Juan Ávila
Director General
Top Energy
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View from the Top

Solving Every Little Detail

Wed, 02/21/2018 - 12:08

Q: What makes Mexico an attractive market for distributed generation?

A: In Mexico we are seeing a yearly increase in power demand. This, combined with the country’s several free trade agreements, is encouraging a boom in the installation of distributed-generation projects. Thanks to free trade we can buy solar panels from China, inverters from Germany and DC cables from several European countries, not to mention that we also have the option to either manufacture the steel and aluminum structure here or somewhere else, which significantly decreases CAPEX. As a result, there are attractive projects in Mexico. The market does not depend on subsidies, which assures investors that this is a longterm industry. 
Q: Why did Top Energy select Aguascalientes as its headquarters in Mexico?

A: My partner started Top Energy in Spain but the market was not attractive. Looking into other countries, particularly in Latin America, he saw a huge opportunity in Mexico because it is a much bigger market than any other country in the region, and it has political and economic stability. His broad expertise in utility projects was also beneficial. He had managed projects around 2MW, which perfectly fit the Mexican distributed-generation market. In 2013, we decided to establish the company in Aguascalientes because I have been living there my entire life so I have good knowledge of the possible suppliers, as well as potential customers. Starting our business in Aguascalientes has been tremendously beneficial. The city is just the right size to offer many opportunities and for networking. We know and can have a closer relationship with all our potential and present suppliers and clients, making any decisionmaking process faster. In addition, its legal framework is more flexible compared to bigger cities, such as Mexico City or Guadalajara. We know that  to grow we have to expand our business outside Aguascalientes but for now, we are taking advantage of working and growing in a small city, which will help us become robust enough to expand with a stronger foothold.

Q: In your opinion, how has CFE evolved since the Energy Reform?

A: CFE is an 80-year-old company and throughout its entire life it has been the only player in the Mexican energy market. In 2013, the Energy Reform brought radical changes for the company and the country. CFE has now been split into 10 business units. In some cases, offices had to be divided by a wall because, according to the new law, these new units must be situated in different assets, which created chaos among most of its workers. CFE’s senior workforce knows how to get things done but many are starting to leave the company. Now, midlevel employees have to fill those positions. Although some have the same ideology as their predecessors, others have been influenced by the new market conditions, which creates a mixture that has been difficult to manage. Looking at the big picture, it is completely understandable why CFE is facing difficulties. 

Nevertheless, the company is starting to change its mindset and is creating more efficient processes. This is largely due to the fact that CRE has had a consistent and firm position when settling any regulatory issues arising between CFE and either final users or market participants. When CRE became involved in the issue of CFE taking too long to interconnect systems to the grid, the process went from lasting more than 20 days to taking only about a week. This is one step forward but we have to keep on working on efficiency of processes, as that will lead to a fair market that ensures the correct implementation of the reform. As the net metering and net billing schemes roll out, CRE will have to keep a closer eye on these practices to ensure a fair market. This is also the reason why Mexico must be careful to ensure CRE does its job. If CFE keeps putting up barriers to new players, system developers will be tempted to go off-grid and if the market follows this direction, then CENACE’s efforts to create a proper transmission and distribution infrastructure for the country will not be supported by regular demand. Instead, it will have isolated systems.

Q: Besides the installation of distributed-generation systems, what other areas is Top Energy developing?

A: In Mexico, there are only 38 companies that work under a PPA scheme where the company sells energy to off-takers through distributed genertation, and our Energía Real branch is among them. Through this branch, we developed the Plaza Arcos project, in which we made an entire shopping center 100 percent renewable. This project will be used as a business case for the future expansion of the company. Another of our branches will participate in the long-term power auctions. We have two projects in a JV with a company from Uruguay that are ready to be offered to an investor for auctions or PPA’s. This company is providing us strong experience in the auctions as it has already partnered up to work on projects in Argentina, Chile, Uruguay, Peru and Colombia under that scheme. Although we are entering into utility-scale projects, we still consider distributed generation our core business, and the niche in which we will grow the most.

Q: What makes Top Energy the best option for distributed generation?

A: My associate established Top Energy in Spain in 2011, and then transferred the activities to Mexico to take advantage of the clear possibilities present here. He did not choose Mexico by mere chance; he analyzed the entire Latin American market. Other possibilities were Argentina, Chile and Brazil, but those proved to be too small compared to Mexico and the market instability in the latter encompassed too many risks. He worked in what was considered utility scale in Spain, but which in Mexico fits perfectly under the distributed generation scheme. His expertise developed over the years in Europe and our technical capabilities make us experts in distributed generation. This expertise led us to win a bid to become the developers of a solar calculator to be used by CRE. Another example of our in-depth knowledge of the industry and its processes is the fact that, starting in February 2017 we have seen clients getting charged more than they should. In one specific case, customers with installed solar systems were paying more because CFE had not updated its IT system nor performed proper training for its midlevel employees, therefore resulting in the amount of energy generated by the solar PV system that got injected into the grid being added to the customer's bill instead of being subtracted from it. We were the first service company to notice this omission and we reported it to CRE but as of July 2017 they had not been able to work that out. For some clients, the energy they inject into CFE’s grid is actually being charged as if they were consuming it. Even though these issues are bad for the country, they have made us stronger, given that our clients usually recognize our capabilities, not only technical but regulatory as well, and more importantly, because we always support our customers when they have a problem with CFE. 

These strengths are noticed by clients, as they recognize that Top Energy is a company with in-depth knowledge of not only the technical but also the legal aspects of the energy market, and they have positioned us as a strong company. It has not come over night, but is the result of our hard work and commitment to the market. Our deep knowledge of the industry and its processes is one of our key advantages as a company. We do customer follow-up, and we are able to identify when customer consumption patterns change so we can advise them to add more solar modules to their array or we help them out with energy efficiency measures. By providing these services, customers not only recommend us, but sometimes they want to buy substations or grow their power capacity, which requires the kind of legal and technical expertise we provide.