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Insight

PV COmpany Makes the Most of Each Market

Wed, 02/24/2016 - 13:43

Of all the words in the English vernacular, ‘explosive’ is the term chosen by Juan Antonio Balcázar, Director General of Granite Chief to describe the unprecedented growth of the solar sector over the last couple of years. “The north of the country is full of competitors looking for land to develop solar farm projects; everywhere we look there is somebody searching for business opportunities in the same place.” For Balcázar, this is the new tone for the solar energy business in Mexico, and he believes the market will continue to grow exponentially over the next two or three years. “The two segments responsible for this growth will be the industrial segment, which can be supplied through solar farms, and the residential segment, which will provide a great opportunity because of the DAC tariff,” Balcázar explains. “Even so, both markets face obstacles that sometimes overlap, such as financing. Clients in the industrial segment expect to save money over a determined timeframe, and they want to see the ROI in no more than five years.” He continues by stressing that the residential market wants financing, but people in this segment do not seem too concerned with the time it takes to see economic benefits.

Despite the specific differences, both markets are very active and interested in solar technology. Balcázar considers that the problem with solar energy in is that prices are rather high, therefore business only becomes viable through volume. The industrial market provides volume, as it entails large, robust projects, while comparatively the residential market does not provide significant volumes in the short term. “The residential segment is in its infancy and I would not say that even 0.1% of this segment has been installed.” For this reason, Granite Chief designs strategies that balance costs and benefits to launch this market. “We offer direct financing options that lower the economic impact on our customers. In addition, funding can be offered through financing institutions that could support DAC clients, for which we have been in negotiations with a credit union,” tells Balcázar.

Granite Chief has put a lot of effort into staying in the residential market. As part of the company’s strategy in this segment, Granite Chief representatives go directly to households and offer technology and services. The specific consumer profile that the company seeks is people under the DAC tariff with the economic means to invest in solar systems.

In comparison, Granite Chief has already walked the longer path in the industrial market, where the company has experience in starting its own plant, as well as in financing and construction. “Once the plant was completed, we faced the challenge of operating it. This gave us experience with operating across the whole cycle of the solar energy business,” says Balcázar. As a result of this experience, Granite Chief was able to develop internal tools, such as technology for determining the energy output of its projects. This process is carried out in the company’s facilities in Mexico, enabling it to ensure the energy output that will determine a project’s financial feasibility.

A testament to Granite Chief’s work in the industrial segment is the Apaseo El Grande solar farm, which is a project intended for self-supply purposes. Balcázar states that prices were stipulated at the beginning of this contract, as prioritizing this is paramount for obtaining a profitable project. In addition, a project must accomplish the forecasted energy output for the next 25 years, with Balcázar explaining that if energy production is affected by an obstacle in the plant, the project loses all its profitability. “You might have a very well-built project, but if you do not take care of even the smallest detail, you will lose energy instantly.” For Balcázar, the planning and conceptualization stages are very important, as these provide opportunities to cover all the details, avoiding possible problems in the execution and start-up phases. The impact of focusing on these stages, he says, translates into lower costs.

In order to be a serious player in the Mexican energy industry, it is important for a company to demonstrate its capabilities to CFE. Granite Chief has shown the Mexican utility company its expertise and knowledge in technological assessment, and for this reason it was chosen to evaluate five different technologies in the Cerro Prieto solar farm. “We want people to know that we are providing the technology for CFE’s Cerro Prieto pilot program. Granite Chief is a company that is positively impacting the mentality of the market, changing the way our customers think about energy and the environment.” Ultimately, Balcázar believes people will eventually change their attitude toward solar energy because large corporations are starting to look at renewables as viable solutions. “All eyes will soon be focusing on the benefits that solar energy can bring,” he asserts.