Guillermo Garcia
Regional Director, Mexico and Central America
Arctech Solar
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View from the Top

Adapting Solar Tracking to a Shifting Energy Environment

By Cas Biekmann | Thu, 09/03/2020 - 16:34

Q: What is the company’s history in Mexico’s solar sector and what sets it apart?

A: Arctech Solar is a company of Chinese origin and has been active in Mexico for quite a few years. The company has grown rapidly. We have been able to close roughly 750MW in Mexico, both in projects stemming from the long-term energy auctions and via private power purchasing agreements (PPAs). Arctech truly believes that Mexico’s energy transition is important for the development of the country. Therefore, we have invested significantly in Mexico. We do this by providing technical services and offering competitive prices, betting strongly on the resources we have placed in LATAM in general, and Mexico in particular.

As a comparative advantage over our competitors, we have strong sales and engineering teams present in Mexico. They provide services to other countries in LATAM as well. We have a great deal of trust in the Mexican market because we understand the massive potential regarding solar irradiation and the Energy Reform. These are clear indicators that Mexico is the right place to be.

 

Q: How has the company adapted to the pandemic and recent policy shifts, and how has this process affected its 750MW portfolio?

A: It has been quite a challenge. In terms of our portfolio, we are experiencing a genuine slowdown with many of our customers due to the pandemic and recent policy shifts. Government interconnection and construction permits have become difficult to obtain for many clients. Nonetheless, most of these projects continue to make progress. We are working closely with our customers to provide them the best possible combination of technology, costs and support.

We have also noticed a great deal of uncertainty in terms of additional investments. Many developers in Mexico are planning to complete their projects, but they will likely be reluctant to bring additional investments into the country because of the political uncertainty. This has affected our plans for the short term, even though we are still optimistic that the situation may change. Given the prominence of renewable technologies in the global energy portfolio, we hope that the administration comes to recognize its importance. At this moment, we are cautious in terms of adjusting our services proposal. Probably, we will look at other mature and emerging markets in LATAM but will retain our strong focus on Mexico.

 

Q: Other than potential expansion in other countries, what new opportunities in different market segments in Mexico is the company eyeing?

A: Arctech is a very active technology company. We are involved in every step of a solar project’s life cycle from the structure standpoint. We take part in the design and develop our own technologies to offer the best technology for each project. We manufacture our own steel and parts as well, so having our own solid R&D area is crucial for us. In addition to being the largest structure supplier globally, offering fixed tilt and tracker options, in August 2020, we have introduced a solar roof solution for industrial and smaller-scale markets. We believe that the market may migrate to a stronger distributed generation (DG) approach. Considering that Mexico’s regulation offers simplified processes to build projects under 0.5MW, we think that this market may grow rapidly. The DG market has been under-developed to a certain extent. Even big businesses are becoming interested in DG because utility-scale projects will likely not develop as fast as they had before. We see the DG segment growing at double-digit rates, both in Mexico and in other LATAM countries.

 

Q: Which products in Arctech’s portfolio are most in demand?

A: We are in a strong position with our tracker technologies. Trackers are usually a viable option for projects above the DG cap of 0.5MW. The increased yield obtainable through tracking systems is in excess of 15 percent of generated energy in the Mexican context, as compared to fixed tilt. The price increase from using trackers instead of fixed systems is merely around 3 to 7 percent higher, although this depends on each project’s characteristics.

We see a trend in projects that require the two typical tracking architectures: one module in portrait and two modules in portrait, which usually depends on the project characteristics. Another important trend to consider is the usage of bifacial modules, and tracker with the capabilities to support them adequately. Arctech focuses on broad solutions to adapt to our client’s needs. Many solar module manufacturers are releasing larger panels as well, which has engineering implications at the structural level. Our customers in Mexico and Latin America are well-versed in technological advances, so as soon as new modules become available, we have to move rapidly to adapt our structures to support these changes.

 

Q: How does the company invest in R&D to stay on top of these fast-moving developments?

A: The company is very keen on R&D. We invest a significant share of our budget in this area, allowing us to be competitive in different markets. Arctech Solar is the largest company globally in terms of structure. We have around 24GW of installations globally. Originally, Arctech was focused on fixed structures, but R&D has been active in presenting commercially successful architectures for tracking. We are releasing a new generation of structures for two modules in portrait, which are designed to support very high wind loads. For example, you would previously be taking a risk by installing trackers in windy areas such as in Yucatan, Baja California or the Caribbean. Today, through strong R&D focus, we offer solutions that allow customers to install trackers in in even hurricane prone regions. Other than that, the company is trying to penetrate the DG market by finding cost-accessible solutions for roof-mounted solar modules.

This past June, Arctech Solar became a public company in one of the main markets in China. We received a great deal of interest from the market, allowing us to expand even further with an extended business portfolio, strengthening our global position and offering clear competitive advantages to our customers in the process.

 

Q: What are the main objectives for Arctech Solar in 2020-21 and what challenges could arise?

A: I think the largest challenge in LATAM to overcome will be the COVID-19 pandemic. We still need to see what the real impact to the economy will be, as this has not been so evident for solar projects despite some delays. Many privately signed PPAs and projects still stand, as players understand the benefits of solar energy. Nevertheless, the depth of the crisis is currently difficult to estimate. In Mexico, the government’s approach to renewables has been clearly negative, but in other countries, such as Brazil, chile and Colombia, there is both public and private interest to invest in solar.

As for the company, Arctech will continue leading in the Mexican and Latin American markets. Arctech has the infrastructure and investment set already in Mexico. We will complete the projects in progress and are working closely with our local customers to succeed in execution, considering that Mexico’s situation might change rapidly. Many of our current customers are present across the LATAM region as well, after all. We are cautiously optimistic in our prediction of what Mexico will look like in one year. Nonetheless, we are also investing strongly in markets with a clear potential growth, such as Colombia and Brazil.

It is quite evident that Mexico’s current administration does not have a clear interest in renewable energies, which will result in a loss of interest from international investors. However, the market trends on renewables growth and Mexico’s potential are still enormous. We will continue to try and take advantage of that because we have a lot to offer in the Mexican market. This year, total solar PV installations surpassed 5GW in Mexico, which is probably not even 10 percent of what can be installed in the country. At this moment, all government decisions related to energy are politically and ideologically driven, losing sight of a cleaner energy transition. In this scenario, we will continue working hard to offer the best possible technology for our customers in Mexico and beyond.

 

Arctech Solar is among the largest global manufacturers and suppliers of utility-scale, commercial and industrial PV tracking and racking systems. With over 24GW installed in more than 15 countries, its technologies focus on improved energy yields.

Photo by:   Arctech Solar
Cas Biekmann Cas Biekmann Journalist and Industry Analyst