Gerardo Pandal
Project Development Director
Guascor de México
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View from the Top

Cogeneration Leader Paves the Way

Wed, 02/19/2014 - 15:29

Q: What differentiates Guascor from its competitors in the Mexican market?

A: Guascor is a multinational company that started building engines for ships before shifting to gas engines that can also use biogas. After a few years, the company ventured into alternative energies and focused on energy efficiency with combined heat and power (CHP) projects based on cogeneration technology. This is currently Guascor’s core business, and the company has positioned itself as one of the leading manufacturers of cogeneration technology. Our engines are modular and range from 300KW to 1.3MW, which creates flexibility and allows for off-grid solutions in locations such as Amazonas, Brazil, where we implemented one of our signature projects. We combine our flexibility with technological capabilities to develop off-grid projects based on multiple modular engines combined with solar and wind power.

We have been working in Mexico since 2001, when it was hard to convince clients to potentially invest millions of dollars in a cogeneration power plant, due to the immaturity of the market. This country was not used to cogeneration projects because it was not used to the selfsupply concept. We were one of the first companies to bet on this market. The Mexican market historically developed based on cheap fuels, with the industrial sector prioritizing low capital costs over energy efficiency. This means that companies would often rather invest in a cheap boiler, without taking its efficiency into account or considering the savings another boiler could bring them. Now the market is maturing and opportunities are emerging for providers of energy efficient solutions. A distributed CHP project can achieve up to 70% efficiency, while electricity from the Mexican grid achieves around 25% efficiency. This shows that we make better use of the fuel we have in this country when we invest in CHP projects.

Q: What do you consider to have been the milestones of Guascor de Mexico?

A: We won the bids to develop cogeneration projects for Sigma Alimentos and Qualtia Alimentos, the biggest food companies in the country, for which there was intense competition. The power plant for Sigma Alimentos, which is a 3MW project, is particularly efficient, achieving 75% and generating steam and hot water besides electricity. This was a milestone for us as we demonstrated that a very sophisticated and complex CHP project could have a payback of less than two years. It also enabled us to obtain financing by demonstrating to financial institutions that CHP projects made sense. Our clients were very satisfied and told the media they invested US$3 million in a CHP project and got a payback of 1.5 years, which beat our estimate of two years.

Q: How have these projects positioned Mexico within the company’s global operations?

A: After establishing Guascor de México, we faced a couple of tough years without selling a project. We had to convince clients by taking them to see CHP projects in other countries. Until then, Mexico did not play a significant role in Guascor’s global operations. However, things started shifting around 2007 as our sales started to increase. We established our credibility in the market by investing in ourselves. This investment was not just made in our own operations, as we also financed a couple of external projects with our own money. Since 2007, we have been growing steadily, until 2012 when we grew exponentially.

Q: How can you help financial institutions trust in CHP projects?

A: Experience is the main argument. At first, nobody understands how cogeneration projects work and it takes time. We can accelerate this process as much as possible, but we cannot skip it. Another important factor is that it has to be easier for paperwork to be processed. The fate of a US$300 million wind project rests in the hands of two or three people in the government who can easily rule that the project will not go through, without any third party being able to argue in its favor. Financial institutions know how complicated this process is, and will not finance your project until you have proven that it is ultimately viable. The problem is that you can easily spend US$5 million on pre-developing a wind farm, but this is a gamble and not all players have that kind of money to bet with. We need more certainty in the market.