Project Developer Expands to DG

The opportunities unlocked by the development of distributed generation in Mexico is enticing seasoned energy companies to branch out toward this niche, says Teodoro Krapp, Director General of Intertec Solar Mexico. “Our expertise allows us to work comfortably in the distributed generation segment, particularly as it is a less capitalintensive business compared to large-scale projects,” says Krapp. “Baja California offers us a considerable client portfolio given its attractive solar irradiation levels and our work in a 30MW PV project there. We are looking forward to further developing this business line in the near future.”

To ensure profitable businesses for distributed generation, Krapp believes CRE needs to further strengthen its regulatory procedures and reach in the electricity market. “It is no easy task considering CFE remains a giant with significant comparative advantages given its 70 years of experience. We are confident CRE is working diligently to guarantee a level playing field for all other market participants,” he says. Considering CRE will soon overtake the design of the longterm electricity auctions and tariff publications from the Ministry of Finance, Intertec hopes to see clear-cut decisions as well as decisive and enabling regulation, especially in making more dynamic and efficient processes when it comes to interconnection studies and permitting.

Critical success factors at a large-scale PV project can be transposed to distributed generation projects, including the products involved in a PV system. “To guarantee long-term seamless performance, you need Tier 1 solar panels and inverters. A meticulous and demanding selection process is a must when it comes to choosing your products’ supplier or manufacturer,” says Krapp. Location is another key variable. For large-scale projects, “a higher distance between your PV power plant and the electric substation that will distribute the generated energy implies a higher cost, not only from energy loss but also from installing additional transmission lines and substations from scratch so as to have electric infrastructure closer to the location where your project is being developed.” 
Distributed generation, by its very nature, has the advantage of bypassing this infrastructure issue.

“Most important of all is financial closing. Even when you have enough capital to finance the project from your own balance sheet, compartmentalizing risk in every stage of the project by obtaining specific financing from specialized third parties comfortable with financing a particular stage of the project is a highly recommended and common practice,” Krapp adds.

Intertec started as a consulting company, cumulating valuable insights into Mexico’s PV market since it opened its doors in 2012. “Our business strategy entailed a joint venture with Germany-based Saferay under a holding scheme. We set out to develop a Baja Californa-located 30MW project in July 2012, as regulation at the time limited a project’s installed capacity to that amount,” Krapp says. Intertec considered this particular location strategically attractive for solar power considering fuel oil used to generate electricity in Baja California needs to be shipped into the state, rendering the use of fuel oil more costly compared to other states in Mexico. “We underwent pre-feasibility studies for the optimal design of the power substation and the construction of a 5km transmission line and went through all the permitting procedures and CFE’s purchase-sale contract.” The project developer also capitalized on the first long-term electricity auction by offering its project development services to large companies looking to participate. “In 2014, we partnered up with Norwegian Scatec Solar to maintain a healthy capital flow into our project development activities.”

Krapp’s company wants to remain one step ahead in distributed generation by tapping into battery-equipped PV solar systems. “We recently closed a business relationship with ABB to integrate its high-end batteries into our portfolio,” he says. Intertec is also teaming up with Enerray to provide greater added value into its developments.

Intertec Solar is taking the distributed generation challenge head on. “We see great business potential in solidifying this particular business line. Also, we want to increase our offgrid PV systems business as it can be developed within a shorter time frame and bypasses the need of additional electric infrastructure costs. Our partnership with ABB will be instrumental in this regard,” Krapp says