Growth in Qualified Supply, Consulting and Power ProductionBy Cas Biekmann | Thu, 05/13/2021 - 11:10
Q: How does Tuto Power define its presence in the Mexican market?
A: Grupo Alego is the holding group, which includes Tuto Energy. We are involved in three main activities. Tuto Energy develops projects from scratch or purchases them from other developers, which is a common approach in the energy industry. In a partnership with Acciona, Tuto Generation owns half of Mexico’s second-largest photovoltaic solar plant, the 320MW Puerto Libertad in Sonora. Puerto Libertad is a small community, so the construction of the project and our social commitment was a rather big deal for them. With US$400 million in investments, it features over 1.2 million solar panels. We trade half of the power produced to the electricity market as a qualified supplier. The other half of Puerto Libertad’s energy is sold to CFE, since the project was part of the second long-term auction in 2017. We are involved in all three main areas of the Mexican energy sector.
Grupo Alego is also involved in R&D regarding biofuel production and in project financing, although these areas are currently on stand-by. We work with private and investment banks when we need to finance our projects. Furthermore, Tuto has signed power purchase agreements (PPAs) with private power producers in Mexico, especially in Baja California and central Mexico. Overall, Tuto is the sixth-leading qualified supplier in the country.
Q: What areas have been affected as a result of current energy polices?
A: In the past month, the generation side has been affected by the recent proposed changes in the law; it is more difficult to push development forward than it was before. Qualified supply operations are somewhat easier. Nevertheless, this arm still faces some challenges due to the policy changes in the industry because some clients are no longer willing to take the risk of changing from CFE to a qualified supplier. We are also examining other developments in the cogeneration area and have considered solar and wind projects as well. However, the changes in the sector have put a halt to our development of wind and solar. We need to be certain that if we develop energy, it will be dispatched into the grid. We will slow down our activities until we have more certainty in this regard.
Q: What other technologies is the company looking to add to its power generation portfolio?
A: We are looking at the new technologies entering the Mexican market. We have talked to some Spanish companies involved in technology related to battery storage to see how we could develop our projects and balance loads for our clients. This year, Tuto Power launched a new division called Tuto Services, which focuses on providing consulting services. Examples include technical requirements imposed by CFE through the grid code and some small, on-site solar-panel project developments below the 0.5MW threshold.
Q: How do you gauge the awareness of Mexican companies regarding the grid code?
A: Many of our clients are unaware of the grid code’s requirements. Manufacturing plants were supposed to have their loads supported by modifications in 2020 but since there has been no announcement from the government, CFE or CRE, people remain unaware. Ninety percent of the time, it is not until we start working in the client’s plants and examine their equipment that they realize the necessity to comply with the grid code. Some of the larger energy consumers requiring big loads have already had discussions with CFE about these requirements. Unfortunately, clients consider meeting these requirements an investment or a down payment. Tuto Services is looking to provide financing for items such as smart metering as well.
Q: What are Tuto Power’s goals for 2021?
A: Our main goal is to consolidate our position in the Mexican wholesale electricity market this year. As the sixth-largest qualified supplier, we are looking to end the year in the same position, although climbing a spot would be great. We are negotiating some interesting contracts with big off-takers, with discussions regarding what they need or do not need. Tuto Power provides a simple quotation, and the client then chooses which option they prefer. Our strategy is not to be aggressive but to grow moderately while maintaining the company’s ideal financial stability. We have seen that in the short history of the electricity market aggressive companies without extensive financial backup risk going out of business within the span of a couple of months.
Tuto Power is a prominent Mexican business group involved in the energy value chain, as well as in clean energy development, qualified supply and consulting.