Delivering on Customer Expectations Leads to Organic GrowthBy Cas Biekmann | Mon, 08/31/2020 - 14:46
Q: What are the main services ODG provides and in what sectors is the company present?
A: ODG Energy serves residential, commercial, industrial, and public sectors. Currently, we are stronger in the residential and commercial sectors, but aggressively shifting to the industrial and public sectors. We expect to see more business coming from municipalities to provide public lighting and PV-systems for water pumping and treatment. We are growing quickly in this area, which represents around 50 percent of our income.
The last two years we have implemented large solar systems for water treatment facilities, allowing them to purify water and release it back into the surrounding communities. In regards of sustainability, we also support projects in rural communities with limited access to the CFE grid, providing PV-based water pumping systems and enabling access to this basic resource.
Q: What are the main concerns of your clients in both the public and private sectors?
A: Mexico’s regulatory changes are still murky for many companies in the private sector, including ourselves. We are still not sure how new regulations will affect companies. The biggest concern for the private sector is therefore uncertainty. We are in the process of understanding these regulations. This is why we are busily researching new technologies, approaches and solutions that can be applied based on the new rules. Companies are looking for a cost-effective alternative to CFE for their electricity. Unfortunately, companies in the energy industry are not yet sufficiently prepared to provide these solutions to the market because the regulations are still uncertain.
The main challenge for the public sector is limited resources. Previous public investment funds that were spending these resources on communities and municipalities are mostly gone. The municipalities are therefore still trying to understand what resources are there and how they can get access to them in order to benefit their communities.
Solar energy solutions do not necessarily meet the government’s requirements, so municipalities are focusing on simple urban solutions to meet basic needs. Unfortunately, the government does not realize that solar energy is one of the most strategic solutions the country could implement for communities and economies of all sizes to develop at a faster pace.
Q: How do you assess Mexico’s awareness regarding the benefits of solar, and how can you help incentivize its adoption?
A: For the most part, private companies and homeowners are aware of the benefits of solar energy solutions. However, they would like to see a decrease in solar energy prices. In Mexico, private companies face some difficulties to get budget approval for solar solutions. We have to be realistic in this regard and understand that the number of companies and homeowners with the possibility to pay in cash for a solar system is limited, and therefore getting access to loans or leasing solutions from financial institutions is sometimes the only way to solar energy. I believe that in the private sector, companies and residences are ready to embrace solar technologies, but the lack of resources remains the main issue. We are not a financial institution of course, but wherever possible we offer solutions that allow clients to access our services despite budget limitations.
Financial vehicles, however, are also expensive in Mexico. By adding the financial cost, a solar system might be twice expensive. Nevertheless, despite the financial challenges I believe the Mexican market in general remains interested in what the PV-solutions can do for them in terms of efficiency, comfort and most important, in cost reduction of productive operations. If we can help our customers to obtain the right financial tools, companies will jump onto solar. For this to happen, however, we need to have a good understanding between ODG Energy, the customer and the financial institution. One example would be a recent implementation of a large photovoltaic system for a golf course. While the bank offered to finance the client at a 25 percent annual interest rate, we decided to offer them the same leasing agreement at a lower financial cost. We believe it is important to support our clients with the right financial solutions, and sometimes that is the only way to sell a PV project.
Q: How does ODG measure success?
A: Despite quality and cost/effectiveness, what makes ODG Energy a strong brand is honoring our energy generation promise – which we put it in writing for our clients. ODG Energy has a strict policy of measuring how much energy we can potentially deliver with a PV system, with the whole organization focused on deliver such promise. For that purpose, we utilize the most advanced engineering and technology to accurately define the right size of every project, at a fair price. As long as we can back up our solutions with quality, providing the best-in-class components, and deliver great service while meeting the energy target, we consider ourselves in a good shape.
Q: What objectives has ODG Energy set for the 2020-2021 period and in what areas is it set to develop further?
A: For 2019 we targeted ambitious financial plans that drove ODG Energy through a challenging, yet fantastic first year of operations. For 2020, we had great expectations as well. However, we are still dealing with the effects of the pandemic. We adjust financial targets as we progress in the year and our expectation is to close 2020 with some more business than previous year, mainly focused on growing up organically supported by current contracts and on-going projects. That is certainly not what we were planning for this year, but it is not bad considering the present circumstances.
For 2021 – our third year in market, the profit target will be around MX$50 million. We are working arduously, have a committed staff and a great-looking solutions portfolio for our customers, despite the challenges in the regulatory sphere.
We are also developing strategic commercial agreements with solid PV players in Mexico and Central America, like Innovación Solar, a company located in Cabo, specialized in off-grid and energy storage solutions. The Baja Peninsula serves as a laboratory for us. In this region, CFE lacks infrastructure and capacity. Most of our customers there are either residential or commercial and do not have access to an interconnected photovoltaic system. As a consequence, off-grid and energy storage is most of the times the right solution for them. We were a little reluctant to incorporate batteries in our business portfolio as they are somewhat environmentally unfriendly, but it is the most cost-effective solution and furthermore, off-grid and energy storage solutions give us the advantage of not having to deal with government regulations in terms of interconnection.
Along with pure PV-systems, we are also developing some other complementary solutions, like industrial isolation systems to protect PV installations against challenging weather conditions. So, we are moving into the world of battery storage and industrial PV protection systems, forging strong partnerships with companies that can provide us with these components.
The horizon is still uncertain in regards of official energy regulations and challenging economical conditions. Nevertheless, this is also an opportunity for ODG Energy, and we are taking advantage of it, supported by a committed human capital, high level engineering processes and developing our C team to grow up in a fast pace along with the company.
ODG Energy develops solar energy projects for the residential, commercial, industrial and public sectors. These projects help clients to substantially reduce their costs and environmental impact. These includes photovoltaic systems, solutions for public lighting, water pumping and water treatment systems.