Early Ambitious Targets for Competitive GrowthMon, 02/25/2019 - 09:21
Large, cross-sectional multinationals in the country are betting on clean energy sources and energy efficiency to improve their competitiveness. But coupling growth and its inherent surge in energy consumption with clean energy is easier said than done, says Victor Treviño, Energy and Environment Director of FEMSA. “To reach FEMSA’s 85 percent target of clean electrical energy consumption in Mexico by 2020, we use a two-pronged approach: searching for energy efficiency across all our operations and adhering to primarily renewable electrical energy consumption,” he says.
FEMSA, which operates the largest independent Coca-Cola bottling group worldwide, was among the early movers in fully committing to using renewable energy sources in 2007, when it signed its first PPA. FEMSA recognized early on the importance of reducing the environmental impact of its operations and designed a now-tenured strategic sustainability framework. “Incorporating renewables is a critical element within this strategy,” Treviño says. On the energy efficiency side, the FEMSA group incorporates new technologies across its different business units to ensure optimal efficiency. These include OXXO retail stores, Coca-Cola FEMSA manufacturing plants and the retail operations of its pharma division. “Each year, we are proud to report lower kWh consumption,” he adds.
Based on FEMSA’s particular energy consumption profile and its international footprint, it adapts its energy requirements based on the location’s options. “Each country has its own energy regulatory framework, renewables capacity and resource availability. For instance, Panama stands out for its hydroelectric use, while the Philippines has important geothermal resources,” he explains. “If it makes economic sense, we adapt those trends and technologies to Mexico’s specificities.” But he adds that wind power remains the renewable technology best-suited to the company’s needs in Mexico. This may not necessarily be the case in the long term, as the company is constantly searching for the best option. “We continuously evaluate different technologies, including solar PV, wind and thermo-solar,” he says. According to Treviño, while the country’s long-term electricity auctions can serve as a reference, they should be viewed in the context of Mexico’s energy availability as a whole. “The auctions do not take into account additional elements beyond generation costs,” he says. “A qualified user must account for transmission, distribution and financial transmission rights, ancillary services and power demand.” He identifies solar PV as a rising star emerging from the auctions.
Reaching its target of 85 percent clean energy by 2020 required a comprehensive overhaul of FEMSA’s productive chain, far beyond clean energy consumption. “While we make sure all our operations contribute to this effort by including them in our renewable energy acquisition contracts, we do not stop at electricity,” Treviño says. FEMSA is also lowering its water-consumption footprint and implemented a waste management and recycling program. Today, 81 percent of Coca-Cola FEMSA’s plants recycle 90 percent of their waste.
As it defines and revises its clean energy goals Treviño identifies technology as a key pillar for the company’s strategy. “FEMSA is constantly on the lookout for new technologies applicable to refrigeration, lighting, efficient compressed-air generation systems, high-efficiency motors and new control algorithms for our bottling lines and sensors to further automatize processes and avoid downtimes,” he says.
FEMSA’s philosophy, Treviño adds, is to view competitiveness through a long-term lens. “Competitiveness is a work in progress to which all components of our cost structure must contribute. We continuously look at ways in which we can maintain competitiveness through our project management capacity, translated into environmental responsibility with a positive economic impact for the industry,” he says. FEMSA remains open to new instruments and incentives deployed in other markets, such as carbon bonds, but he says Mexico still requires the further development of an incentive-oriented market. Treviño is optimistic about attaining the company’s clean energy goal, even prior to 2020. “In 2018, we anticipate reaching 60 percent of renewable energy consumption and expect to reach 85 percent by 2019, with a strong possibility of surpassing it,” he says. “We will continue working toward achieving this major milestone, providing our support to renewable project execution.”