Gerardo Pandal
Director of Operations
Guascor de México
View from the Top

Discovering Alternative Cogeneration Applications

Wed, 02/24/2016 - 12:44

Q: Which industries are already clamoring for cogeneration services, and how are you preparing yourself to meet to their needs?

A: Mexico’s industries were borne with an abundance of energy, so the term “efficiency” was consequently erased from the map. Industrial players have not sought energy or fuel efficiency, and as prices rise, this will become important leverage for distributed generation and cogeneration players. Most industries make use of thermal energy, particularly pharmaceutical, food and beverage, textile, paper, ceramic, and the service sector, and many players are conveniently located where natural gas is already available. A company that consumes electricity and gas for thermal processes can opt for efficient cogeneration and natural gas. It is a proven technology and there is no doubt that it can reach efficiency levels of 70-75%, which makes it one of the cheapest forms of energy generation in the market and can translate into an overall energy cost savings of 25-45%.

Q: Why have financial institutions been reticent to invest in efficiency cogeneration projects?

A: The barrier this sector has encountered is financial institutions’ lack of appetite for investing in this technology. Cogeneration is a fairly young sector, so it will take time for it to penetrate the energy mix in a significant way. These projects hold a better position when facing financial institutions than in the past. Many institutions previously overlooked distributed cogeneration because the projects demand investments of US$1-10 million and do not seem viable. Now, financial entities recognize the importance and bankability of this technology, and they are beginning to invest in groups of cogeneration projects. The premise of this model is to offer users cheap, reliable, and clean energy and to incentivize efficient power generation. All players involved have made considerable efforts to make this transition as smooth as possible. There is uncertainty, however, as this is a temporary situation and we have already surpassed last year’s sales. Despite the new configurations, all players know the benefits they will gain from using distributed cogeneration.

Q: How can grouped cogeneration projects attract the attention of investors and financial institutions?

A: Our clients range from small to large corporations with several manufacturing sites across the country. For the latter, we propose an analysis of their sites and present the different projects in unison in such a way that the investment figure is attractive for financial institutions. The more cogeneration projects are grouped together, the higher the allocation of resources, meaning that banks and financial institutions are more open to invest. It is far better to have a group of projects than individual ones scattered across the country requiring investments of US$1 million each. Also, banks and financial institutions like to optimize their time, so it is far more efficient and less time consuming to invest in a group of projects. Many sectors stand to benefit from cogeneration, since they use thermal energy in their processes. In an industrial cluster, we optimize processes by placing the cogeneration plant in a strategic area, offering electricity and heat to several players. Biogas is a particularly interesting sector, and anaerobic water treatment plants have great capacity generation. We are currently installing our fifth such project.

Q: What is the process of installing a cogeneration plant in an anaerobic water treatment facility?

A: We work with operators that win concessions to operate the water treatment facility. The plant must be anaerobic and have bio-digesters in which the decomposition of residues takes place. These bio-digesters are large containers where the mud is concentrated and decomposed by bacteria. In order to keep the bacteria alive, the bio-digesters must maintain a constant temperature, and when a cogeneration plant is not on site, these are heated using diesel or other fuels through conventional boilers. Running a water facility demands a lot of electricity and thermal energy, so installing a cogeneration plant is a good opportunity. The decomposition of the mud generates biogas with high quantities of methane. If the gas is corrosive, it goes through intermediary processes of carbon filters or sprays in order to clean it before being used in the engines to generate electricity and heat. These projects offer the highest efficiency possible and fastest return of investment. We also intend to introduce further groundbreaking technologies to the Mexican market, having invested a significant figure in new technologies, and in seeking more efficiency in our processes and products.