How Successful Bids Turn Into Successful Projects

Q: How would you rate the design of the long-term electricity auctions?

A: So far, we think the auctions have been successful in their objectives. We are satisfied with the transparency shown throughout the whole process, as well as the power volumes allocated. Through this instrument, Mexico has become the most attractive country in Latin America energy-wise. This long-term view allows us to plan ahead and to compete for large volumes of power generation. The participation mechanisms are somewhat complex, involving many different variables, but once you get the hang of it, the process goes smoothly. Another important aspect of the auctions is that we are starting to witness how banks are willing to finance the projects, guaranteeing attractive liquidity. The Ministry of Energy and CENACE have done a great job in creating a well-received auction process and more private players are looking forward to participating.

Q: What elements of its auction-winning strategy did Jinko Solar adapt to Mexico’s specifics?

A: First, you must find the most competitive projects. Second, you should adapt the design and development of the project according to auction rules. For instance, in Mexico’s first long-term auction, we identified important benefits from projects in Yucatan. Then, once you know the rules, you single out and focus on the most competitive variables inherent to the project. Primarily, financing, designing a competitive EPC and O&M plan and the project’s cost. The auction’s rules may change, which is why you just need to adapt and offer a quick and effective response to these modifications. That is what Jinko does.

Q: Did the introduction of the Clearing House change Jinko Solar’s strategy?

A: This new mechanism is attracting several new energy buyers to the bidding process. Along with some relevant financial entities, we are looking into these incoming offtakers. We expect a bundle of off-takers in the future, but for now CFE will take most of the energy.

Q: What technology developments in renewable energy is Jinko Solar watching?

A: All relevant players in the solar sector are looking at the same technology. The changing variable in most technological equations will be pricing and its variation over time. Also, technology-wise, solar manufacturers have a choice between mono-crystalline and polycrystalline modules, or using both. The next step everyone is monitoring closely is batteries. They still have to become cost-efficient, given that in the future the name of the game will definitely be energy storage, both for wind and solar power. This will allow renewables to have a larger stake in the energy matrix of most countries. Storage will boost renewables to the next step and will scale up the sector.

Q: What makes a good corporate social responsibility program?

A: First, you need to be totally integrated with the local communities of the locations where you build a project. Then, you need to make sure that they benefit from it and embrace the project through different means, such as integrating community members into the project’s workforce, particularly in the construction, operation and maintenance segments of the project. This approach is of capital importance to our projects in Yucatan, for instance, where there are important Mayan communities.

Q: What have been the highlights for Jinko Solar in Mexico?

A: Definitely the first auction. Jinko entered the Mexican market in January 2016. One month later, we qualified for five projects and in March of the same year we won three of them, representing an investment of close to US$300 million. In that short period, we became one of the big winners in terms of awarded MWs. We are finishing the development of the projects and will see them come online in 2018.

Jinko Solar is a China-based PV manufacturer and project developer. The company distributes its products and sells its solutions and services to a diversified utility, commercial and residential customer base worldwide.