Playing Long from the Very BeginningWed, 02/21/2018 - 15:25
One of the major cornerstones achieved by Mexico is the success of its long-term electricity auctions. With a committed investment resulting from the first and second editions of US$6.6 billion and the successful conclusion of the third auction, which showcased an average tariff of US$20, the lowest yet, Mexico’s potential is slowly developing. Andrea Bernardy, Country Manager Mexico of EPC company Enerray, believes that the auctions have been cautious, but strong. “The cautious implementation of the Energy Reform has been beneficial in a way because it has allowed the market to develop according to a long-term vision.”
Companies entering a developing market often need the support of experienced players, such as Enerray, a leader in the design, installation and maintenance of utility-scale and industrial photovoltaic systems. The company itself entered Mexico long before the Energy Reform took place and as a result, it can offer added value and expertise. “Enerray’s strategy was focused on entering countries that had high energy demand and high sun availability,” says Bernardy. “We decided to enter Mexico in 2007, before the Energy Reform provided greater incentives for companies to enter the country. We recognized that Mexico did not need incentives to be economically attractive and therefore made the tactical decision to be a first entrant with a long-term vision compared to companies that are now spending money to enter the market without the proper knowledge and network. All these years have allowed us to focus on business development activities and to be ready for when the market booms, which is what is happening now.”
Bernardy finds in Mexico a wide range of possibilities for developing projects because it has “a utility-scale sector with long-term contracts offered by the auctions while also opening opportunities for bilateral contracts with qualified suppliers and distributed generation for on-site self-supply.” Until now, Enerray has played an EPC role in the Mexican sector that allowed it to be as close to the market as possible, to listen to its needs and be prepared to offer the best service possible, Bernardy says.
As an EPC, its job is to reassure its energy generation customers that production will not stop. “Our offer includes a performance warranty that few players in the market provide. This warranty states that under certain conditions we guarantee the working hours and performance of the plant,” Bernardy says. “With this performance warranty the client knows how much the plant will produce, and if the plant does not comply with this performance then Enerray is committed to pay for any ensuing damage.” A commitment level of such magnitude can only be offered by a company that has a longterm vision with its clients, he continues. “We want our clients to make a profit from their investments.”
In an innovation-driven market such as energy, being a first mover does play a role. “One of the opportunities we have identified is offering customers, such as qualified users, offtakers, generators and other investors, the possibility to get energy by investing in the development of a certain utilityscale plant together with other customers, and then offering the customer a portion of the energy generated that is proportional to its investment,” says Bernardy.
Starting a ground-breaking project like that is no easy task but as of June 2017, 50 percent of the required players had already signed letters of interest to start financing the 100MW project. Bernardy explains the benefits of it: “Under the old EPC scheme, a utility-scale project of 100-200MW would restrict us to only one client. Now, with that same plant we can tackle more clients. This project will also offer us a constant supply of capital for several years. This type of offer is not yet present in the market and developing it will give us an advantage,” he says. “And it will have the Enerray seal of quality.”