Injecting Liquidity into the MarketFri, 05/03/2019 - 15:41
Q: What market opportunities does Orca Energy expect from the policy direction of the federal government?
A: 2019 is set to be a relevant year due to three main factors. First, the energy industry, and hence the WEM, is evolving into a mature stage. The market participants’ learning curve has grown at a fast pace and stakeholders are now more experienced. Second, under this advancement, the Ministry of Energy and CRE have published new legislations that provide clarity. Third, the entrant administration has defined certain guidelines stating the WEM will be respected and CFE will be strongly reinforced. Given these three factors, the transitory period toward 2020 will be successful. Previous to the governmental transition, industry participants were uncertain about the continuity of the legal framework. To date, more companies are being incorporated throughout the value chain, from generators, to qualified suppliers and qualified users.
Q: How will the relationship between generators and qualified suppliers evolve in the coming years?
A: With the cancelation of the auction scheme, developers that own ready-to-build projects can allocate the energy generated through two models: merchant and qualified suppliers. In 2019, the price imbalance between generators and qualified suppliers changed, influencing our decision to focus our portfolio on qualified users following contracts with a definite time frame. Before, the long-term electricity auctions offered solid guarantees at low prices. Now, under these new models, guarantees are tied to the market or directly to a qualified supplier. However, they are not backed by the government, their financing is different and associated tariffs are higher.
Q: What fundamental characteristics should Orca Energy’s perfect partner have?
A: Our business model is based on the consolidation of a robust and diversified portfolio. In the meantime, we seek AAA clients whose guarantees are strong enough to be matched with the guarantee’s generators are offered with. The Mexican electricity market is among the sturdiest on a global level because it is insured by every market participant. In this sense, we offer guarantees and in case any breach of agreement takes place, there is a guarantee behind that, which supports our operations. In this sense, it is important to work with companies that offer strong guarantees.
Q: What role will qualified users play in this scenario and what services does Orca Energy provide?
A: Before the basic supply tariffs were published, the end-user had the choice to become a qualified user or not because it had no visibility on the topic. Today, we are observing that qualified users have more access to information and are becoming empowered by managing one of the most important commodities within its operations. They have the possibility to select its qualified supplier and with such flexibility, every company is looking to Orca Energy as its No. 1 option. There are many different types of qualified users in the market. We have the big qualified user that is a large energy consumer and has a team within its organization that dominates this area. On the other hand, there is the off-taker that barely consumes 1MW and wants to become a qualified user. Among this array of options, every company wants certainty. Orca Energy provides contracts between 12, 24 and 36 months. In this sense, companies can be in control of their energy budgets because we deliver this certainty.
Q: What will be the company’s priorities during 2019-20?
A: Orca Energy is a pioneer. For instance, this year we will be organizing an in-house auction for generators. We have advanced our technology and I believe our company has one of the most robust systems in the energy supply market. We are purchasing energy on a daily basis, but our goal is to have more detailed schemes and to consolidate a stronger approach with generators. Today, qualified users execute auctions to select the best available conditions offered by the qualified suppliers. We see a huge opportunity to do the same with generators. Orca Energy is willing to purchase certain energy volume from the generators that present the best market conditions. With this strategy, we will be able to manage very competitive energy prices. We want to reach a portfolio of 500MW by the end of 2020 and expect to allocate 70 percent of this capacity to our qualified users.
Orca Energy specializes in the development and commercialization of energy solutions. The company offers innovative energy supply options while pursuing competitive prices, excellence within its service and the optimization of clean energy within its portfolio.