Renewable Developer Favors Dynamic StrategyBy Cas Biekmann | Tue, 12/08/2020 - 12:48
Q: What is the history of Notus Energía and its relationship to Mexico?
A: Notus Energía Mexico is part of Notus Energy, a German company founded in 2000. It started developing wind projects and soon after, the company began to do business in Europe. Notus Energía Mexico was founded in 2014. We already had some experience in Mexico participating in a project in Oaxaca between 2007 and 2008. Subsequently, Notus Energy established itself in Chile and Colombia.
Mexico is important to us not only as a country but also because it is our first investment in Latin America. In Mexico, we learned which best practices need to be implemented and how to move forward with these in other Latin American countries. Despite regulatory uncertainty, we believe that sooner or later, renewable energy development will pick up again because of growing energy demand.
There are two other notable Mexican players within the NOTUS Group: first, E2M, led by Hans Kohlsdorf, which focuses on qualified energy supply and the energy market, as well as energy generation. Then there is Demsa, a Oaxacan company that owns a wind farm in the Isthmus of Tehuantepec. These investments show Notus’ strong commitment to Mexico.
Q: What is the company’s strategy in regard to Mexico´s development, considering the challenging atmosphere the sector is facing?
A: We never tie ourselves to one single strategy because we know that changes in the environment of any country are always likely to happen. For this reason, we plan to remain dynamic in the midst of change. When we started out, the development of wind projects was the core of our strategy because solar prices were not that competitive. During the first auctions, solar costs dropped impressively. This was a wake-up call for the wind industry, which had to adapt its prices and practices to remain competitive. As a result, Notus started to move into solar as a side business. The same dynamic is occurring with distributed generation (DG), as we see utility-scale projects becoming more difficult, due to the necessary permits and interconnection requirements. Despite the fact that the laws are not crystal clear in the DG area either, these projects fly well below the radar because they make little noise and it does not affect the new government. We are finalizing 0.5MW in San Luis Potosi. Furthermore, we are offering our services in this area to other large developers and off-takers.
Q: How did the collaboration with Goldbeck Solar bring about the 0.5MW San Luis Potosi project?
A: The 0.5MW project was developed by Notus Energía from scratch, in a joint venture with German EPC company Goldbeck Solar. We originally started looking at constructing a utility-scale project, which we had done before in England, but decided to focus on DG after we realized that interconnecting a larger project would be problematic. When we mapped out the project, identifying the right location was a challenge, since Mexico has great solar potential almost anywhere. Through collaborations with E2M, which has in-depth knowledge in this area, we determined the area where it would make the most sense to construct the project based on local energy prices. San Luis Potosi’s node is attractive for DG. We are aiming to construct another 0.5MW next to the existing project. The project will sell its energy in the electricity market but we are also looking at off-takers locally.
Q: How have the pandemic and regulatory uncertainty affected the company’s construction and project pipeline?
A: The pandemic caused some issues with our logistics, delaying the arrival of modules and inverters coming from China. This lasted approximately two months. The construction itself was not a large hurdle. We only had 10 people on the construction site and taking the necessary measures posed no challenges. Working outdoors with plenty of distance between each person meant we faced no issues during the construction.
However, like most companies we have trouble understanding the government’s policy direction regarding renewable energy. Nobody is pleased when the rules of the game change overnight. It puts a brake on development and investment for the sector. Personally, I see that within CENACE and CRE, renewable projects have slowed down as well.
Q: Taking these issues into account, how do you assess future potential for developing new wind projects in the country?
A: We will eventually see large projects again in areas that have the potential in terms of resources and energy demand. Sooner or later, the Mexican government will need to let these initiatives flow. This is all that is needed because financial and fiscal incentives are already no longer a necessity. If the government aims to put its fight against poverty first, low energy prices could be a great support. CFE is struggling to provide cheap energy prices but the energy auctions have showed that through the influx of private companies a very low LCOE is easily obtained. At some point, people will have to realize that renewable energy has become a reality worldwide and not a political issue as such. This is why we are keen to remain in Mexico. Large wind projects will eventually be an opportunity again.
Q: How might Joe Biden’s US presidential election victory influence renewable development in Mexico?
A: There is great potential for renewable energy along the entire Mexico-US border. States such as Texas could receive cheap clean energy from Mexico and collaboration between development banks already exists for border projects. Notus Energía Mexico developed two projects near the border and it is trying to make use of these opportunities. I believe having Biden in the White House will be beneficial. Trump’s policies were similar to López Obrador’s in some areas, after all. The winner of the election will have a strong influence in many areas, including energy.
Q: What objectives will Notus Energía strive to achieve in 2021?
A: We rely on outside investment to maintain our operations, so the main goal would be to turn Notus Energía’s Mexican operations fully sustainable by generating local income. Furthermore, we would love to develop other projects in Mexico. For this to happen, we would need more visibility in regard to what direction the renewable energy market is taking.
Notus Energía México is the Mexican arm of Notus Energy, founded in 2001 in Germany. The company is focused on the planning, development and management of wind and solar energy projects, including Distributed Generation projects. In addition, Notus provides construction administration, technical and commercial management services.