Alejandro Lorea
Senior Project Manager
MGM Innova
View from the Top

Expansion of Services for New Energy Markets

Wed, 02/19/2014 - 17:40

Q: How have MGM Innova’s priorities evolved to reflect the current Mexican business environment?

A: The new opportunities we see here are in the area of energy efficiency. In the past we were focused on carbon markets, the development of the Clean Development Mechanism, and the opportunities surrounding the reduction of greenhouse gas emissions. The big drop in the price of carbon credits meant that our former business model was no longer viable, and we are now shifting towards a broader area of business by seeking to work more on energy issues. Our value proposition is our ability to link energy issues and climate change issues at the business strategy level. We help companies improve their competitiveness and productivity while complying with the specifics of the General Climate Change Law.

Q: How can government initiatives persuade individuals and companies to become more energy efficient?

A: Enough incentives exist to encourage people to take energy efficiency steps on their own merit; we do not need to look for additional incentives. Furthermore, a regulatory framework that demands compliance with certain energy efficiency rules is not desirable. Companies have the common sense to take such actions by themselves, rather than being compelled to do so by the government. It is true that some firms may still approach energy efficiency as a cost rather than an opportunity, but they represent a diminishing proportion.

Q: What opportunities does MGM Innova identify in the power generation and renewable energy sectors, and how important will such activities be within your portfolio?

A: MGM Innova is being restructured, moving from solely focusing on consultancy to becoming a group of four companies. The three new companies are MGM Innova Energy Services, MGM Innova Renewables and MGM Innova Capital. Under this new structure we will look to provide integrated solutions for energy and sustainability. The Energy Services and Renewables branches will structure projects based on the findings of the consultancy, while the Capital company will raise funds to support projects that our clients cannot fund themselves due to capital restrictions. We hope this fund will grow to reach US$100 million. We see a chance to build up a very good portfolio that links energy efficiency, sustainability and climate change.

Q: How does MGM Innova persuade its clients that investing in energy efficiency solutions will eventually prove to be profitable?

A: There is a current trend for businesses to reduce their carbon footprint, which means that we do not need to convince them. However, many of them do not know how to develop strategies that will help them do so. Often, a company’s head office, located outside of Mexico, will mandate that local subsidiaries must reduce their carbon footprint, but locally this can be difficult, as there has not been much discussion about what it even means to have a carbon footprint, let alone how to reduce it. We need to offer proper solutions so that the adaptation process can go smoothly. MGM Innova advises clients on how to shift toward solutions that are best suited to them. We seek long-term relationships with our customers, rather than focus solely on a project-by-project basis.

Q: Power generation accounts for a significant proportion of CO2 emissions. What can be done to reduce emissions in this sector?

A: On the generation side, clean energy generation will offer companies more opportunities to reduce their carbon footprint. Nuclear energy, as we have seen in France, is a big help in reducing carbon emissions and should be expanded in Mexico. We would like the ISO 50001 standard, which oversees energy management systems, to be used more widely. The savings that were seen in Europe after this standard was established were substantial, between 8% and 10%. We feel this standard could be even more effective here in Mexico, including in the area of power generation.

Q: What are MGM Innova’s future goals in the Mexican energy market?

A: We will work to become partners for government bodies such as CRE, CENACE, CONUEE and FIDE. We may introduce NAMAs (Nationally Appropriate Mitigation Actions of Developing Countries) into Mexico, since nobody here knows what they are; if we were to do so, forming a partnership with the government would be essential.