French Giant Eyes DG, Qualified Supply

Q: Considering EDF Renewables’ experience, what possibilities do you see in it becoming a qualified supplier?
A: EDF Renewables has a sister company called EDF Trading, located in Houston, which is a qualified supplier. Though in the past EDF Trading has not been interested in participating in Mexico, we are in discussions to see if the Mexican market has become more appealing. However, we are also looking for new business model alternatives with other types of generation such as distributed generation, and we are in the process of designing a strategy for these alternatives. Preparing for this, we acquired two companies in the US that will strengthen our capabilities in this regard.
Q: In addition to the distributed generation opportunity, which other niches is EDF exploring to generate presence and add value to the market?
A: We are working on two different options. The first is transmission, where we are actively participating in one of the consortiums bidding on a direct-current transmission line in Oaxaca, through our affiliate company, RTE, the French transmission system operator. RTE has also signed a memorandum of understanding with CENACE for technology and information transfer, since it is the world’s most qualified company in the area of electricity grids.
The second is a French company that we are just starting to work with that provides engineering services for various fields, including nuclear, hydraulic, thermic, transmission, direct-current and renewables. It will also work for third parties and as advisors to the government on topics regarding nuclear plants, an area where there is not a lot of expertise in Mexico.
We are also opening a business line for operation and maintenance for third parties. In fact, we have already signed three important contracts for maintenance and operation of third-party solar and wind-power projects.
In December we hope to complete the Sonora solar project and start operations in January 2019. The wind project in Oaxaca, which had certain social issues to be solved, is moving forward and we believe that around February or March 2019 we will be able to start construction.
Q: What is EDF Renewables’ method to approach smaller companies and supply them with electricity?
A: For these companies, we are fortifying the sales structure with special personnel that will take our clients by the hand when they do not have the relevant energy expertise. The idea is to have a team with a strong commercial and advisory profile that can provide the technical expertise, which will be the key to doing business with these clients.
When we present ourselves to big companies that have an energy department, we are all speaking the same language. However, with smaller clients we advise them and show them the benefits of the new structure. These are clients that want to see a quick return on their investment. So, we have to be creative in the way we offer the product, where clients see benefits as soon as possible.
Q: What can we expect from EDF in terms of participation in the generation niche?
A: This will be determined by whether any future auctions take place given that the fourth long-term electricity auction was put on hold by the new administration. Our participation in auctions depends a lot on their continuity. We also just signed an important bilateral PPA.
We expect to continue with PPAs. We have a disadvantage as we are not a qualified supplier, which would allow us to sell directly to the final user. We are making associations with several qualified suppliers, so we will be able to participate in the market with them. Our trading affiliate must first show interest in participating in trading in Mexico before we can become a qualified supplier, but it is already operating on a global level. This is something we will discuss in 2019.