Gabriel Quadri
Director General
Enerclima
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View from the Top

Establishing Sustainable Solutions and Carbon Emissions Reduction

Wed, 02/19/2014 - 11:13

Q: What motivated you to move out of your role in government and get involved in the private sector, specifically in the renewables industry?

A: I moved into the private sector immediately after finishing my responsibilities with the federal government. I worked for the National Business Council for Sustainable Development, while also founding an environmental services company. Three years ago we started to explore the possibility of developing renewable energy as one of the core areas in our business. This was as the result of my experience as Director of EcoSecurities, a British firm that operates in Mexico and Central America and specializes in the carbon market. We developed a number of projects in Mexico relating to renewable energy, and specifically the generation of carbon credits in order to sell them in the European market. I foresaw that the carbon market would not always be as attractive as it was previously, so I began exploring the possibility of developing physical assets, focusing on emissions reductions and mitigating climate change.

At Enerclima we have explored a number of alternatives, such as methane in pig farms, methane in landfills and solar energy. We opted for solar energy, since this kind of business does not require a lot of capital. We started out partnering with a German company. Germany has been the leader in solar energy for decades, and we were able to learn from their expertise and start developing projects for different industries in the private sector. Given that electricity prices in Mexico are going up, solar energy will soon match the tariffs that the industrial sector is currently paying. Solar energy is also ideal for promoting corporate image, in relation to sustainability policy. Once you have a solar installation you eliminate all uncertainty about prices, because you know what you will be paying per kWh for the next 25 years.

Q: In terms of the operating framework, what are the most important measures that need to be implemented for the development of the sector?

A: There are a number of issues. Firstly we need a market, we need to have the right to sell electricity. You currently have to resort to the self-supply model. The law allowing for a market with bilateral contracts would be a very important change, as this would give a competitive edge to renewables in Mexico. However, I am confident that even without price support renewables will achieve parity. We have actually already achieved parity in some areas of the country for various types of electricity users.

We also need a smart grid, a grid that can transfer energy from areas where renewables are competitive, as well as devices for energy storage. We need for the government to intervene on land tenure issues with local communities. The government should take a more proactive stance regarding these problems and try to facilitate negotiation, to reassure communities about the benefits of such projects and also reassure investors that they will have legal certainty if they sign contracts with landowners.

Q: How can Enerclima provide the best results for industry and municipalities alike?

A: Regarding municipalities, the most important challenge is dealing with the very short municipal government terms. They only govern for three years and they have very shortterm vision as a result. They are subject to broader political pressures and do not have the opportunity to clearly envision the future. That is why we seek to immediately offer them discounts on the electricity they are going to pay, including the financial cost of the project, which is not easy to do. We have to offer them benefits in the first year of operation. You also need guarantees from the federal government, as without them you cannot go ahead with the municipalities.

Q: What are your priorities for growth in the solar market in the next five years?

A: In the next five years, we expect Mexico to have 1GW of solar power, and this number will grow exponentially after that. It would give the power sector much more flexibility, it would give much more freedom to consumers and will make the whole ensemble more decentralized. It will put pressure on CFE to be more efficient and to build a smart grid capable of incorporating intermittent energy sources, such as solar and wind. Fortunately, with the Energy Reform, we will have the institutional framework needed to develop renewables in Mexico. Even without the subsidies seen in Europe, Mexico will be a huge player in the renewable energy market.