Vicente García
Director of Business Development
Isolux Corsán
/
Insight

Experienced EPC Goes for Transmission Lines

Wed, 02/22/2017 - 15:26

Businesses that previously worked with CFE at the heart of their strategies suddenly have a new target in the wake of the Energy Reform. Private companies are the new fertile ground for EPC firms such as Spain-based Isolux Corsán, which sees the private sector playing a bigger role in the emerging energy landscape.

“CFE will continue to be important in the power generation sector but we believe private clients will become more relevant in the future,” says Vicente García, Director of Business Development at Isolux Corsán, which specializes in energy, construction and large infrastructure concessions.

Renewable power, he adds, also is becoming increasingly important. “We focused mostly on traditional power plants in the past but we are planning to include much more renewable energy projects in the future. We have strong experience in the renewable energy sector outside of Mexico and we have already been involved in the construction of wind farms here. Solar energy is booming in the country so we plan to also work in the construction of related facilities.”

García points out, however, that despite the changes raining down on the sector, traditional power plants remain essential. Isolux Corsán, with an EPC portfolio worth EUR6.8 billion, will continue to be heavily involved in the construction of natural gas-based facilities, in line with the government’s plans to increase the country’s natural gas infrastructure.

In all cases, the key difference will be the involvement of private players in addition to CFE. García says one of the challenges for private investment to take off in the sector is convincing companies to invest in projects still seen as a novelty in the country. “We are confident that it will happen, as many companies have shown interest in coming here. We contribute by providing reliability to investors as a firm that has been successful for many years in the Mexican power industry.”

Isolux Corsán, which has been in business for over 80 years and has operations in more than 40 countries, including Mexico, is eyeing power transmission projects in particular. García says it is already in discussions with some companies but is waiting for the tender documents before making any decisions. “There are two big projects that are grabbing the attention of the private sector, including a US$1.21 billion transmission line that will connect Sonora to Baja California,” he says. “Private companies, however, are worried about the legal framework, tender requirements and payback schemes, among other details that are not yet clear.”

The tender for the HVDC transmission line connecting Oaxaca to the Valley of Mexico takes place in the first quarter of 2017 and is expected to shed some light over private participation in transmission assets. The event is highly anticipated by private industry and Isolux Corsán and its clients will be among those following the development of this project.

Isolux Corsán sees an opportunity to support transmission projects built with private capital because those companies can now invest in the construction and operation of transmission lines under certain schemes. “We are trying to put the spotlight on private participation in transmission lines. We are highly familiar with these projects in Mexico so we can help companies willing to invest in this sector.”

He points out the company has 5,000km of high-voltage transmission lines in Brazil as well as concessions for transmission lines in Peru, the US and in India. “We have had conversations with CFE about our experience in other markets and provided them with advice about how other similar countries have handled these same projects,” he adds.

García says the company has been very successful for the past two years, especially in the power sector. “We were awarded part of the construction of the Toluca-Mexico railway, meaning the catenary, traction substations and the energy system. We are also building three transmission lines for CFE and are doing a US$400 million revamping of an existing power plant in Tamaulipas.”