Rethinking Energy for all UsersFri, 02/01/2019 - 13:24
Q: Why did BayWa r.e. find Mexico an attractive market in which to do business?
JA: BayWa r.e. is a company with nearly 100 years of history. Its focus on the global scale started about 15 years ago, assessing the potential of new markets on a yearly basis. Three years ago, Mexico became a top-tier country in terms of market attractiveness for us due to strong market fundamentals, its long-term predictability and the emphasis being given to renewables.
MP: The Energy Reform certainly triggered a transition in the country. Although Mexico was already in our crosshairs, it became even more interesting for us after the reform was signed. While still an early-stage market, the opportunities we can see are significant and tangible.
Q: In which segment of the energy industry is BayWa r.e. looking to develop activities?
MP: BayWa r.e. has the capacity to develop a wide variety of projects, from utility scale for the long-term electricity auctions and C&I offsite structures to onsite projects for C&I customers. Our goal is to become a leader in providing sustainable energy solutions in the country. We already have a sizeable portfolio of projects under development in Mexico, which has allowed us to improve our economies of scale and become more competitive in both in costs and our ability to serve a broad market.
JA: Mexico fits perfectly within our global strategic development considering the market support for increasing investment in clean energy projects. With Mexico’s commitment to increase energy consumption through clean sources, an effective and quick way to comply with this requirement is to install on-site power production plants. Because of our global reach, multinational C&I customers have been very receptive to BayWa r.e. supporting their renewable energy needs for their Mexican operations. Longer term, offsite, utility scale projects both for the longterm electricity auctions and offsite C&I structures have been very attractive for us. Ultimately, because Mexico is a strategic market for our organization, we will continue to adapt to market mechanisms required to suppor the best value for our customers. Also, as a technologyagnostic organization, we can ensure the latest and most effective technology is always implemented. We believe this approach allows the most appropriate selection of solar, wind and storage technologies that offer the highest added value to the customer.
Q: What kind of risks has BayWa r.e. encountered while developing projects in Mexico?
MP: Some of the larger project development risks are related to regional factors such as existing infrastructure, workforce development and unique social requirements. As an example, we have noticed that social diversity requirements vary in the southeast from those in northern areas of the country. To minimize project delays or increased costs we identify the challenges, understand them and work hard to mitigate them in the early stages of the project development.
Another challenge for foreign companies is the uniqueness of how to best navigate Federal and Regional entities. Coordinating development efforts with federal institutions such as CENACE, the Ministry of Energy, CRE, INAH, CONAGUA or SEMARNAT is part of the complexity that increases when dealing with local institutions and authorities. We have the know-how to navigate these market complexities, and that allows us to provide more certainty to our customers that we can successfully execute projects.
JA: I oversee the Americas’ portfolio, and it is interesting to see that the complexity of developing a project is lower in Mexico than in the US. Although Mexico has several levels of government that have to be managed, in the US this number is significantly more considering that each state, often regions in each state, have their own governmental agencies and processes, along with different market and infrastructure operators.