40 Years of Experience Shows in Cogeneration, RNG Know-How

Q: How does the company highlight its added value?

A: Gruppo AB started as a very small company 40 years ago doing electrical work for one company. Soon after, Gruppo AB developed and this company eventually became its supplier. Over time, the company amassed its main added value: know-how. AB stands out from its competitors because there is no other company doing what it does and with as much experience. This has made us a strong player in technology development and application and in after-sales services. Gruppo AB has accumulated 50 million operating hours from more than 1,450 power plants over the years. This has provided us with a great deal of knowledge regarding equipment maintenance and preservation.

Q: How does the company assess demand for cogeneration in Mexico, considering the regulatory uncertainty that has dominated the sector’s outlook?

A: Since we arrived in Mexico in 2016, cogeneration has been a viable and attractive technology for companies. The difference between the cost of natural gas and electricity has always been high, which is a great indicator of whether a country would be drawn to combined heat and power (CHP) or not. The technology is there, and so are the economics. What has been a problem are the permits and legislation that companies need to manage when installing it. Any project over the 0.5MW threshold, which requires permitting, has been stopped due to a lack of permits coming from CRE and interconnection from CENACE. Cogeneration below 0.5MW is possible but complicated because the economy of scale does not always work in its favor, even though some successful examples exist.

Knowing this, Gruppo AB suggests doing a feasibility study for prospective clients. Prior to making any down payments, clients should start the permitting process. This might delay a project by up to two years but once permits are available, clients will have certainty that the project will start and become a success and the equipment will not remain idle.

Q: How does Gruppo AB ensure that its projects quickly achieve ROI?

A: It all comes down to after-sales services, which is the main factor that can be controlled after installation. In cogeneration, there are only a few main costs, such as natural gas as fuel. As a commodity, companies have little control over its price. In contrary, after-sales services directly influence how operational the equipment remains, which can be controlled by good management. In this regard, it is better for clients to pay more on services than to face failures in their machinery, leading to costly stoppages that could last weeks or even months. Therefore, AB distinguishes itself by offering its clients a full-service agreement with a protection plan that covers all preventive and corrective maintenance. When a machine does break down, we can resolve it swiftly. This is possible due to AB’s size, allowing most of our clients to have this kind of coverage and boosting equipment availability to above 98 percent. We can guarantee 95 percent as a threshold, but historic figures for natural gas-based equipment show that we can surpass that.

Q: How does AB’s use of Industry 4.0 technology factor into these results?

A: We use DOABLE, our digitalization branch, in two ways. We are focused on making our projects more efficient and faster. But we also want our customers to order our machines through our website. If we have the customer’s required benchmarks, we can design solutions in an extremely efficient manner, shortening the implementation time. Another focal point for DOABLE is the large number of operating hours AB is able to reach. All our equipment is connected so we receive data. We use this information to predict trends regarding when a major failure is bound to occur, allowing us to anticipate these failures. Eventually, we want to reach a point where the system sends out an alarm to avoid unexpected shutdowns.

Q: How could the development of Renewable Natural Gas (RNG) fuel benefit Mexico?

A: The RNG business started a couple of years ago due to trends in Europe and the US, where players were interested in producing biomethane rather than generating biomass to produce power. In Mexico, this market has not yet taken off. Usually, these kinds of fuels require help from legislators through incentives, just like the already established renewable technologies before them. Even though a law was recently passed to encourage the development of biogas, no real incentives have been established in our country. However, global companies want to reduce their carbon footprint based on their own objectives. By signing clean PPAs, they can take simple steps. If they have a thermal process, they can only burn a fuel like natural gas. It is difficult to get rid of this carbon footprint but RNG and biomethane offer a solution. As a result, we have seen a large market emerge based on companies that are willing to increase their costs to become more sustainable. We see this as an opportunity for Mexico. Hopefully, we will eventually see this beneficial technology incentivized in the Mexican context. The company’s BIO4CHANGE, which produces biomethane, could play a role in bringing down the economic costs.

Q: What are Gruppo AB’s main priorities for 2021?

A: We want to bring all our installed power plants online despite the uncertainty in the market. Helping our customers achieve savings is greatly important to us. Mexico needs more successful case studies. In the past, we have seen cases where cogeneration or biogas projects did not end successfully. Our main objective is to foster more success stories, not only to promote ourselves but to promote the technology in general so that others can benefit. CHP might in the end not be the final solution toward global decarbonization but it will remain an important factor. We also want to install the first RNG plant in Mexico on an industrial level. From there, we hope to set off a chain reaction and further develop RNG.

AB Energy is a global leader in the cogeneration sector in both technology and implementation, with a strong presence in the Mexican market. It also uses its technological prowess in the development of biofuels and renewable natural gas.