used in Mexico and Latin America. Advising Mexico-based clients from a US office also provides clients with a strong 24/7 work ethic.

What changes in the commercial and/or legal market do you anticipate in the 12 months ahead in Mexico?

The Mexican energy market has been undergoing a major transition after the enactment of the new Energy Law opening up the market to competition. After the election of Andrés Manuel López Obrador, the new government cancelled the fourth energy auction and has slowed down the transition. This has put many projects on hold. However, we are seeing a bi-lateral PPA market emerging with corporate and industrial offtakes (similar to the US C&I offtake market) and believe that this will become a driving force for new project development and construction over the next 12 months.

What influence will legal technology have on US/Mexico working practices in the future?

US legal and financial technology will continue to play a significant role in the Mexican market, particularly with renewables. As discussed above, the use of a common facilities trust has been successfully imported into Mexico. Another example is the use of two on-site construction contractors for the construction of wind projects – the turbine supplier under a turbine supply (and in some cases installation) agreement and the balance of plant construction contractor – as opposed to a single EPC Contractor. I fought and won this battle with US lenders and investors for the first US wind project financings in the 1990’s and again with the lenders and investors in the first Mexican wind project financings. Mexico will continue to import US legal and financial innovations as the market develops.

What is your perception of in-house counsel’s priorities in terms of client service when working with US-based law firms?

Excellence, certainty of execution, efficiency and cost.