NOTUS Energía Rethinks Project Scale, Storage Approach

Q: How would you describe NOTUS Energía’s current footprint and strategic priorities in Mexico’s renewable energy market?

A: NOTUS is a project development company. We have been active in the Mexican market for over a decade, primarily focused on utility-scale projects, though we have also engaged in distributed generation. In fact, we currently operate our own distributed generation project and have provided development support to partners pursuing isolated supply and self-consumption projects.

Our company is deeply committed to delivering high-quality renewable energy projects. We strive to meet utility-scale standards from the top down, distinguishing ourselves through the excellence of our development process. This commitment is not only grounded in our fully Mexican-based team but also strengthened by the technical and financial backing of our parent company in Germany. As the Mexican subsidiary of NOTUS Energy, we uphold the same high standards that define the entire group.

Q: How has your strategy evolved in response to regulatory changes over the past few years?

A: Our trajectory reflects the broader evolution of the market. We began operations around 2014, coinciding with the implementation of Mexico’s Electricity Industry Law (LIE) and the issuance of the first generation permits. In those early years, we focused mainly on large-scale wind projects—those exceeding 150-200MW.

The landscape shifted significantly when solar projects began entering the market at remarkably low costs. This compelled us to diversify and enter the solar space. Although our roots are in wind development, we have since built strong expertise in solar generation and, more recently, in battery storage as well.

Our first solar initiative was in fact a distributed generation project here in Mexico, which also happened to be NOTUS Group’s first solar project globally. It served as a hands-on learning experience that allowed us to fully understand the technology from the ground up, from development to commissioning and operation.

As the previous federal administration imposed constraints on renewable energy deployment, we had to reassess our strategy. This led us to explore other avenues such as distributed generation and isolated supply schemes. During this time, we began offering development services in addition to our core business, and we adopted a capital-light approach to maintain long-term collaboration with our German investors.

Today, under the current administration, we see renewed momentum in the market. While our interest in utility-scale projects remains strong, the focus has shifted to smaller-scale developments. We are now working on projects ranging from 30MW to 100MW, often incorporating battery backup systems. Furthermore, we are no longer limiting ourselves to project development. We now aim to stay involved through construction and operation, as well.

Q: Mexico’s new electricity law grants CFE control over 54% of power generation. What implications does this hold for private developers like NOTUS, and how do you envision collaborating with CFE going forward?

A: We have always recognized CFE’s critical importance to the Mexican energy sector. No other company in the country matches its technical capabilities and nationwide reach. Our goal has always been to position ourselves as a reliable partner to CFE.

For instance, in the distributed generation project I mentioned earlier, the medium-voltage interconnection line, operating at 13.8KV, was entirely built by CFE. The company completed the work more quickly and at a more competitive cost than several private contractors who also quoted for the job. This is a real example of CFE’s operational strength and efficiency.

Our working relationship with CFE has been positive, and we are fully aware of the areas in which it excels. That said, the private sector plays a key role in complementing CFE’s efforts, particularly by contributing financial flexibility and development expertise.

There is tremendous potential for collaboration. Private companies like NOTUS can support CFE in achieving its generation targets, similar to the dynamic we saw during the auction era. While the regulatory structure has changed, the fundamental objective remains the same: to increase power generation capacity in Mexico through coordinated efforts.

Q: How is NOTUS adapting to Mexico’s new regulation mandating battery storage equivalent to 30% of renewable project capacity? What is the major impact of this policy on renewable projects?

A: Like most regulations, it comes with both advantages and challenges, and it is important to understand the rationale behind it. This 30% storage requirement being promoted by CENACE for nearly all projects is grounded in a technical objective with which we broadly agree. The key concern is that renewable energy, particularly solar and wind, is inherently variable. These technologies cannot simply be turned on or off to meet real-time demand. Their output depends entirely on weather conditions. As such, the goal is to ensure a stable, reliable, and continuous power supply, which are objectives that battery systems are meant to support.

That said, before imposing such a significant battery requirement, it would have been more beneficial to promote hybridization of renewable projects, particularly by combining solar and wind generation, which naturally complement each other quite well in Mexico. This would have helped smooth generation profiles without relying exclusively on storage.

We do understand the intention behind the rule, which is to reduce the volatility of intermittent generation sources. Technically, this makes sense. However, the practical challenge is the cost and lifespan of batteries. Unlike solar panels or wind turbines, batteries typically need to be replaced at least once over the lifetime of a renewable project. This means developers must plan for at least two battery systems over a 20 to 25-year horizon.

The main concern is not whether batteries can support the grid, since they absolutely can, but whether they can be financially viable. Unless battery systems are compensated through capacity markets or benefit from some form of additional revenue stream, it will be very difficult to recover their cost. Today, the revenue they can earn through time-of-use arbitrage or balancing services is limited and often insufficient to justify the investment.

This financial barrier could significantly slow down the development of new projects under the new regulation. At NOTUS, we have been proactively designing projects with integrated storage for the past two years, not only to comply with the 30% requirement but also to explore how batteries can support the grid during peak hours.

We are also evaluating where to best locate the batteries, what capacity makes sense beyond the regulatory minimum, and how they can contribute to grid stability. Our approach is not to rely on full battery charge and discharge cycles. Rather, we aim to use batteries for smoothing output profiles, reducing sharp peaks and making renewable energy flows into the grid more gradual and manageable. We seek a balanced approach: installing sufficient battery capacity to support grid needs during critical hours, complying with regulatory requirements, and contributing to system reliability.

It is important to also consider the broader implications. Batteries, while useful, are not entirely clean. Their production, use, and eventual disposal carry environmental costs. Unlike with solar panels, whose recycling industry is only now becoming viable after years of buildup, we already know that in 10 to 15 years we will be facing large volumes of retired batteries, not just in the energy sector, but also from electric vehicles.

We must plan accordingly. We need intelligent, forward-looking solutions that not only support the grid but also address the environmental challenges that come with widespread battery deployment. This is a shared responsibility across sectors and an issue that deserves serious attention.

Q: What kind of opportunity does isolated supply represent? More importantly, what hesitations remain, either among clients or on your side, that may be preventing further adoption?

A: We have not focused on isolated supply or self-consumption. While some opportunities have arisen where we have participated in a supporting role, we have not actively pursued this market. These projects tend to be complex. Once you exceed 2 or 3MW, you are essentially subject to the same permitting requirements as any large-scale generation facility: interconnection agreements, environmental impact assessments (MIA), social impact assessments (EVIS), and so on.

For us, this represents a significant challenge. We are structured around utility-scale projects and shifting our team to support an industrial or commercial client, who may not fully understand that permits today can take up to 18 to 24 months, adds layers of complexity. These clients often compare the process to residential solar installations, which are completed within days or weeks, and that creates mismatched expectations.

Isolated supply projects require significant time and financial resources, and not every company is prepared to manage that. While we do respond to some invitations to explore these projects, it is not a market segment we are actively targeting. We know the model and we have worked on it, but we prefer to continue focusing on the large-scale utility segment.

Q: For 2025 to be a successful year, what are NOTUS's main priorities?

A: We already see signs of renewed momentum in the sector. That alone is a success, not only for us but for the entire industry. Even though we are still facing some uncertainty, with pending regulatory definitions and legal interpretations, the mere fact that there is movement and intent is a positive sign.

There appears to be genuine interest in reviving large-scale renewable projects in Mexico, similar to what we saw in past years. Mexico once achieved some of the most competitive prices globally. I firmly believe we can return to that level of leadership.

For us, a key goal in 2025 is to secure interconnection agreements. We want to see progress on the projects that were stalled due to disproportionate or unclear responses from authorities. If we, or our peers, begin to obtain viable interconnection permits and see investment flow back into the country, that will mark a major step forward. That, for us, would be a real success.

Notus Energía México is the Mexican arm of Notus Energy, founded in 2001 in Germany. The company is focused on the planning, development, construction, and management of wind and solar energy projects, including distributed generation projects.