Teodoro Monzón Arribas
President Mexico & Latin America
View from the Top

Larger Turbines to be Rolled Out in Coming Years

Wed, 02/19/2014 - 10:46

Q: What is Gamesa’s strategy to deliver on its commitment to offer customers the lowest possible cost of energy?

A: Currently our strategy is focused on providing a product with proved state-of-the-art technology at a competitive price. We are investing millions of dollars each year in research and development, and from our initial range of 600kW, 650kW or 850kW wind turbines, we jumped to 2-2.5MW turbines and more recently to our new 4.5MW wind turbine platform. Few companies have a 4.5MW wind turbine in the market nowadays. We have recently taken an important leap by installing an offshore 5MW prototype in the Canary Islands, which has been working since October 2013 and is our first product for the offshore market. We are working on certifying the wind turbine of the Canary Islands and we plan to begin installing our machines in Scotland and the Baltic in the next few years. We believe offshore will enable us to install higher power machines, possibly reaching 7-8MW in the future. Large scale offshore development is going to happen on a global scale, as long as the continental shelf is not very deep and the ecosystem on the seabed allows it. We are constantly investing in developing new high power products with low energy costs because we are aware that wind power is competing with other types of energy.

Q: Gamesa’s 2.0-2.5MW platforms are the most used in Mexico due to their capacity to adjust to the geographical conditions and existing resources. What have been the most important developments using this product in terms of quality and performance?

A: Our main development area in Mexico is Oaxaca, where we have been developing parks and selling turbines for almost 10 years. The high speed winds in the Isthmus of Tehuantepec require special Class I wind turbines due to the potential for earthquakes and very strong winds, when machines might be stopped due to excess speed. The machine protects itself when the wind speed goes over a determined speed to prevent damage to the blades. Currently, we are operating close to 1GW and we are building an additional 550-560MW. This means that Gamesa will have close to 1,500MW operating in Mexico, adding the small development in Baja California to the Isthmus operation. This means we will continue to be thenumber one wind turbine manufacturer in Mexico due to the concentration of parks that Gamesa has developed, as well as machines that have been acquired by clients.

Q: Which role can Gamesa’s 2.0-2.5MW platform, with different blade options and tower heights, play in the diversification of the Mexican wind industry from Oaxaca to states with lower wind factors?

A: The wind sector is currently working in many states in Mexico. The initial focus of the industry was on the region with the strongest wind, which is the Isthmus of Tehuantepec, but new developments are now taking place in the northern states, such as Baja California, Sonora, Chihuahua, Coahuila, Nuevo Leon, and Tamaulipas. Due to its potential and advanced network, Tamaulipas will follow Oaxaca’s development. Baja California is facing an interconnection issue; if it was connected to Mexico’s national grid, it would be a different story. The day this network exists, and CFE is working on it, Baja California will be able to develop a lot of renewable energy. It will take time because we are talking about a high voltage 400km grid, as well as finding the land, and building the wind farms and substations. It could take years, but when that is done, Baja California will become an important wind energy center. There are other states like Zacatecas, San Luis Potosi, Puebla, and Yucatan where developers are already at work. As for Oaxaca, the Open Season 2 will take at least three years to build the required transmission lines and substations. During this time, developers will be concentrating on other states. In the next two or three years, wind farms will be built in eight or ten Mexican states.

The design of our 4.5MW turbines is state-of-the-art. Installed with blades that have a diameter of 128m, these turbines generate energy for 15,000 families. The equipment is transported in precast segments and are assembled on site, in the same way as our 2MW turbine equipment. The next five years will see the installation of 4.5MW wind turbines in Mexico. However, projects have to be planned in a way that enables them to use this type of equipment. It also takes three to four years to develop a wind park using these turbines, because of the extended wind measurement period that is needed to determine if the turbines are adequate for a project.

Q: What is your strategy to optimize your maintenance and after-sale service portfolio?

A: Between operation and maintenance, Gamesa oversees more than 19GW of the 27.6GW it has installed globally. The rest is the responsibility of companies that have their own maintenance operations, such as CFE. Over the past two decades, we have worked in the wind energy sector in major markets such as India, China, Europe, the US, Brazil, and Japan, among others. Working across five continents creates knowledge and experience which can be applied to specific situations.

Our main alliances are with electricity companies and utilities. Iberdrola owns 19.7% of Gamesa, and we have ties to Enel, EDF, Gas Natural Fenosa, Grupo Mexico and Renovalia. We have also worked very closely with CFE since it started acquiring wind turbines from us.

Q: How attractive is the small and medium-size wind project market for Gamesa?

A: Projects that fall under the small power producer scheme are part of our portfolio. For example, we are working on a 2MW wind farm for a municipality in Sonora, which might be expanded to 6MW at a later stage. The issue with small wind farms is their financing capacity. One way of supporting them is to pass regulation wherein another entity, such as the state government, throws its support behind such projects. This does not change the fact that small power producers need the involvement and backing of a third party for financial institutions to approve the financing.

Q: What is the main impact that the secondary laws will have on the Mexican energy sector?

A: This depends on how the secondary laws will settle certain issues, such as how wind energy will be billed, how contracts will be structured, how tenders will proceed, and the future of the self-supply scheme. All of these issues will be clarified in the secondary laws. CFE’s role will also be clearly defined, which will bring further development. The target to produce 35% of Mexico’s electricity from clean sources by 2024 is very ambitious, but it can be reached if a sturdy legal framework is achieved through the secondary laws. Mexico is a very attractive country for foreign investment in different sectors, including renewable energy. In order for projects to become a reality, three elements need to be working in sync: resources, grid, and regulation. Mexico is developing its grid infrastructure, resources are available, so the only thing missing is regulation.