Luis Alfonso Acosta
Financing Director of the Energy Sector
View from the Top

Betting on SMEs as Mexico´s Future Off-Takers

Wed, 02/24/2016 - 14:01

Q: In terms of renewable energy promotion, what have been Bancomext’s most important contributions?

A: We have developed various programs to support this industry through preferential conditions. We began in 2007 when we created the Mexican Carbon Fund with contributions from The World Bank and KfW, in an effort to support projects in obtaining carbon credits related to certified emission reductions. Since the emissions reduction market did not prosper, this initiative was cancelled, but it heralded more programs to support the renewable industry. As of today, the renewable market is one of the main three sectors in Bancomext, and we are fully committed to finance projects for different technologies, such as wind, photovoltaic, hydroelectric, and biogas. We have received special funding from KfW and JBIC to promote renewable energy projects and we are waiting to evaluate the development of these projects. Bancomext obtained support from the German Development Bank KfW and its subsidiary DEG in order to understand on a wide scope all the changes and challenges that the Energy Reform might bring.

Q: How important is the renewable sector for Bancomext? How many resources are destined to this area?

A: Last year, we closed the year with a portfolio of MX$5 billion (US$400 million) and the year before, we had MX$1.2 billion (US$90 million). It is a significant growth and for 2015, we are expecting to achieve at least a 15% increase. In terms of resources, we favor wind power and hydroelectric because of the current development and stability of those sectors. The photovoltaic sector, on the other hand, is riskier given that the return is not sizable enough to cover the investments. We are currently analyzing biogas and we still need to look into tidal and geothermal generation; both have potential but we do not yet possess the necessary knowledge of the segments.

Q: The current strategy of Bancomext is to target large corporations. How are you going to migrate from them to the Mexican SMEs?

A: We signed an agreement with CONCAMIN and CANACINTRA to target SMEs with clean energy at competitive prices. At the moment, we are designing a project based on wind and photovoltaic energy directed toward a small group of 200 off-taker SMEs elected by these associations and Bancomext. We are currently looking for small corporations with sufficient credit quality ratings and if the project is successful, we will diversify in order to cover a larger set of companies.

Q: What barriers must be addressed in order to allow municipalities to become off-takers?

A: With the new regulations, it is necessary to have a minimum of 3MW in one consumption point during the first year in order to be classed as an off-taker. The project that we are implementing falls under the previous scheme, but now these companies cannot be considered qualified users. Bancomext already has many projects where municipalities are off-takers, like in one of our projects in Santa Catarina, Monterrey, where all surrounding municipalities are offtakers. While they hold great potential, we are aware that many of them do not have high credit ratings, so we are seeking regions that have support from the local government, in order to reduce this potential financial risk. There are other projects that involve municipalities such as lamp substitutions for public lighting.

Q: What are some of Bancomext’s most emblematic projects, and how do these reflect its ambitions and goals within the renewable energy sector?

A: Bancomext has a wide range of emblematic projects. In cogeneration, we carried out a project in Tabasco for a PEMEX plant. In the wind sector, we are collaborating with Banobras and NADB in projects like the Ventikas in Nuevo Leon, which produce 252MW. In this case, we have first level off-takers like FEMSA, CEMEX, and ITESM. We are also involved in the EURUS wind farm in Oaxaca, Piedra Larga I and II along with Bimbo. We are also working on Eólica Santa Catarina, and the Ingenio wind farm sponsored by Actis and Comexhidro. We want to promote the initiatives proposed by the federal government for a cleaner industry, creating a competitive export market fueled by clean energies. To reach this goal, we are offering products with competitive conditions in terms, prices, and funding sources like the World Bank, NADB, and KfW. We have agreements with all these organizations and they are all eyeing renewable projects.