Creative LED Solutions for Energy EfficiencyWed, 02/24/2016 - 15:32
Q: How much longer do you think it will take for LED lights to become a staple product in the market?
ES: LED lighting is growing in Mexico, prices are dropping, and the technology is evolving, which are all factors aiding the adoption of LED lighting. Several commercial companies like Starbucks and Chili’s have incorporated LED technology in their establishments, and municipalities and local authorities are also following this trend and incorporating LED in public lighting. The market is now established and LED is readily available, so the next step will be to innovate and create new products and applications with this technology. An interesting application we developed was the mobile illumination towers, which are used in construction sites and festivals. Similar towers are usually powered by diesel engines, whereas our products are powered by solar panels and use LED lighting.
Q: Who is your current client base, and how important are the residential, commercial, and agricultural segments for the company?
EV: The commercial segment provides the bulk of revenue to the company, and in recent years we have seen a growing interest from municipalities. Currently, only 300-500 out of 2,454 municipalities are using LED technologies. The tariff for public lighting is one of the most expensive ones and it is almost double that of the industrial tariff, so it is important to adopt energy efficiency practices. We offer municipalities a PPP where we guarantee a 50% saving in electricity bills. We absorb the investment for ten years and we replace all the lighting fixtures, so this contract resembles an ESCO. A business proposition for a municipality always requires the goodwill of the municipal president. Given the short administrative terms of municipalities, the municipal governing body must sign the agreement in order to allow contracts to extend over five years. At the beginning we would approach municipalities but it was difficult for them to purchase our technology because of lack of funds. At that point, the technology we offered was worth US$200 million; now through technological advances, we can offer solutions costing US$20 million.
Q: What strategies do you put in place to become an authorized supplier? How do you negotiate costs and percentages in order to bring over 1,000 LED models to Mexico and offer them at accessible prices?
ES: At Verde Alterno, we seek manufacturing companies that offer unique products and applications at a reasonable price. There is a pricing war so we must ensure that we look for high standard LED products that have competitive prices. Additionally, our LED applications are not readily available in the Mexican market, and are custom made to our requirements. We do not see ourselves as distributors of LED products, but rather as lighting project developers. Verde Alterno helps its clients design and develop their lighting projects according to their needs. We import the products from many markets, but mostly from Taiwan and China. We travelled to some of our suppliers’ manufacturing sites in order to oversee their processes and ensure high quality.
Q: Could you tell us about the GrowLED technology? How has this created new business opportunities for Verde Alterno?
ES: It is LED technology that is used for agricultural processes and it is generally used by think tanks, sanitation and governmental agencies, and laboratories. These technologies enable scientists to monitor the growth of certain plants under strict environmental conditions. Energy efficiency norms have largely promoted the development of LED technologies in the market. There is a NOM that encourages the replacement of incandescent light bulbs, but this has been targeted to the lower segments of the market. It is difficult to enforce these NOMs and there are shops that continue to sell these incandescent light bulbs. In the LED market we continue to compete with incredibly cheap and poor quality products.
Q: Now that normativity is creating opportunities for energy efficient lighting, what role would you like Verde Alterno to have in the Mexican efficient lighting industry?
ES: This year we have plans to develop three to four landfill projects and we would like to offer the integrated solution which includes LED technology for public lighting. To stay ahead of the game, we will continue to introduce new technologies into the market and follow the Energy Reform.