Renewable energy investment strategies of National Oil Companies in Latin America: Rationales under divergent macroeconomic and regulatory contexts

This paper examines why two Latin American National Oil Companies (NOCs), Argentina’s Yacimientos Petrolíferos Fiscales (YPF) and Colombia’s Ecopetrol, have adopted different financing strategies for renewable energy investment despite achieving broadly comparable additions to renewable capacity. Through a comparative case study combining semi-structured interviews, company and policy documents, and quantitative analysis of corporate and renewable-energy debt instruments, the paper examines how macroeconomic conditions, renewable-energy business models, corporate financial constraints and organizational structures shape financing choices. The findings show that the divergence between project-oriented financing at YPF via its subsidiary YPF Luz and corporate balance-sheet financing at Ecopetrol reflects different combinations of conditions. In Argentina, severe macroeconomic instability and high sovereign borrowing costs made conventional corporate financing difficult. Project finance did not eliminate country risk; rather, RenovAR auctions, FODER and World Bank guarantees, USD-denominated long-term power purchase agreements (PPAs), currency-risk mitigation and the MATER market created sufficiently bankable renewable projects to attract external financing. YPF Luz’s ring-fenced structure further separated renewable assets from hydrocarbon activities, facilitating access to green-labelled and multilateral financing and enabling its financing strategy to evolve from development-bank and project financing toward capital-market and green-bond issuance. Ecopetrol’s reliance on corporate finance reflects Colombia’s comparatively stable macroeconomic environment and stronger corporate credit profile, alongside an underdeveloped domestic renewable project-finance market and lengthy public-entity approval requirements. More fundamentally, Ecopetrol’s renewable assets primarily support self-consumption and generate energy-cost savings rather than standalone market revenues, reducing the need for independent project vehicles. Its debt position further limits the benefits of project finance because controlled special purpose vehicle (SPV) debt would generally remain consolidated under International Financial Reporting Standards (IFRS), weakening the potential for off-balance-sheet financing. The comparison shows that financing structures are context-dependent instruments, shaped as much by organisational design as by macroeconomic and policy conditions.