Ignacio López
Business Development Manager Latin America
Emergya Wind Technologies
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Insight

Plural Factors Favor Mexico as Wind Destination

Wed, 02/21/2018 - 18:29

With a potential energy generation of 25,104GWh per year, an average potential plant factor of 37 percent and the amount of wind resources in industrial states such as Yucatan, Tamaulipas and Veracruz, it is no surprise that Mexican fields are attracting wind turbine manufacturers. “Mexico is among our Top 5 countries for potential clients,” says Ignacio López, Business Development Manager LATAM for Emergya Wind Technologies (EWT). The fact that industrial and big consumers in Mexico face high electricity costs that will continue rising also boosts the country’s appeal. “As electricity consumption costs can reach up to 40 percent of a company’s OPEX, our solution, which is guaranteed for up to 20 years with proper maintenance, allows companies to fix and shield these costs against market variations.”

To attack this market niche and take advantage of its potential, EWT, which works in wind distributed generation, launched operations in Mexico as early as December 2015, just as the Energy Reform was consolidating into an open market in the areas of distributed generation and selfconsumption. “During the development phase, we began building relationships with regulators, the main players already present in the renewable energies market and potential clients and partners,” López says.  

A major milestone that solidified EWT’s market opportunity was the announcement of mandatory CELs starting Jan. 1, 2018. That news was announced in January 2017, spurring EWT to fully rev up its operations in the country, making it the first company to enter the Mexican market niche of wind distributed generation. López understands that the company’s approach not only opens business opportunities for EWT, but also for other players that work in wind distributed generation. Although some might see this as a risk, he believes that in gathering all the available expertise, potential partners and customers, he is consolidating the company as the first option for these kinds of projects. “One of our main strategies to enter the market was to find established local providers of infrastructure.” These companies would not only offer services to EWT at a local price but actually help it assemble a strong portfolio of potential clients, without having to lose too much time  and effort, he explains. It is a strategy that is paying off. By September 2017, EWT had eight well-established local partners as well as 50MW of projects in the pipeline that are under negotiation.

Still, before proceeding, López also sees challenges with the implementation of the projects that must be solved, starting with the regulatory landscape. “As a matter of fact,” he says, “regulations are the reason most of our negotiations have been delayed.” The main issue is that renewable energy projects are catalogued as distributed generation only if their capacity is below 500kW. “Our distributed generation projects can reach up to 3MW with medium-sized turbines of 1MW of nominal power that are much smaller and have much lower environmental and social impact than any solar project of a similar size, or even smaller.” 

EWT is in close contact with regulating institutions to solve this, together with other problems delaying projects. Although not vital for the economic viability of the project, and the fact that EWT can negotiate a beneficial contract under the current regulations, López explains that improvements would allow for wind distributed generation projects to expand with even more strength. “If the regulations allowed it, Mexico could be a tremendous market for us.”

Also playing to EWT’s strength is its innovation standard. Rather than focus on technological innovation, the company emphasizes business innovation. As a clear example of this vision, López talks about EWT’s most recent project in the Netherlands, which was completed in September 2017. “This project lets people within the same postal code invest and become owners of local renewable energy projects. Through this project, they can save up to 40 percent on their electricity bill. To take it one step further, EWT also got the project into a crowdfunding scheme offering a 4.5 percent ROI rate. Eighty percent of the crowdfunding came from the residents who would receive energy from the project, as well as from EWT employees,” he says. “These kinds of innovative projects are also possible in Mexico, we just need the right regulation to allow it.”