Construction Experience Enhances Renewable Project Engineering

Q: How would you describe Revergy’s experience in the Mexican market?

A: We launched here in 2014 with three great promoters, and the company has grown in line with their needs. In 2016, we had our first experience with wind farm maintenance and since then, we have been increasing our portfolio both in the inspection segment and as third-party technologists and developers for banks and investment funds.

Regarding solar energy, we started working on concrete projects in 2018 with two plants, which have an installed capacity of 100 MW and 60MW, respectively. We have two other projects in Hermosillo, each with a capacity of 110MW that will be developed in 2020. Our role in these projects is to review the conceptual engineering and work with the supervising team to ensure the EPC company executes according to the engineering parameters.

Q: Which companies are among Revergy’s most important strategic partners?

A: What we normally do is supervise the EPC and enter into alliances with developers. Solar parks and plants usually are built under the O&M formula, wherein the EPC company builds the plant and maintains it. As property engineers, our job is to supervise the project once it enters into commercial operation. The EPC company remains in charge of the power plant’s operation, although sometimes the project developers want us to be involved in the supervision of the O&M.

Q: What is the main solution that the company offers its customers?

A: Throughout the process there are several concerns within each phase. First, the main concern of a developer when approaching us is the project’s viability. They normally ask us for due diligence to see if the parameters they are contemplating are viable. If the project was developed by others, you need to check that the designed parameters really match the parameters that ultimately will drive the return on investment. This refers to the parameters agreed with the banks. In the second phase, the concern is related to permitting, both with CRE and CENACE, for entry into commercial operation. Everything needs to be in order and the engineering needs to comply with the requirements of the regulatory authorities. The third phase is the initial project construction. The key concern for customers in this phase is the potential for technical, social or environmental problems that could cause a project to stop. The last phase entails asset management, so the concern relates to maintenance standards provided by the EPCs and ensuring those standards comply with requirements.

Our strength is that we are an engineering and supervisory company. Ninety percent of our staff comes from the construction sector. I spent 18 years in a construction company. When I analyze a construction plan, I already know if the set parameters match the requirements. I do not need to understand their procedures to know if they are going to be executed well or not. We can detect a project’s deficiencies right from the start. Normally, all projects have problems and all projects deviate from the initial plan. We have the capacity to draft action plans to prosecute the project according to the original dates.

Q: What is the current state of Revergy’s projects?

A: The last time we were interviewed, we only had two parks in operation and maintenance. To date, we have been awarded seven more. In Oaxaca, we now oversee the O&M of six parks:  El Retiro, San Jacinto, Piedras Largas I, Piedras Largas II, Oaxaca II and Oaxaca IV.  In addition, we have another three parks in the central area of Mexico. We have 800MW of assets under management: a wind farm in Reynosa and another in Oaxaca, and two photovoltaic parks, one in Orejana and the other in Santa Maria.

Q: How has the current legal framework impacted the role of renewables in Mexico and what strategy is used to overcome the challenges?

A: Changes in the regulatory framework have had a massive affected on us. The number of construction projects has decreased significantly. All the projects we had under construction have been stopped. To date, only the legacy projects from the second and third auctions are running. We are dealing with this situation by diversifying the business and focusing more on the O&M sector rather than construction. We adapted our human resources to integrate into the O&M processes.

Q: What is needed in Mexico to ensure the energy market matures? 

A: What the government should do is change the formula. If the auction formula does not satisfy them, they should reactivate construction. Mexico grows between 5 and 6 percent every year and has a lack of installed power between 6 and 8GW. When construction stops, the damage in the sector lingers for the next five years. Power plant construction must be reactivated. Today, there are many areas of the country that are energy deficient, such as Yucatan, Oaxaca and Baja California. Efficient global energy management is required to improve these conditions.

In Mexico there are also many niches that need to be developed, including distributed generation. In Chile, for example, the standard is already at 3MW, and there are ongoing discussions to increase it to 5MW. These are small producers who do not consume everything they produce, so they could sell their excess to a neighbor.

Q: What are Revergy’s expectations in terms of growth for this year?

A: Revergy has practically reached its goal for this year by just maintaining the seven parks we have. We also expect to grow in the operation and maintenance of substations and lines. But we are a small company that likes to measure its steps slowly. This year, we have made great strides regarding the wind sector. Once we are settled and have our people working and the local staff functioning, then we will consider whether or not we can develop more wind power. Between the second quarter of this year and the first quarter of next year we will have to forcefully enter the area of ​​solar operation and maintenance.

Revergy is a Spanish engineering company that offers a complete set of services in each phase of a renewable energy project, from the inspection of the assembly to the O&M of wind energy projects. It has over 8.4GW in 12 countries.