Geothermal Plus Solar Demand to Offset Pandemic Slump

Q: How has GEOTER’s portfolio developed over a challenging past year?

A: Following last year’s landmark project for a sports club, we landed on an interesting niche for both these clubs and their swimming pools. With one project already functioning as a case study, we were planning to focus our efforts on this niche across the country because low-temperature geothermal energy is an ideal solution for these types of clubs. The solution can generate savings because heating a small pool can take a great deal of energy, let alone an Olympic-size facility. Unfortunately, the pandemic forced many players to shut their doors for several months, which interfered with our plans. On the upside, residential users began discovering how much energy they actually used while in lockdown, especially if they have a pool, so this presented GEOTER with further opportunities. Photovoltaic energy factored into these possibilities as well. Nevertheless, this is not exactly the type of project the company really aims for in terms of strategy. Most of the year was spent working to solve the challenges of the pandemic and how to get back to our industrial client base.

By the end of 2020, we were doing small solar installations for industrial clients, just as the economy began to reactivate and geothermal demand in our targeted niche began to increase.  We also closed an important project regarding water-warming heat pumps.

Now that mobility is increasing again, people are realizing just how much they can save on energy. We believe that the sports club niche will remain a cornerstone for us. In recent months, we have talked to many potential clients in that space, including developers of new buildings, especially clients in the C&I environment. Word of mouth and success stories are important to generate more leads and business.

Q: How would you assess opportunity within the tourism industry for GEOTER?

A: The tourism industry relies on many of the benchmarks that sports clubs use. For instance, they need to heat large amounts of water and provide cooling for other spaces. However, we have not been that close to the tourism industry because the sector is not located in the geographic designation we usually operate. In Aguascalientes, energy demand is primarily centered in industrial and other commercial sectors. Agriculture, for example, is a major source of income for the state. The pandemic has not allowed us to travel as much as we would like to. Nonetheless, tourism presents a major opportunity for the company. The industry has been hit heavily by COVID-19, so for players that are restructuring their finances and want to lower operational costs, renewable energy can add a great deal of value. Our portfolio includes an analysis that includes topics like financial benefits and energy efficiency, so that we can demonstrate to our potential clients exactly how we can provide them with a successful business case.

Q: How is the company driving heat pumps and PV solar panels as a hybrid solution?

A: Heat pumps and solar energy on a slightly larger scale is an opportunity we are already marketing around the Riviera Maya, in places such as Tulum. These areas have swimming pools and larger-scale water heating as well. Potential clients see these investments as significant but also realize that the benefits they get make the returns that can be achieved rather attractive. The larger the amount of water, the more sense it makes to contract our portfolio. For an Olympic-size pool, owners could easily pay between US$15,000 and US$18,000 per month for heating. This cost can be cut by more than 60 percent, representing energy savings of up to 80 percent. Knowing this, clients are realizing how much they can save. Regarding the tourism segment, pools might be slightly smaller but the value proposition is clear. Especially now that the sector is reactivating and costs need to be cut, GEOTER can capitalize on this opportunity, all to the benefit of the end user.

Q: How would you assess Mexico’s possibilities to develop geothermal energy on a utility scale?

A: Mexico was a Top 4 country when it came to geothermal energy production This is no longer the case: among other factors, one of the largest geothermal power plants stopped operating. Still, the potential exists because Mexico has many locations where it could tap into geothermal resources. Geothermal energy provides very cheap electricity. It might not be the cheapest to develop, however. For example, utility-scale solar is more attractive in Mexico’s current environment. Regardless, geothermal energy is not intermittent and the energy mix needs to be diversified even further. If you have the resource, then you would ideally make use of it. In the current political environment, it is hard to tell what will happen with renewable energy projects in the short term. Long-term energy auctions have been canceled by the government, for instance. On the other hand, CFE has stated that it wants to develop new projects and the government is still committed to the country’s clean energy transition. Only time will tell.

GEOTER Renovables was founded in Madrid in 2007, with a focus on geothermal projects. It pioneered heat generation through low-temperature geothermal resources in Spain, which can also be used for climatization purposes or to heat potable water.