Adaptability Key to Survival

The ability to adapt is key to survival. German firm SoWiTec has exemplified this as it has entered and opened markets across the globe. After establishing a strong presence in Brazil, Peru, Uruguay, and Argentina, the company opened its Mexican chapter. Combining this multinational expertise and taking advantage of the local talent pool has proven to be a competitive asset to aid the firm’s success. The price of setting up a large wind park in Germany is very high, explains Alejandro Robles, General Director of SoWiTec’s Mexican subsidiary. The comparatively modest price of setting up parks in Latin America has given the region an important place in SoWiTec’s expansion plans. Its strategy for the Mexican market revolves around developing projects with the technical and engineering aspects being handled by the German office. However, taking full advantage of local professionals is crucial for navigating the market. “Because of CFE’s control over the power industry, it is hard to come across professionals specialized in renewable energy,” explains Robles. “We find it more feasible to invite young talent to come on board and then teach them about renewable energy.”

SoWiTec is currently scouring Mexico for suitable wind farm sites that combine a good wind resource with access to grid interconnection. To help weed out unsuitable locations, SoWiTec uses the rule that 115kW grid infrastructure and substations must be located within a distance of 1km for every 3MW of potential installed capacity of the wind site that is being evaluated. The first step is looking for favorable interconnecting conditions followed by seeking areas with the least constraining environmental restrictions. SoWiTec sees the Mexican grid as much better than the available infrastructure in some other countries where it operates.

The firm avoided competing for resources against other companies by keeping away from crowded hotspots, such as Oaxaca, Tamaulipas, and Baja California. Besides land availability, SoWiTec found several advantages in working outside Oaxaca. For instance, the company deals mainly with private landowners and avoids the problems that often crop up when approaching ejidos. Getting to know the stakeholders, involving them in the projects, and establishing mutually beneficial payment mechanisms also guarantee the operability of the endeavors. As Robles explains, it is about getting landowners and other 

involved parties in the right mindset. The northern part of the country, however, has proved to be a great place to develop projects. Land conditions vary according to region. “The south mostly consists of ejidos and small properties, while in the north it is easy to find private land owners with 10,000 hectares of property. While in Oaxaca you might find a suitable area that has over 1,000 owners, in Monterrey we usually deal with one or two proprietors. The social risks are different,” says Robles.

With 5GW currently under development, SoWiTec’s projects include a joint venture with Grupo Santander for an 850MW development and an additional 800MW with Enel, which was hired to start the construction of a project in San Luis Potosi. The company is well diversified and strives to develop as much as possible in Mexico. Regarding the firm’s partnerships, Grupo Santander was looking to develop projects outside Oaxaca within two to three years. SoWiTec happened to have several such projects in the north of Coahuila, Monterrey, and San Luis Potosi, which the banking group found quite appealing. 

Being associated with giants like Grupo Santander and Enel has allowed SoWiTec to gain attention from prospective investors. These partnerships showcase the mutual benefit each party draws from them. The Italian and Spanish giants needed external help to develop local projects while SoWiTec benefits from its partners’ negotiating and financial abilities. Other alliances were struck with turbine manufacturers. For this, track records are important beyond a manufacturer’s number of installed turbines. The German firm needs to assure that a supplier is capable of installing a turnkey project in Mexico. “Handling EPC in Mexico is no easy task; we need to know they can build the wind farm. Our main criterion is to ensure profitability,” explains Robles. When it comes to wind turbines, the company has to enforce these standards in order to keep developments cost-effective.

In terms of precise plans, SoWiTec is seeking to develop 2GW by 2017 in the country. “We expect to have at least 1GW up and running by 2016,” says Robles when emphasizing the importance of working faster than the competition and having strong allies on EPC, financing and supplies to ensure on-time project delivery and credibility.