Oscar Scolari
CEO
Rengen Energy Solutios
/
View from the Top

Rengen Hopeful as Demand Grows

By Cas Biekmann | Wed, 10/13/2021 - 12:23

Q: How is the company balancing its energy development projects in the face of regulatory volatility?

A: Although there have not been any regulatory changes, as determined by the courts, the energy sector remains paralyzed by risk-averse actors. Also, the Regulatory Energy Commission (CRE) has approved only a scarce number of energy generation permits since last year. From personal experience, I can tell you that our petitions have been met with resistance. This behavior has adversely impacted the amplification of two projects that cannot proceed without CRE approval. According to the Association of Industrial Parks, the demand is there but neither Rengen nor other private energy producers can attempt to meet this demand without the proper permitting; nevertheless, it remains an important opportunity to us.

 

Q: Industrial parks are facing energy deficiencies. Has Rengen explored the possibility of micro grids?

A: The topic has been explored but it requires permitting, gas interconnections and other regulatory conditions that must be met, which can be expensive, rendering the option unviable. To meet these conditions, self-sufficient plants would require large cogeneration plants with high efficiency technologies in addition to controlled energy output, thereby making the project very difficult for a single business to administer.

 

Q: How is the company progressing with CFE-tendered combined cycle projects?

A:  We are working diligently with the Federal Electricity Commission (CFE) and the individual technologists who will be operating these cogeneration projects that the state company will be premiering. CFE will soon decide which ambitious projects it will be pursuing, choosing from plants in Valladolid, Merida, Tuxpan, San Luis Rio Colorado and two from Baja California. These six projects represent the potential generation of 3,600MW to 4,000MW that CFE is looking to complete. Moreover, there are 10 dams that the CFE is looking to modernize and thereby increase the efficiency and output of these hydroelectric plants. With these projects in mind, our goal is to aid and continue growing alongside our state partners of 43 years.

 

Q: Does Rengen think it will be asked to participate in CFE’s renewable energy generation projects?

A: Yes, in fact the two projects for which we have pending permits are solar energy generation projects commissioned by CFE. We are to construct one of the largest solar farms in the country, in the arid state of Chihuahua. The project is expected to generate 180MW of energy. The latter, smaller project, is to be built in Merida, Yucatan Peninsula, and is expected to generate an estimated 40MW. We welcome the state company’s investment in renewable energy and hope to see its continued commitment to the adoption of these technologies.

 

Q: How does Rengen add value to the operations and maintenance of its energy projects?

A: Rengen adds a considerable amount of front-end value, ranging from obtaining required permitting and other processes to financing, which has become a challenge under the current regulatory climate. This does not mean there are no interested investors. Investment capital is idle, outweighing project proposals. The challenge is to present viable projects to interested parties that are not alarmed by this transitory administrative direction. Furthermore, energy demand has been increasing by an average of 2.5 – 3.1 percent annually but in the past three years, not one MW has been added to the grid. Soon, these energy needs will be compounded by the added demand of completed projects like the Maya and Transisthmic trains or Airport Felipe Angeles, which some estimate will require 10 industrial energy generation projects. This market exigency is more than one market actor can meet on its own, thus pointing to an opportunity big enough for contractors, investors and Mexico’s state companies to coalesce and benefit from.

Q: Many have faulted the country’s delayed energy transition on its transmission and distribution grid and how can companies like Rengen produce more stable energy?

A: It is not a secret that Mexico’s energy transmission grid is very weak and requires immediate modernization. Two lines of direct current that would require investments upward of US$1.8 billion, to be placed in the northern and southern parts of the country, were being contemplated. The realization of such a project is necessary if CFE intends to generate 54 percent of the country’s production capacity while competing with more efficient private actors. However, with the numerous ongoing projects related to plants, transmission, infrastructure and maintenance, how can the state company have money to spare? Undoubtedly, it is a complex issue but it is not something the state company has to do on its own.

 

Q: How would you assess the viability of carbon-capture technologies in cogeneration projects?

A: These are viable and CFE is doing it well. Mexico has access to the cheapest natural gas producer in the world and the infrastructure needed to transport it to almost every corner of the country. As it stands, wind turbines, solar panels and hydroelectric dams have a greater carbon footprint than cogeneration projects, due to the components it depends on. Mexico has the carbon-capture technology, mitigation systems and infrastructure needed to generate net zero energy until renewable energies are able to bridge this gap. Currently, 70 percent of the cost required for energy generation is expended on combustible sources. Cogeneration, which relies on renewable technology, reduces the required input of natural gas, thus reducing the overall cost of energy generation. This method combines the best of both worlds. It is viable and should be pursued.

Rengen Energy Solutions is a Mexican engineering, procurement and construction company specialized in building and operating gas fueled cogeneration plants, as well as PV solar farms.

Cas Biekmann Cas Biekmann Journalist and Industry Analyst