Bringing Solar to the GridTue, 03/10/2020 - 15:27
Q: What is the company’s strategy for developing PV projects without the auction market mechanism?
A: We do not develop short-term strategies but rather focus on five to 10-year terms. Four of the five projects we developed and that are currently in operation resulted from the long-term electricity auction process. The fifth project is the result of a bilateral long-term PPA. We understand the immediate future in Mexico and are actively looking for bilateral contracts, both with qualified suppliers and qualified users that participate in the market.
Q: What are the main challenges you have encountered in Mexico regarding operations and maintenance?
A: Operations and maintenance have not presented any challenges yet because our only project just started operating in December. We try to integrate all our EPC contractors and to keep them for some years as plant operators. We work with our global O&M management team to monitor and supervise all activities regarding operations and management carried out in the plants. The objective is train specialists and carry out a transition into an operator role at the plant so that they can then take care of our assets once the specified period is over. We have created an O&M team in Mexico, which will function as a hub for all our projects on the continent. Our company is consistently growing in both: the US and Mexico.
Q: What is the strategy for developing this hub?
A: We have historically developed this department and its people internally from Spain. However, we would also like to address this development to local talent. Our company strategy for the Mexican market has been focused on to turning to Mexican talent. Even though we understand our sector does not have a relevant background in the country, we believe in Mexico’s potential. Mexico has had many thermal plants in operation and people’s knowledge can be repurposed to develop expertise in renewable technologies.
Q: To what extent are Mexican companies involved in your operations?
A: We try to involve local content as much as possible in consulting, social and environmental matters as an example. X-Elio is engaged with local companies and its engineering aspects are managed in collaboration with local companies. However, some companies do not have a big participation because X-Elio absorbs itself many development issues so we do not subcontract many tasks during development stages.
Q: How does your company decide which partners to work with and what issues have you encountered in your developments?
A: We hire companies to carry out studies and surveys. Field projects and relationships with communities regarding social issues are addressed directly by our company on a first-person basis. I personally do not believe businesses can run any other way. Projects tend to have many partners and stakeholders but we interact with local communities during the whole lifetime of the project. We also carry out a variety of socially responsible activities and involve communities in the development and construction stages of the project. This way of operating has allowed us to mitigate many problems.
Q: How do social issues differ depending on the zone you are working in?
A: They are different in the sense that in northern Mexico, properties are larger so the number of people you deal with is smaller. In the south and center of the country, our properties are smaller so parcels (private or in ejidos) are smaller as well so we have to deal with a bigger number of stakeholders. The main difference is that production activities are paced by your relationship with communities. Any given community may have previous mining experience or some communities may subsist on agriculture and primary businesses so we need to address each one individually.
Q: What lessons have you learned from the long-term bidding processes and what is the strategy for reaching more industrial clients through PPAs or in the market?
A: Processes are different so the approach behind every project is different as well. The best lesson from the bidding processes are project optimization and well-sustained project practices since they are the basis for successful bids. Every bid needs to be backed up by market studies and understanding of the market and the auction process. Our approach to bilateral business processes on projects with a certain degree of advancement is to be as aggressive as possible and to provide attractive offers that stand out in this highly competitive market.
X-Elio has over 12 years of experience and specializes in the development of photovoltaic plants. Having constructed over 650MW, the company operates 41 solar plants globally.