José Zambrano
Director General
Galt Energy
View from the Top

Platform Produces Residential Success

Wed, 02/22/2017 - 17:32

Q: What is the added value that differentiates Galt Energy from its competitors?

A: Galt Energy was founded three years ago to create a platform that would allow customers in the residential, commercial and industrial segments to switch from purchasing to generating power. The idea is not to rely on PPAs, because we are not looking to be an electricity provider, but to liberate users from the obligation of purchasing power from a utility. Our strategy is to listen to customers, understand their needs and offer them tailored solutions. We identified a lack of financing options in the market so we created our first fund for residential solar projects. Instead of replicating a foreign model, we created a new, attractive one adapted to the Mexican context. In 2014, as a result of the drop in electricity tariffs, we decided to reshape our commercial strategy and focus mostly on residential customers. Our main objective is to reach a large enough scale to lower our capital costs and increase our experience, which will be useful when the commercial sector regains its attractiveness.

Q: Which financing plans are most popular?

A: Product-leasing schemes are becoming more popular, particularly with the low-income segment. By offering these plans we are moving away from the high-consumption residential sector, which most solar companies are targeting but only represents 2 percent of residential electricity consumers in Mexico. Our model does not require a large initial investment so we can target a wider market. Lowincome customers do not pay the high tariffs that wealthier users do but they represent a higher share of their income. So it might be a greater incentive to invest in a solar system that could eliminate up to 25 percent of electricity costs. Our short-term contracts also offer our customers the possibility of achieving energy independence.

Q: What aspects of the Energy Reform will benefit the development of solar projects?

A: The Energy Reform offers several opportunities for utility-scale solar projects because it allows companies to sell electricity directly to consumers but several of those will be hard to put into practice. There is uncertainty about the profitability of solar projects here because the prices for CELs and transmission rights remain unknown. If CFE’s electricity tariffs continue decreasing, it will be even more difficult for solar to compete.