Philippe Delmotte
CEO
ENGIE México
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View from the Top

A 3-D Strategy: Decarbonization, Decentralization, Digitalization

Wed, 02/22/2017 - 12:47

Q: What factors drove ENGIE to transform its business strategy at the global and local levels?

A: The energy landscape has changed profoundly in recent years. The transition is a global phenomenon that is revolutionizing the industry and ENGIE as a global energy company wants to lead it, which implies placing the environment at the core of our business. We also consider it crucial to include the digital revolution and technological breakthroughs into our corporate strategy. This led us to reshape our strategy and diversify our portfolio, placing greater importance on alternative sources of energy. As such, the three axes of our new strategy are decarbonization, decentralization and digitalization.

In Mexico we are implementing a strategy in line with the company’s global vision. Three key points drive our vision and operations. The first is an increase in our renewable energy assets. In this respect we achieved an important feat by winning two renewable projects in CENACE’s second power auction, which followed our success with Sol de Insurgentes in the first power auction. The awarded projects were Trompezon Solar Park, with a power production capacity of 157MW in Aguascalientes, and Tres Mesas III, in Tamaulipas, with 51.8MW of capacity. Both assets will supply 209MW of clean energy to the national grid. The second goal is to offer integral services to our current and potential clients. We are already serving almost half a million customers in Mexico and we are looking to expand our reach in both client numbers and services. Finally, we are looking to offer support to sustainable city development.

Q: How has the Energy Reform opened new opportunities for ENGIE’s operations in Mexico?

A: ENGIE perceives the Energy Reform as a fantastic opportunity to strengthen its business in Mexico. ENGIE won three projects in the power auctions. We are sure new opportunities will come in the near future, for example with the third auction in 2017. We also consider the implementation process followed so far by the Reform as a success. We see great potential for us in the natural gas and the electricity market liberalization. Regarding natural gas, the Ministry of Energy and CRE have already announced 2017 as the year when an open market will become a reality. ENGIE, a leader in transportation and distribution of natural gas, is in a privileged position to take advantage of this by entering the natural gas commercialization business and importing from the US.

Q: Given the recent dynamics, where do you see energy markets moving in the local and global contexts?

A: We expect future energy markets to develop mostly through renewables as a consequence of the global energy transition. Renewable energy prices have evolved considerably in the past few years and solar and wind energy projects are now as competitive as traditional fuels, as was witnessed in CENACE’s first and second power auctions. We also expect a wave of new services to accompany the growth in renewable energies, particularly those that mitigate the sector’s intermittent nature such as batteries, alternative storage or demand management solutions.

Q: What are the main challenges to complying with the contracting conditions?

A: The main challenge ahead is to implement the projects that were awarded. The first milestone is to finish the permit phase, specifically the local ones that are needed to start construction. We expect the support of the authorities in these processes because it is in the interest of the country to supply energy with efficient projects.

Q: How does ENGIE match its ambitions in clean energy production to its natural gas business?

A: We have three business lines in Mexico, one of which is power production. Cogeneration plants have been the core of our power generation business up to now because they are already efficient processes. ENGIE has around 311MW of cogeneration capacity installed. Besides electricity we offer steam to our clients and inject the surplus power to the grid.