The Do’s and Don’ts of Greenfield to Ready-to-Build

Q: What is SOWITEC’s vision for Mexico?
A: We continue to trust in the potential of wind power and want to continue developing wind power projects. SOWITEC specializes in social and environmental impact assessments, resource metering and permitting procedures to commercialize ready-to-build projects. In some markets, such as in Uruguay, we have projects in the construction phase or already operating. In Mexico, we have five projects undergoing metering campaigns to gauge the quality of the resource in Coahuila, Sonora, and the central region of the country. We also have an interest in developing PV projects with different partners.
Q: Why focus on the first link of the value chain in Mexico?
A: SOWITEC was founded with a clear project-development mandate in mind. Based on the rapid growth and dynamism of the renewable energy market showcased globally, we want to advance and grow parallel to this market and position ourselves in other links of the value chain. We are looking for the right partners to build up our financial capacity to do so. Looking further down the road, we want to be an active player in Mexico’s wholesale electricity market and bid for projects in the long-term electricity auctions that meet building and operational requirements. For now, we remain focused on resource prospection services and permitting procedures to support projects for our partners, who can prove the technical and financial capacity of our ready-to-build projects. We have the expertise and capacity to build up greenfield-stage projects and present them to different companies that then can select the best fit and the appropriate commercialization scheme, such as electricity coverage contracts.
Q: Who are SOWITEC’s ideal partners to build its growth in Mexico?
A: SOWITEC has closed critical partnerships with long-term electricity auction winners that continue cementing their leadership position in Mexico’s energy transition. Our philosophy is to lay the bedrock on which our partners can solidify their market foothold with successful projects. We also believe it to be equally important to strengthen our relationships with governmental authorities. The Ministry of Energy’s workload relating to social and environmental impact assessments’ review is creating a backlog in project development. CENACE and CRE only focus on the business aspects of the project, providing the most competitive prices to bidding projects close to the most cost-effective interconnection points. It amounts to bypassing an integral analysis to gauge zones that are both economically and technically attractive on one hand but also generate the lowest social and environmental impact on the other.
Q: What are the most important factors to successfully transition from a greenfield to a ready-to-build project?
A: Securing land ownership is the most critical aspect of any greenfield renewable energy project. For this to happen, developers need to make sure to identify the rightful owner of the land for the contract to be valid. Otherwise, time is lost in contract negotiations that will invalidate the legality of the contract. It can even cause a ripple effect and become a social issue where communities organize to put a stop to the project’s development. Ad-hoc project design is another crucial point. Every project needs to echo the environmental conditions and biotic and abiotic factors of its location. This is where well-executed topography geotechnics and hydrological studies are significant. Bypassing these factors can generate exorbitant additional costs, effectively compromising bankability.
Q: What are SOWITEC’s objectives for 2019-20?
A: We are looking to present a winning project for the fifth long-term electricity auction. In parallel, we will continue working with our auction-participating partners to make sure they bid on winning projects and grow their portfolio. We are also looking to deepen our footprint in project construction and project operation. Clean energy is setting the pace for Mexico’s future.

SOWITEC entered Mexico in 2008 where it has developed and sold seven projects with a total capacity of 1.2GW in operation or under construction, as well as 3.1GW of wind and 2.7GW of solar projects under development.