Cogeneration Conglomerate as Opportunity in DistributionWed, 02/21/2018 - 11:49
Q: What is missing from Mexico’s wholesale electricity market to make it more attractive for investment?
A: Mexico’s wholesale electricity market is armed with all the key components it requires to generate competition and foster new projects. From a regulatory standpoint, however, the accelerated pace of the Energy Reform seems to often get ahead of the required regulatory policies, causing confusion and inconsistent interpretation and application by the various energy-focused government bodies. In our particular case, given the distributed generation portfolio we set out to develop in Mexico, our understanding of the rules was often met with differing views of the various government bodies, causing extended delays and additional costs in completing projects.
Another hurdle to overcome for new generators is the continued dominance of CFE in the market, whereby many customers continue to compare and link the price of nonCFE delivered energy to the existing and fluctuating CFE tariffs. Rather, we try to focus our client’s attention on its own business needs and competitive energy pricing to help it achieve the optimum business results.
Q: How did ATCO adapt its market expansion strategy for Mexico?
A: ATCO’s footprint in Canada and Australia was developed over a long period of time, while our presence in Mexico is relatively new. For the first two markets, ATCO built customer-centered business strategies. Identifying potential customers, pinpointing their needs and providing tailored solutions laid the groundwork for our success in those locations. This is the approach that we are looking to duplicate in Mexico. While differences in market conditions, regulatory landscape and culture have to be taken into consideration in our strategy, we are confident we will replicate the success we have had in other markets. ATCO has the advantage of being able to provide a wide variety of products and services from logistics, modular structures, gas pipelines and liquids, power generation, distribution and transmission to provision of water treatment and conveying systems, all under an innovative solution benchmark. Our diversified portfolio gives us the flexibility to provide and adapt to all of our customers’ needs under one umbrella.
Q: Considering your experience in retail energy, what are your plans for this particular business line in Mexico?
A: We are pursuing all forms of gas fired and renewable generation, with a focus on distributed and solar energy. A flexible generation portfolio does not tie us to a single generation source that can be impacted with technological advances or changing market conditions. Flexible generation also provides customers' choices to meet their business needs. The reason we are pursuing gas fired generation in addition to renewables is that stable baseload generation that comes from gas fired units becomes increasingly important for grid stability while bridging old and fuel-oil fired generation with renewables. Energy storage solutions are also of interest and we are pursuing several technologies in other operating jurisdictions.
Q: What was the added value of your Grupo Hermes partnership for the Hidalgo cogeneration project?
A: ATCO considers it vital to work with Mexican partners because of their expertise in dealing with land owners, facilitating permitting processes and understanding how to deal with government agencies, among others. They bring specific knowledge of the Mexican market to the equation.
Q: How is ATCO capitalizing on its cogeneration expertise in Mexico?
A: We are the largest cogeneration provider in Western Canada and also own several cogeneration facilities in Australia, a direct result of our ability to design tailormade cogeneration plants for our customers. Our experience is not only in designing and building tailored cogeneration plants, but also in the operation and maintenance of these plants.