Fréderic Sauze
CEO
ANDRITZ HYDRO
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Company Relies on Holistic Hydropower Activities

Wed, 02/24/2016 - 18:50

Q: ANDRITZ is a company with 170 years experience worldwide in the hydro power generation sector. How would you describe the role ANDRITZ has played in the development of the sector in Mexico?

A: ANDRITZ has a historic presence in the hydroelectricity sector, and it has continuously embarked on a series of emblematic projects in different markets around the world. The most recent acquisition was in 2008, when ANDRITZ acquired GE Hydro’s assets and references, as it complimented its existing portfolio. The company targets three main sectors. The first is large hydropower plants between 30MW and 800MW, and we supply electromechanical products and solutions that enable the smooth running of the power plant. In this particular segment we do not cover civil engineering at all, and act independently for the investor or as a sub-contractor of a civil contractor. The second sector is mainly comprised of mini hydro power plants, for which we supply electromechanical products and solutions for projects below 30MW. In this area we sometimes collaborate with strategic civil engineering companies and carry out “Water to Wire” strategies, where we ensure that the electromechanical equipment is in working order and electricity is delivered to the grid. In addition, we offer solutions for micro applications, which are suitable for villages or small companies. Finally, the third line of business is maintenance and renovation of existing power plants, where we update the equipment in small- to large- scale hydropower plants. We arrived in Mexico in the 1980s with the support of NAFINSA, and since then we have been serving the needs of Latin American markets. Here in Mexico almost every CFE hydropower plant has partial or complete electro-mechanical equipment from ANDRITZ. The initial driver that brought ANDRITZ to Mexico was the demand from the Mexican government to acquire new practices and transfer technology.

Q: Could you describe the process of winning the tender for the modernization of Central Hydroelectric Temascal 1 to 4?

A: CFE is familiar with the hydropower sector and, as a result, has a high level of technical expertise. Usually, CFE designs the specifications for the modernization of the plants, since it knows what must be changed, what technologies are needed, and how they must be implemented. The level of client input, which in this case comes from CFE, is very high. CFE consults with suppliers to map the evolution of technologies, and ANDRITZ provides attractive benefits to enhance its assets. The tender is a transparent process where the pre-specifications are published and we make some recommendations; afterwards, CFE publishes the official request for quotation (RFQ), which is a list of fixed specifications that must be fulfilled. There are open question and answer sessions where we could raise concerns and CFE provides insight and answers. Finally, we submit an economic and technical offer without deviating from CFE’s requirements, and we deliver a competitive price within the allocated budget. This is not the first tender we have been allocated in Mexico. We won another contract in the state of Michoacan called El Infiernillo, which, like Temascal, constitutes a sizable refurbishment and an investment of around US$20 million for three units. CFE was able to see its ROI in less than a year and this shows the significant advantages of refurbishing power plants. By using the existing complex as a frame and only changing key components, it is possible to attain higher efficiency or output reliability, or sometimes even both. It is a perfect alternative to the construction of a power plant.

Q: What opportunities do you see in the development of mini hydros?

A: One of the advantages of compact hydro is that it can be extremely efficient. For instance, we developed a project called Truchas for a mining company that used the water from their process to generate electricity. The project was designed, manufactured, installed, and commissioned in less than one year, which is an attractive timeframe for the investor. When the dust settles after the Reform, we will see a boom of small- and medium-sized hydro projects in the private sector and through CFE. The commitment of Mexico to adopt renewables is clear and there is a lot of market potential. Every technology has its advantages and disadvantages, and one of the biggest benefits of hydro is that it can support other intermittent technologies and act as a source of energy storage. As more renewable energies connect to grid, hydropower will help create a balance by using Pump Storage Plants (PSP). Hydropower can be applied to existing processes like irrigation and desalination systems, channels, and water management systems.

Q: Could you describe the potential of renewable energies in Michoacan?

A: Michoacan is reasonably advanced when it comes to clean energies, with the main source being hydropower. CFE’s Infiernillo hydropower plant is one of the most profitable in the country and Michoacan also boasts the second largest geothermal field in Mexico, Los Azufres. To a lesser extent, the state has biogas capabilities and some cogeneration plants. There is plenty of opportunity to develop small and medium-sized hydropower plants, and we will begin to see a rise of interest in developing smaller projects for municipalities. Cooperation is required across all levels of the government and across its different agencies, but our experience so far has been positive

and we have witnessed the authorities’ openness to new suggestions and ideas. At a state level, consciousness is growing around clean and renewable energies, and some states like Chiapas, Jalisco, and Michoacan have gone further by creating energy secretariats. We will maintain our position within this market and we will contribute new solutions and products.

CFE will carry on investing alone and with partners as it has done it in the past, and in this respect it is important to offer the best technologies and solutions available in the market. We will play a bigger role in the refurbishment and modernization of power plants. There is another area into which we wish to venture with CFE, and this is long term maintenance contracts. CFE has significant manpower, resources and technical expertise, and teaming up with a technology-driven company like ANDRITZ would be a good fit.