A passion for power: Investing in Argentina's stable energy supply for economic development

Roger Nores of StoneWay Capital invests in the energy market in emerging countries with a passion: The young Argentinian-American knows that economic development depends largely on a stable power supply. In Siemens, Nores has found a partner that not just completed building four new turnkey-ready power plants for him in Argentina, but also helped Roger with financing the ambitious project and finding the right coinvestors.


by Roman Elsener

Should you run into Roger Nores on a busy street in Manhattan, you might mistake the lean 29-year-old Argentinian-American for a famous actor or a soccer star. The young man, who calls New York his home, definitely looks the part. Being from Argentina, he loves soccer, he admits, but lately, he hasn’t had much chance to play: The young investor spends most of his time on a plane – he clocked up around 120 flights last year alone.


However, his professional passion is far from the soccer field. Roger Nores heads StoneWay Capital, a privately held company seated in New Brunswick, Canada, with subsidiary Araucaria Energy S.A., headquartered in Buenos Aires. StoneWay, through their Argentinian subsidiary, construct, own, and operate simple-cycle power plants to provide electricity to the wholesale electricity market.

How the power business is going to look like ten years from now, in both the emerging markets and the developed world, is pretty hard to tell.
Roger Nores

New technology needed

“Before the current administration in Argentina came into power, we would experience blackouts, especially in the summer or on very cold days, even in the most developed areas like Buenos Aires,” Roger recounts. The new government realized the country needed more electricity, from stable sources. They called in a tender which received 40 or 50 offers from a lot of different companies and invested about 10 billion E in the energy market. Through the bidding process, Roger and Araucaria were awarded four Power Purchase Agreements to sell an aggregate of 686.5 megawatts of generation capacity to the state-owned Argentinian distributor CAMMESA. “My feeling is there is still a lot that needs to be invested in the Argentina power grid. A lot of the old equipment is still in operation, you need to get rid of that. You need to bring in new technology and lower that cost,” says Roger.


To achieve this goal, Mr. Nores and his team of about 15 coworkers – “I consider them family” – turned to Siemens. “We had to come up with a technology that was both efficient on simple-cycle and in an actual closing cycle. Siemens was the obvious choice – they have the best technology out there,” Roger says and adds: “We had a great connection with the Siemens guys. We started collaborating, and brainstorming around how to pull off this deal. We came up with a structure where they would almost give me a personal loan against the shares of the project. That was contributed as equity for the bondholders.” Soon, they received a lot of inquiries from Blackrock, Fidelity, Pioneer and Mundi, PGGM pension fund, Prudential, and a lot of very large players in the capital markets especially dedicated to emerging markets.

Four separate contracts

With a grin, Roger recounts his first meeting with Siemens: “Basically, I told them all I know is how to go to capital markets and raise money – I know very little about power plants, but I know this number has to work. They were very supportive from the first day.” Ultimately, StoneWay Capital and Araucaria Energy entered into four separate contracts with Siemens.

“The first one was the local piece in Argentina, where Siemens Financial Services provided critical support and capital for our project financing. Then followed the execution piece, the EPC, where Siemens provided the turnkey-ready construction of the power plants. Then we entered into an O&M contract, that defines how Siemens manages and runs the power plants,” Roger says, explaining that all the staff located on site are Siemens employees, monitored remotely by two control centers 24-7. On top of these contracts, Araucaria also entered into an LTP contract, a long-term service agreement under which Siemens covers replacements, should parts break down over time.


He might look like a pop star of the younger generation of investors, and was recently featured in Forbes magazine as such, but the versatile businessman clearly knows what he is talking about. Looking to the future, you can almost see the numbers crunching in Roger’s head during the interview. He needs no printed report, nor an assistant to pull up the numbers – he has them memorized.

A fast-changing market

“It’s really hard for people to think nonlinearly and incorporate the compounding effect of technology into their thought process,” Roger says and points to a by now famous example from the 1980s, when consulting firm Baker McKenzie was hired by the US utility Bell South to forecast how many cell phones would be sold in the year 2000. “Assuming all the factors of how digital technology would develop and take over the world, they came up with 800,000 cell phones being sold in the year 2000. The first day of the year 2000, 2 million cell phones were sold.”

“How the power business is going to look like ten years from now, in both the emerging markets and the developed world, is pretty hard to tell.” He sees a trend in the energy market towards migration from conglomerates into smaller companies and from large utilities to independent power producers (IPP). “But it’s shifting so fast that I wouldn’t be surprised to see another shift where IPPs become more of an intermediary, or a broker between the end consumer and the renewables producer, as opposed to the actual holder of the asset, in two or three years from now,” Roger says.


Part of the fast change is the new approach young investors bring to the table. “My generation, we think differently. We are not tied up with politics. We don’t like procedures too much. We don’t like bureaucracy too much. What I bring to Siemens is someone who is relating to the young people who are on the hedge fund side, looking for opportunities. It’s a lot easier for me to communicate with those guys and cut straight to the chase,” Roger reveals. But of course, all talk is no guarantee for success.


“You have to have a lot of energy employed to come up with a crazy idea and the willingness to go forward with it and take the leap of faith,” Nores says. He recounts how exciting it was for him to have the power plants built from scratch. “Having seen the empty fields and then how they look now after everything has been built and executed, is like a dream, and to actually touch the power plant is truly amazing.”


Roman Elsener is a news, business and technology journalist in New York City.

Picture credits: Photos by Stefan Falke, Video by Leane Clifton and Roman Elsener

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