Hipólito Suárez
Director General
Gamesa Latinoamérica
View from the Top

Gamesa Strives to Maintain Position Through Vertical Integration

Wed, 02/24/2016 - 13:16

Q: What were the opportunities Gamesa spotted that inspired it to establish its Latin American headquarters in Mexico?

A: We decided to establish our headquarters for Latin American operations here in Mexico because we expect the market to experience considerable growth. This decision was made even while the Energy Reform was being drafted. If the market is going to grow as we expect, we thought it was pertinent to allocate sufficient human and financial resources to Mexico. From here it makes sense to reach out to other markets such as Central America and the Caribbean.

We not only install the wind farms, but we are also manufacturers, with 73% of the market in 2013 as a wind turbines supplier. We are the leaders and will maintain this position, so this prompts us to continue investing in Mexico. The Ministry of Energy’s plan for 2017 sets a goal of installing 8,722MW, which means that around 5,000MW have to be installed between 2015 and 2017. This creates a huge market and for this reason we will continue investing in Mexico and trying to sell as much as we can.

Q: How will Gamesa maintain its position as the leading wind turbine supplier in Mexico now that the Energy Reform will bring more competitors to the market?

A: The most important thing for Gamesa is that it is imbedded in the whole value chain of the wind sector. It is crucial that we maintain our productivity across the value chain by designing and manufacturing wind turbines, developing wind farms, and carrying out Operation and Maintenance services (O&M). Working on these three areas differentiates us from the rest of our competitors. Even if our main global activity is supply, our experience in developing and selling wind farms has proven crucial to our benchmark position in the self-supply segment.

At the moment, we are the leaders in Mexico with around 1,400MW. We have developed, built, and commissioned over 244MW, an additional 70MW are under construction, and we have more than 1,000MW under O&M. We plan on developing our operations across these three sectors and maintaining our position as leaders in the wind market.

Q: How can wind energy keep its leadership in Mexico’s renewable energy sector now that other clean sources will start competing in the market?

A: We have great deal of suppliers in Mexico, and it is easy to find innovation in the sector, from companies manufacturing components to engineering and construction. In order to further push the Mexican value chain in the wind energy sector, we are constantly trying to find new customers and new local suppliers. Being able to work locally provides several benefits for the company, so we are putting a significant effort in finding new collaborators that will enable us to sell equipment at lower prices and develop more advanced wind farms. Gamesa puts emphasis on local content; therefore, the company also recruits local engineers and technicians.

The intention of the Reform is to create cheaper energy sources and we think we can contribute to this objective because wind energy can easily compete with all the other renewable sources. In fact, I think wind energy is more competitive than alternatives because it performs more efficiently in terms of capacity, costs, and energy factors. Considering these elements, we assume that wind is going to remain strong in the future. Gamesa will collaborate with CFE and the rest of the energy sector in order to achieve the targets established in the law.

Q: Ultimately, do you think the Energy Reform achieved the right framework to accurately regulate the renewable energy sector?

A: I think the Reform has very positive elements and some shortcomings. For example, positive aspects include clean energy certificates, targets by percentage of renewable energy, carbon credits, and a new wholesale market. These are positive traits that will promote the development of the wind sector. On the other hand, there are shortcomings, such as the failure to address logistics of market functioning and prices. Everything is new and everybody has expectations and wants to know what will happen with this market. Provided that the problems will be quickly rectified, there will be a flood of investments for these kinds of projects. Gamesa is investing in Mexico because we are confident that this will become a significant market.