China's Role in Energy Transition: A Strategic Ally for Mexico?

Q: What does Mexico mean for Zuma Energía’s global strategy? How does Zuma align its strategies with Mexico's energy goals and broader global sustainability objectives?
A: We are here because Mexico has developed rapidly, even during the pandemic. For us, as a Chinese company, it was a challenging time to establish ourselves due to limited flights and opportunities. However, we see Mexico as a promising opportunity. Notably, Mexico possesses a wide range of valuable resources.

One remarkable resource is its energy potential. For instance, there are excellent solar resources in Sonora, Chihuahua and Baja California. We measured radiation and the number in Mexico is over 2,200W/m², while China has 1,700W/m². This means Mexico's radiation is 30-40% higher than in China. Consequently, investing the same amount yields a 30% higher return in Mexico for solar energy. 

Mexico is also exceptional for wind energy. The wind resource report indicates about 50% potential utilization, equating to around 4,000 hours of full turbine operation per year. In comparison, China's best resource is in my hometown, with only 2,800 hours of yearly utilization.

Moving on to Mexico's renewable energy capacity, it's very promising. In China, we developed renewable energy on a large scale, with power plants of up to 14GW, covered extensively with solar panels. However, in Mexico, wind and solar energy prospects are even better.

In China, our largest power plant is 14GW, which is roughly 20% of Mexico's entire capacity under CFE. This means we can provide renewable energy to the state. Our system, called carbon-zero, seamlessly integrates solar and hydropower plants, instantly switching between them when required to ensure a continuous energy supply.

This technology can greatly benefit Mexico, providing green energy and reducing pollution. Moreover, it can create income by selling excess energy to the US. Developing renewable energy bases in desert areas can also transform the land into green spaces and help conserve water.

Additionally, in China, we have initiatives that promote the combination of solar plants and agriculture or aquaculture that can lead to innovative land use. For instance, in Beijing, where there's a densely populated area with over 20 million people, we provide 30% of the fish through aquaculture, demonstrating how land can be optimized for multiple purposes.

Q: Despite regulatory obstacles, what factors contribute to solar energy's continued growth as one of the best clean energy options in Mexico? 
A: As a Chinese company, we acknowledge that opportunities and challenges often go hand in hand. When we embarked on our journey, we recognized that Mexico, like China 20 years ago, is experiencing rapid economic growth and significant energy demand. This resonated with our experience when China faced severe energy shortages two decades ago.

In Mexico, addressing energy scarcity issue has become a focal point. To comprehend this situation, I visited numerous industrial parks and their owners consistently voiced their energy requirements due to the high demands of the industry.

Our expertise lies in developing solutions, and our approach is particularly distinct. We are championing the concept of a smart city, one that's carbon-neutral. Our vision for making Mexico's cities “smart” is by producing energy at the point of consumption. This allows us to bypass the need for extensive transmission infrastructure, which can often take years and resources to establish.

Q: How does Zuma work closely with local governments and other relevant stakeholders to ensure the positive social and economic impact of its projects?
A: Our collaboration with Merida City, a notable example, aims to implement these solar projects. The state’s governor even visited our Beijing headquarters to discuss this venture. This carbon-neutral smart city initiative not only resolves energy shortages but also offers clean and affordable renewable energy. Customers can enjoy savings of up to 15%, without upfront investments as we provide the necessary resources. Moreover, our products contribute to tackling climate change, which is perceived as a true win-win scenario.

I believe this makes the situation conducive for seamless execution. Our products practically sell themselves.

Q: What makes Zuma’s solutions unique in the Mexican market? 
A: Our innovation extends to colorful solar panels. These panels come in various colors to blend with the surroundings, although this feature is not unique in the industry. What sets us apart is our solar panel billboard. Primarily designed for use as a street billboard, which is over 2m², the purpose of such a product is not to generate large amounts of energy but enough to power itself and a streetlight bulb. This innovation showcases our unique technological capabilities.

While the cost in China is around MX$3,000 (US$176.4), other factors must be considered for imports. Our endeavors are aimed at bringing these advantages to Mexico, aligning with the country's energy needs and innovation goals.

Our ultimate purpose is profound. Just imagine, two years ago, before SPIC's intervention, China was relying on fossil-sourced energy by more than 60% in its mix. In a remarkable reversal, we now stand at 68% renewable energy. This transition signifies our commitment to addressing pollution, mitigating climate change and advancing renewable energy.

Another venture we are undertaking involves fostering partnerships for EV transformation. Recognizing that a significant proportion of pollution stems from urban vehicles, we are promoting electromobility. Our charging poles and renewable energy integration establish a comprehensive ecosystem of solutions.

Our worldwide capacity stands at an impressive 236GW, a magnitude three times bigger than all of Mexico´s capacity. This has drawn businesses and banks eager to collaborate and finance our endeavors, showcasing our competitive edge. Our extensive network comprises over 20 partners in the EV sector. 

Q: How can mutual cooperation between China and Mexico contribute to the advancement of renewable energy technologies and the fight against climate change? 
A: As part of our DNA, we drive the energy transition in every country where we operate. Currently, we see a great opportunity in the automotive sector and in the development of smart cities in Mexico. Our technology is already a reality in several Chinese cities and we can make it a reality in Mexico thanks to the accelerated growth of its economy.

We are opening the market to introduce electromobility solutions. That is because, together with other industrial partners, we have developed a comprehensive battery exchange system for heavy electric vehicles, revolutionizing the transportation industry. We also offer solutions for small electric cars and fast charging facilities that can supply up to 100 vehicles at the same time.  

For smart cities, we offer a one-stop solution that integrates distribution, storage, control of electricity supply and monitoring of energy use, guaranteeing stability and efficiency, cost savings and ecological benefits.   

Q: What are the key drivers behind Zuma Energy's recent acquisition of the Potrero Solar Park and how does this align with the company's growth strategy in Mexico and Latin America?
A: We have invested more than US$1 billion in the country and we are planning to keep on investing and expanding our businesses if the market conditions allow it. 
For our generation business, we are planning to increase our installed capacity from 1.1GW to 5GW by 2030. This is the strategic line for which we acquired Potrero Solar Park and for which we will continue to expand our generation parks.

Q: What are some of the challenges faced by the Mexican energy sector, particularly in the context of solar photovoltaic energy development? 
A: We understand that in each country and region where we operate, local needs are different. We have the capacity to adapt to the different markets in which we work. 

We see Mexico as a key player in the development of our businesses. In addition, nearshoring is a key factor for our future investment projection in the country. It is a reality that the pandemic and nearshoring are changing the business strategy, globally. In the case of Mexico, the country always had a strategic geographical position for trade. Now, it is imminent and key for SPIC to invest in the country. Nearshoring is opening doors for several of our business lines, such as transportation, energy storage and smart energy.

For us, every challenge is an opportunity. There are great energy demand opportunities for the development of the industry in Mexico. We are ready to leverage the country’s potential to provide photovoltaic solutions as a partner and ally in the national energy sector.

Zuma Energía is the Mexican subsidiary of the Chinese state-owned State Power Investment Corporation (SPIC). Zuma Energía's portfolio includes significant renewable energy capacity and strategic investments, supporting Mexico's economic growth and environmental goals.