Added Value: The Ironclad Strategy for Distributed GenerationWed, 02/21/2018 - 13:13
Mexico has a richness of resources it could harness to produce energy that requires no digging or drilling. You do not even have to look hard to find it. “There are news reports that Mexico has a fossil treasure buried deep underground in the Gulf of Mexico. The real treasure is radiating across the country, hazard free and without the exorbitant investment inherent to the oil and gas industry. This solar richness is free, clean and it asks only to be harvested from the sun and connected to the grid,” says Francisco Sepúlveda, Director General of Eco Ener, a Mexican provider of distributed generation systems and products working on PV, thermal and small wind technologies.
Eco Ener’s business line is around 60 percent based on commercial and industrial applications of technologies such as solar panels, wind turbines, energy monitoring systems and lithium-ion batteries. The remaining 40 percent is residential, focused on the high-consumption residential rate. “If we were to compare them, high-consumption residential has a shorter ROI than industrial or commercial, because those function under different rate levels,” says Sepúlveda. “The appeal of distributed generation for the industrial and commercial sectors lies in energy savings and implementing peak-shaving systems. The amount of energy purchased from CFE during peak demand hours is reduced, when electric power pricing is at its highest. Our goal is to consolidate our business portfolio largely toward the industrial and commercial sectors.”
For the residential sector, Eco Ener offers credit card-based financing solutions of six to 12 months or negotiates the lease of equipment. For larger projects, the company is working with a Puerto Rican investment fund. Energy trading is another option the company is exploring but it is still waiting for clearer and definitive rules in this segment. “We believe that costs will continue to come down as Mexico’s renewable energy market maximizes its continued growth,” says Sepúlveda. “Alleviating aftersales concerns is our top priority so our clients will know that they can install our products, use our services and not worry about performance for up to 10 years. When our clients start seeing costs are manageable, financing is available and
the product’s performance is seamless over the long term, these three ingredients will lead to a boom in distributed generation in the country.”
Eco Ener only works with brands such as LG, Sharp, Jinko Solar and Bornay. Not only is the manufacturing guaranteed and certified but the company also has technologies allowing the real-time monitoring of the aggregate performance of a solar system, module by module. This advanced monitoring system also measures total electrical energy used by the customer, and calculates the net electric power purchased from CFE. “Our strategy can be summed up in two words: added value,” adds Sepúlveda. “Our experience in the residential sector shows that it all comes down to price. More often than not, such a mindset overshadows the quality factor, resulting in a bad name for renewable energy in general, and solar power in particular. In general terms, we provide more value with an energy-efficiency analysis platform.”
Distributed generation, a scheme in which independent generators of renewable energies can sell their surplus to CFE, has gotten off to a bumpy start. “The reform has undoubtedly been helpful, even though the pace of growth in distributed generation is slower than in other sectors,” says Sepúlveda. “The industry is open to utility-scale projects backed by a regulatory framework that was still missing until the first long-term electricity auction took place in March 2016. The long-term electricity auctions are the reform’s big surprise because they have resulted in highly competitive prices. We have to use these positive aspects and increase awareness because the kWh tariffs CFE is committed to deploying are cheaper than other nonrenewable resources.”
Despite the market opening, smaller businesses are still finding it hard to scale up to the level necessary to partake in larger projects. “SMEs are set to grow from the highconsumption domestic-users segment to commercial and industrial projects but they are still struggling to get a foothold,” observes Sepúlveda. “Banks and financial entities have their sights set on utility-scale projects, to the detriment of ambitious SMEs, which have yet to find easier access to proper financing instruments.”