David Flores
Former Country Manager
View from the Top

Creating Local Value with Electric Utilities

Wed, 02/21/2018 - 13:48

Q: What is Ormazabal’s competitive advantage that makes it an attractive partner for CFE in power distribution?

A: Ormazabal has been active for 50 years. Since its inception, the company has had a close relationship with electric companies. Virtually all the products, solutions and complementary services that we have developed have been designed to satisfy the needs of these companies. These products, solutions and services could also be extended to other sectors where electric companies have had a lot of influence. Electric companies work first hand with the changing requirements of the electricity grid. Many of the projects that we are undertaking with CFE are based on our European experience: smart grids and control and communication of the distribution network, among others. Our work with electric utilities cemented our vast experience and wide array of products and solutions, allowing us to work with companies like Iberdrola Distribution, EDF, Vattenfall, Enel and Endesa, to meet the requirements of the Mexican market.

We demonstrated to CFE that we have what it takes to answer the new distribution challenges it is facing: technical and nontechnical losses, TIU (Interruption Time Per User) improving and reducing operational costs, to name a few. That is our primary focus in our relationship with CFE: providing the necessary tools to make it an increasingly efficient and competitive public company. 

Q: How is Ormazabal capitalizing on its Velatia distinction in Mexico?

A: Initially, our group as a whole was called Grupo Ormazabal. The distinction with Velatia was created to establish a separation between Ormazabal’s core business, the electric sector, and the rest. We looked for a different name and a different image from a marketing point of view. Primarily, Velatia is composed of Ormazabal, followed by Ikusi, which has a significant presence in Mexico. Mexico is the one country in the world in which we can find a better synergy between the group’s companies. In the particular case of Ikusi, the business nucleus in Mexico is the communications network. The company has been Cisco’s gold partner for five years in a row. 

Q: What strategical alliances is Ormazabal targeting in Mexico?

A: In 2015, we formed a partnership with the National Institute of Electricity and Clean Energies (INEEL). The goal is to work jointly on demonstrative projects related to the generation of new technologies, applicable to the specificities of Mexico’s energy sector. It is a tool we used and that worked very well for us in Europe and it will work just as well in Mexico. We are pushing to have significant amounts of public funds that build alliances to develop projects. Our STAR initiative with Iberdrola, as well as our Star City Málaga project, started this way. Universities, technological institutes, the electricity distribution company and technology manufacturers converged to create a win-win project for all. Well-funded projects, with many participants to share costs, that evolve into standards for the electric industry is the primary objective. We have faced difficulties in establishing a similar design in Mexico and are waiting for CFE’s complex transition to conclude to provide this mechanism the importance it deserves.

Q: What other projects is Ormazabal earmarking?

A: In Mexico, we have three main market niches: renewables, public distribution and what we call end energy users (industry, infrastructure, buildings and hotels, for example). As for other projects, I believe we are facing a turning point in reference to the challenges that we will face in the next three to five years. We have to be able to capitalize on all the experience we have gathered in network intelligence, both in Europe and in Latin America, and make CFE take notice of the added value we bring to the table. We have to encourage CFE to change its distribution model, to be prepared to cover the growing necessities of the Mexican energy market. The STAR project with Iberdrola is a leading example of what CFE can achieve by working with us.