Canatlan: Developing Solar Success in a Challenging LandscapeBy Cas Biekmann | Thu, 08/13/2020 - 10:45
Q: How did Risen Energy arrive in Mexico and what do you consider to be a major success story for the company?
A: Risen Energy is a company of Chinese origin. In 2015, an assembly center for PV modules was established to cater to the national market through a logistics center. It then developed business divisions in project development, EPC services and starting up projects. Chinese companies often have a zeal for expansion. Mexico provides an excellent platform for this because of its excellent solar radiation.
One major success story would be Canatlan in Durango. It has 117MW of capacity and we expect it to be operating very soon. It will be an important new asset for both Risen and Mexico. In general, Risen’s strengths are its bankability and technical capacity. Outside of my specific business unit, Risen Energy is also quite busy selling its modules for utility-scale projects and distributed generation.
Q: What are the characteristics of Risen’s Canatlan solar project?
A: The Canatlan project was bought from Spain-based Iberia Renovables in 2017. We developed it from the start, and it is now almost complete. We brought it in the ready-to-build stage and then constructed it with 100 percent equity, which meant no further financing was needed. These breakthroughs are important because it highlights Risen Energy’s financial health. It will produce 265Gwh per year, featuring the latest modules from our company. The other main components have been sourced from major Chinese manufacturers. The project is located on an ejido, which resulted in several delays and other headaches for the company. Since 2018, I have been personally involved in fostering a good relationship with the ejido as an intermediate, which turned out to be successful. We re-signed a lease contract and started construction.
Q: How is the company’s solar park in Guanajuato progressing?
A: Unfortunately, our 150MW project in Guanajuato has been stalled due to requirements for interconnection. By law, CENACE is obliged to ask for solutions to the issue. In this case, CFE are asking us to construct an 86km-long transmission line. The high cost of this project makes it completely unviable. We are analyzing whether or not to reactivate the project, although it might not be the right time at this moment. In any case, we do not want to leave Mexico and abandon our investments.
As a result, our plan to have 1GW installed in Mexico has been put off. Recent announcements from the government do not help foster foreign private investment. Nonetheless, we still aim to finish our Canatlan project and are participating in various tenders as an EPC company. We think we can still achieve our 1GW goal for Mexico, but this will likely take more time than we had initially thought. Legacy projects, which were finalized before the Energy Reform, are no longer among the company’s objectives, due to recent changes in porting tariffs and regulations. We are now focusing on projects that are governed by laws created under the Energy Reform. This is because we now understand Mexico´s policies quite well. At first, we were not big fans of the energy auctions. Now, we would welcome a fourth or fifth auction.
Q: How would you assess recent political developments in the energy sphere?
A: We are quite concerned. Some of the laws the government hopes to implement are completely unfounded. Every law that is passed needs to pass through several chambers, and this has not been the case. The government has made controversial decisions, forcing the private sector to take legal action. We are worried about Mexico. While the rest of the world is moving toward having a 30 to 40 percent renewable energy participation in its mix for 2030-2040, Mexico is moving in the opposite direction. We hope that the government does not double down on this position and changes its outlook and focus regarding renewables. Otherwise, there will be difficult years ahead for renewable energy in Mexico.
Q: What are the main factors Risen looks for when considering project development in Mexico?
A: Risen looks for terrain with a good geography to start a project, especially one that is close to an interconnection point. In Mexico, whoever owns the land is important, whether it is private property or a type of ejido. Proximity to an interconnection point is suggested to developers from the beginning. In our experience, if you are not close to a transmission line and are asked to develop one, this can make your project completely unviable. Avoiding unusual rocks and slopes are important as well.
Q: How has the company experienced the road toward modern, high-efficiency solar modules?
A: Without going into specifics about the types of modules that can be found in Risen’s other units, we noted that from 2010 to 2015, capacity for solar modules improved significantly. The speed of development did so as well. Before this happened, to add 30MW of power to a module could take almost an entire year to develop. When I entered the Mexican market with Risen in 2017, 330MW was the top level that could be reached. Now, we are comfortably pushing past 500MW. I am not sure if we were the first to break the 500MW barrier but we are always at the forefront of development. Today, we offer the highest available power in the market.
Risen has invested many resources to increase the power of its solar modules on ever-smaller surfaces. Getting rid of dead spots on the module and increasing the size of cells is important as well. Risen is focusing on bifacial modules, which are shaping up as the trend of the future for other manufacturers as well.
Storage is an even stronger trend. Risen has acquired a Japanese company to have a factory producing battery storage in its portfolio. We think storage is part of solar’s future, and we plan to get further involved in this in the coming years
Q: How is the company working to increase the financing for its bifacial modules?
A: We have been working with bifacial modules for some time, and it is a challenge to convince banks, which are important players in project development. In total energy production, one can gain 25 percent more because of a durable backsheet on bifacial modules. However, banks do not quiet see the advantage in this. Here, technical advisers play an important role in promoting this technology. We hope that in the coming two years we can justify an increase in production and ease the financing process.
Q: What are Risen Energy’s goals for 2020-2021?
A: The main objective is to finish the Canatlan power plant, as we are already nearing the finish line. Our goal is to reactivate the development in Guanajuato as well. We have invested time, money and work into this project, so we would like to finish it. Furthermore, Risen Energy is looking at various tenders as an EPC company. In fact, we have already been chosen to head the EPC on a 72MW project: Proteus by Prana Power. However, the pandemic obstructed the financing and they unfortunately decided to change plans. Closing one of these contracts would be our third goal. Even though we are not necessarily looking to invest in or buy new projects, we are still getting to know other players and investors who might be interested in investing in Mexico. This is one of the reasons why we keep working in Mexico. We are ready to get back to business when the sector opens up.
Risen Energy is a China-based PV company founded in 1986. It develops, manufactures and sells Tier 1 solar panels but also develops solar projects from the greenfield stage up to its completion.