Ability to Adapt, Resilience Propels Success
STORY INLINE POST
Q: What challenges did ErgoSolar overcome in 2021?
A: 2021 was a complex year. Many changes in the dynamics of commercial and social environments impacted companies' business models. Disruptions in the supply chain were particularly troublesome. ErgoSolar was not immune to these circumstances. Fortunately, energy consumption is a crucial input for all productive activities.
To confront the pandemic, we mainly focused on people's well-being and worked closely with our team. We transformed our work scheme toward home office to maintain the safety and health of our staff. Achieving this security was one of our greatest challenges, as well as remaining united as a team despite the physical distance. To stay connected, we launched home-based recreational activities, as well as nutrition and physical activity challenges. Through these efforts, we became closer.
In terms of sales, we sold less in 2021 than in 2020. We are accustomed to triple-digit growth; the drastic decrease in sales truly challenged our operation. To adapt, we transformed processes, making them more efficient and reducing our operating costs. Thanks to this resilience, ErgoSolar is today one of Mexico's Top 5 solar energy companies.
Q: Why is the ErgoTrust model a differentiator for the company's services?
A: Normally, solar companies simply sign a contract and provide the service without the customer being aware of the installation process. Following a heavy investment, clients expect a reduction in their energy bills. However, most of the time, the amount of energy saved remains vague. Our ErgoTrust methodology accompanies the client throughout the process.
We developed an application, called ErgoApp, with which the client can visualize all stages of the project’s status. ErgoApp also notifies the client about the progress of the installation process with photos and videos. During the permitting stage, ErgoSolar is the only solar company in Mexico that has specific software to manage the paperwork required by CFE. We distill the best practices of all our previous projects in this software, which allows us to be one of the fastest in paperwork and permit management in the market.
We also deliver the so-called wow factor. In these key instances, we aim to consolidate the client relationship. At the final stage, we hold a festive inauguration for the system so that the client can celebrate their official start in PV-solar electricity generation.
Regarding the after-sales process, we are one of the few solar companies that have an asset management area for O&M, through which we follow up on the almost 1,000 projects we have installed to report energy consumption and cost savings directly to clients. This allows them to visualize the benefits of their investment.
The ErgoTrust methodology has distinguished our customer service. It has led to 70 percent of our clientele becoming repeat customers.
Q: In which solar power production business segment does ErgoSolar see its greatest growth opportunity?
A: There are severe blockages regarding utility scale developments. Companies in this segment have suspended their growth plans due to the uncertainty caused by the energy reform initiative. The sector is at a standstill for the moment, although we do not expect it to remain paused beyond the midterm. The area with the greatest potential is to generate electricity where it is consumed, not only via distributed generation (DG) but also with isolated supply schemes. We are carrying out one of the largest off-grid projects in Latin America. We are convinced that localized projects are more efficient since less energy is lost in transmission and fewer additional infrastructure developments are required. Therefore, we are focusing our efforts on continuing the consolidation of our Energy as a Service (EaaS) offering.
Q: What are ErgoSolar's financing options for these project developments?
A: During the pandemic, companies focused on saving money as much as possible, preferring to invest strategically. ErgoSolar does not divert these precious company resources to energy generation projects. We let them focus on their business model: ErgoSolar ensures that the solar project does not involve any upfront costs for the client. Because of the company’s efficient funding and operations, financing can be provided for five years, unlike power purchase agreements (PPAs) that are signed for 15 or 20 years. For these five years, our customers pay 15 to 20 percent less on their electricity bill. Once the term is over, customers own the entire asset.
Q: How has ErgoSolar financed its internal technological innovation?
A: Mexican companies usually do not make innovation part of their investment strategy. Since its founding, ErgoSolar has invested every year in innovation. During our first years, the company did not distribute dividends but rather reinvested its profits. This tradition consolidated our financial policy of reinvesting between 30 and 40 percent of our annual profits in internal R&D. Owing to this R&D program, ErgoSolar owns four patents in the market. Our developments include smart lighting for public spaces and the development of the Octopus Energy technology software, which regulates energy consumption for industrial machinery and makes it more efficient. This technology, manufactured and developed in Mexico, is already being tested in Canada and Chile. Octopus Energy represents 10 percent of the company's sales. We have also ventured into the development of technology for hydrogen use. We have a project with an international company that will use 50 pieces of equipment developed by ErgoSolar.
Q: Concerning your ESG strategy, what has been the impact of the company’s Energy with a Cause program?
A: Seven years ago, we created the program Energía con Causa to carry out DG projects for schools, orphanages and nursing homes. We started out with one project per year and have completed seven projects, providing 120 children and elderly people with free electricity. DG projects enable scarce financial resources to be redirected toward scholarships or food instead of paying the electricity bill. At the end of 2021, Energy with a Cause was legally founded as a civil association. We have partnered with a key crowdfunding company, Red Girasol, as well as the international company Gear Power to increase our number of projects to 10 per year. In 1Q22, we closed the funding for the first two projects for 2022.
Q: What are ErgoSolar's main goals for 2022?
A: Our first goal is to double our sales from 2021. One of our main challenges is to continue reducing costs and remain profitable in the face of inflation and supply chain disruptions. We also want to increase our customer satisfaction rate from 82 percent to 90 percent. We also continue to expect 10 percent of our revenue coming from the technology we produce internally. New objectives include venturing further into energy efficiency and the installation of battery energy storage systems (BESS) for industrial clients, along with spurring further hydrogen developments. Furthermore, ErgoSolar aims to continue its focus on personal support for our associates, consolidating teams that cooperate without disruptions.
ErgoSolar is a Mexican company based in Puebla and specialized in energy efficiency and solar PV. Through its innovative process and services, ErgoSolar empowers clients to transit toward more efficient and greener energy consumption.