Francisco Torres
Director General
Veolus
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View from the Top

Energy Efficiency, Chp Generation and O&M as a Single Business

Mon, 02/25/2019 - 14:08

Q: What makes Veolus’ offering the best solution for its clients’ energy consumption problems?
A: Veolus’ differentiator is its expertise regarding the operation and management of technical equipment. Energy savings begin by ensuring that equipment performs optimally in relation to the efficiency for which it was manufactured. Anything less than that generates increased energy consumption. Our clients’ primary interest in approaching us is obtaining those energy savings. We provide commissioning services for new projects where the equipment is tested and benchmarked based on the manufacturers’ technical specifications to guarantee the equipment complies with the specifications provided. Deploying O&M services, the next step is to extend optimal efficiency throughout the equipment’s life cycle through our total or partial refurbishment solutions. At the same time, in energy efficiency projects we can finance electromechanical infrastructure modifications so our clients can capitalize on new, more efficient equipment. This means our clients can substitute their equipment without a down payment and the equipment gets paid with the energy savings obtained. Our warranty also assures savings are seen from the first bill and we are reimbursed from the generated savings, which is a no brainer. Veolus is one of two companies in Latin America to be chosen by the IDB for energy efficiency projects from an initial pool of more than 40 companies. Our two-pronged advantage guarantees both energy savings and equipment performance throughout the projects. Additionally, our solutions are typically provided onsite.
Q: Why is Veolus interested in developing a hospital client portfolio?
A: Mexico’s health sector is of great interest to us. We have analyzed possible projects with institutions such as IMSS and ISSSTE. Hospitals are the ideal infrastructure to develop CHP solutions. A hospital’s daily activities require significant amounts of hot water and steam to disinfect surgical equipment and for laundry activities; depending on the geographical location, they need cold water for their air conditioning and last but not least, they require electricity. Veolus excels at managing, air conditioning and boilers, providing the possibility of concentrating all these needs in a single solution: CHP. To our knowledge, there is not a single hospital in Mexico that relies on cogeneration, be it private or public. In Europe, particularly in countries with low temperatures, cogeneration is rather mainstream. Our only requirement is that financing for this solution must not come from federal funding as it contravenes the purpose of our IDB-financed fund.
Q: What other financing solutions should be further developed to foster energy efficiency businesses?
A: Energy project finance virtually does not exist in Mexico. Commercial banks issue loans based on your balance sheet. While it varies depending on the technology used, each MW installed requires an investment ranging from US$1.2-1.5 million. The advantage of our IDB’s funding program is it provides project finance credit line without conditional funding depending on the size of your balance sheet. You have to create SPVs where the projects are concentrated by customer and after securitizing such projects through green bond securitizations, the IDB recovers the capital lent. Mexico’s local banks need to delve deeper into project finance and transfer risk across the project’s development phases.
Q: Which Veolus business line is most popular?
A: While our O&M services of technical infrastructure (HVAC, Electric escalators and elevators, power plants, boilers) continue to be the most important share of our business, the fact that we also provide energy efficiency solutions allows us to cover the entire performance analysis spectrum of a power consumption system: lighting, air conditioning, thermal issues and electricity installation. In bypassing a prone-to-fail approach where entire systems and installations are replaced in the short term, we can extend the life cycle of the installation as a whole.