Iberdrola, Ideal Ally for Mexico’s Automotive SectorBy Cas Biekmann | Tue, 10/13/2020 - 08:50
Q: What is Iberdrola’s history in Mexico and how has the company worked to help the country’s industry meet its clean energy needs?
A: Iberdrola focuses on the energy sector. The company was founded 140 years ago in Spain. We have been in Mexico for the past 20 years and have a strong presence in numerous countries, including the UK, the US and Brazil. The company bases its strategy on power production, transmission and commercialization of energy. In the case of Mexico, our presence is mainly focused on power production and commercialization because transmission and distribution are exclusively tied to the state. The commercialization of Iberdrola’s energy is aimed at the industrial sector, since CFE holds a monopoly in the domestic segment as well.
In this regard, the automotive sector has been essential for us. It has undergone significant developments in recent years and plays a significant role in Mexico’s economy. In this area, we are privileged to have the trust of many companies. Our activity is located mainly in the automotive producing states, such as Nuevo Leon, Guanajuato and Puebla.
Q: How is Iberdrola helping Mexico’s sustainable development, especially when costs are of the essence?
A: Iberdrola’s commitment to Mexico is for the long-term. Our investments are capital-heavy and take time to see returns, which is on par with the country’s energy sector. This is why our business is rooted firmly in Mexico’s development. We understand that the energy sector is crucial to global competitiveness. To compete, costs need to be kept down. This is the role that Iberdrola aims to play in Mexico: to provide our clients with low-cost, reliable energy so that they can offer fair prices inside and outside of the country. During the COVID-19 pandemic, this has become even more relevant as companies are looking to save on costs more than ever before. Iberdrola has a great deal to offer in this regard. Many companies continue to rely on us because they know we are fully committed to their goals and Mexico’s overall development.
Iberdrola is also strongly committed to sustainability. Renewable energy in particular is a strong part of the company’s DNA. We are the biggest developer of wind energy on a global level and we want to expand clean energy’s footprint even further. Iberdrola operates numerous renewable power plants in Mexico and seeks to expand on this front because companies in the automotive sector increasingly are demanding sustainable energy to meet their own commitments. This is where Iberdrola can be the ideal ally.
Q: What aggregate value does Iberdrola offer to the energy-intensive automotive manufacturing industry?
A: Due to Iberdrola’s size and scope, we can offer solutions tailored to every client’s unique needs. Many energy users in Mexico are tied to the usual tariff structure. Iberdrola breaks with this paradigm and works to come up with a measured solution. This also depends on the type of energy our clients require, such as 100 percent renewable energy. We also offer schemes that take the client’s own risk factors into account. By eliminating these risks, we greatly boost their competitiveness.
Most importantly, Iberdrola’s goal is to provide added value with its products. We already see this in many markets where we deliver more than just lower cost energy. This includes the potential to install solar systems on our client’s rooftops, especially through our Smart Solar solution.
Q: How can automotive companies benefit from the Smart Solar solution?
A: The idea is to have a solar system installed at the client’s operation. This could be mounted on a rooftop or on the ground. We assess the feasibility of the project and then take on the costs of installing the system ourselves. This means that the client does not need to invest at all on this front. We then sign a long-term power purchasing agreement (PPA), during which the client benefits from 100 percent renewable energy. If a company were to turn to other forms of energy, they could become a victim of volatile energy prices. Through Smart Solar, the client is assured that they will benefit from consistently cheap prices. The solution, therefore, meets the automotive industry’s two major energy concerns: renewable energy and a fixed, low price. This allows clients to focus on their core business. A recent example is a major logistics company, for which we are working to implementing this solution at its facility in the State of Mexico.
Q: What is Iberdrola’s approach to staying on top of technological developments?
A: The company allocates between US$200 million and US$250 million toward this end. We are at the vanguard of technological development on many fronts in the electricity industry. We have developed some of the most advanced wind parks in the world, for instance. In markets where Iberdrola is present in the domestic segment, we have been boosting the adoption of electric vehicles by implementing recharging stations. The company is at the forefront of the development of green hydrogen as well, a crucial sustainable energy source that aims to conquer the future. Iberdrola has created a directorate focused on this subject so that it can develop these projects on a global scale. We already have developed green hydrogen-based projects across the world, hand in hand with local industries. In sum, being on top of technological developments is a key priority for the company.
Q: What is a concrete example of a development in the automotive industry
A: According to forecasts, the demand for energy in the automotive industry will double in the next 15 years. We live in an ever more electrified world, a reality we need to be aware of and which the automotive industry cannot escape. When looking at electric vehicles, the sales in Mexico have been around 30 percent lower than production. However, hybrid cars have seen an uptake in sales by 12 percent compared to last year, despite the pandemic. This demonstrates that more people want some form of electrified vehicle, which takes less toll on the environment. Iberdrola understands this demand and is playing an important role in the implementation of recharging stations, which is becoming a main staple in the automotive industry. Many of these developments will only be successful if both the automotive and energy sectors work together to make them a success. As the automotive sector becomes more selective in the companies it chooses to ally with, Iberdrola is clearly a strong partner for consideration.
Q: How does Iberdrola work to spur Mexico’s development through its social approach?
A: Our interactions with the Mexican industry are incredibly important to us. Sixty percent of our purchases occur in the Mexican market and as such, we contribute to the local industrial sector. But the communities located around our projects are crucial to us as well. The wealth Iberdrola generates remains in the communities surrounding its projects. Among our efforts, we develop local educational projects. For example, we provide scholarships and foster the inclusion of Mexican women in engineering-based higher education. In this segment, female participation is not exactly high, so for us it matters when we make a difference. Another endeavor is to build schools in communities that were strongly affected by the 2017 earthquake, in states such as Oaxaca. Furthermore, we initiated the “Lights of Hope” initiative, where we will bring electricity via solar panels to 30 communities in the Huasteca Potosina, an area that due to its rural location lacks access to this essential service. The project is a MX$160 million (US $8 million) and represents an important commitment to the wellness of our communities.
Q: What goals is Iberdrola working toward in the short-term?
A: Iberdrola has 24 power plants in operation in the country: 16 combined-cycle and cogeneration plants, six wind farms and two solar parks. For the short-term, we are working to construct several power plants in various stages of development. One wind farm, located in Guanajuato, will start operations in October. Another 200MW solar plant is under construction in Puebla and tied to two other power plants we have in operation there. There is also a combined-cycle power plant being constructed in San Luis Potosi, which we hope to bring online in 2022.
Iberdrola continues to have complete faith in Mexico and focuses on developing projects aimed at the country’s major industrial sectors. Our mission is to grant competitiveness to its players and help Mexico comply with industry demands for renewable energy supply for the long-term.
Iberdrola is a Spanish public multinational electricity utility based in Bilbao. It is present in dozens of countries on four continents serving around 100 million customers. In Mexico, it has 24 power plants in operation.