New Player With Wealth of Experience

Q: How do you leverage the experience of your team while being a young company?

A: Vive Energía is a new company but our executives and management team have led the teams of diverse companies and organizations that participated in nearly 60% of Mexico’s current installed wind capacity. We are currently developing nearly 800MW across eight different projects: two wind projects in Yucatan, two in Guanajuato, one in the State of Mexico, two projects in Tamaulipas, and one solar project in Baja California Sur. The most advanced project is in Yucatan, with 100% of the land rights secured, including those needed for the transmission lines. We are currently getting the project approved by the environmental agency. We are also working closely with our selected wind turbine manufacturer in order to establish the most efficient way of carrying out this project, which shall be constructed in 2014.

Q: What are the critical success factors in a Mexican wind project, and at which stage do potential off-takers get involved?

A: After locating the optimal site, it is crucial that CFE allows us to connect to the grid through a substation. Once the site and grid connection are confirmed, we start securing land rights. The off-takers come in parallel to the development of our projects, thus the energy provided to them will indistinctly come from different projects. When an off-taker signs a contract with us, it is then defined which project will supply the energy. If an off-taker signs up late for a particular project, he will be the first one on the list for the next project to become operational, which normally follows after 14-16 months. Off-takers are eager to wait because they are getting either an attractive flat rate or a discount on CFE tariffs without having to invest a single dollar. Also, many things can go wrong in renewable energy projects. Beyond failing to secure land rights correctly or not being able to provide financial back up, the wind resource may not have been adequately measured if towers were not correctly placed or set at the correct height, making the information collected unreliable. It is important to carefully follow international procedures at every step of the way as the information you collect defines the bankability of your project. Banks and lenders in general will only finance projects at a P90 level, which means 90% probability that the foreseen capacity factor will be reached. At Vive Energía we have a wealth of experience in securing project financing. This is one of the most common problems in the Mexican market, as many developers lack knowledge about how to make a project bankable.

Q: What would happen if you fail to deliver the amount of energy that you agreed with your off-takers?

A: Wind resources are evaluated in adherence to what we consider a viable technique. The wind resource is certified by an international company that is recognized by the banks, making it reliable or financeable. However, changes in the natural wind resource occur year by year, and that directly affects the amount of available energy that can be delivered to the off-takers. Our task is to provide energy at a discount, but we cannot give discounts for energy we do not provide. If the contracted energy is not delivered to an off-taker due to our responsibility, then there will be consequences for our company. However, if the problem is due to lack of wind, then it is not our responsibility. We also have years in which the wind resource is above all expectations and projections, in this scenario we either feed the grid with the excess energy or deliver it to an off-taker, as established in the applicable energy power purchase agreement.

Q: Which role does Vive Energia aspire to play in the development of the Mexican renewable energy sector?

A: Vive Energía will be constructing a 70MW wind energy project this year in the Yucatan Peninsula, which is the first of several projected for that region. Therefore, this continued development effort and the proven track record of the Vive Energía team, have established us as the country’s leaders in efficient renewable and clean energy project development. The Energy Reform will surely bring new and powerful players to the energy sector in the following years, yet we believe to have the capabilities to maintain this leadership position despite the new challenging scenario, considering that the Vive Energía team already has the proven track record and the credibility of the market, derived from years of experience of efficiently developing energy projects in Mexico.