Top Energy Brings Mix of Speed, Experience to DG SolarBy Cas Biekmann | Tue, 04/19/2022 - 08:55
Q: How has the DG solar industry grown in the face of a broad range of challenges?
A: The energy industry in general has faced many challenges since the current administration began. If you add the COVID-19 pandemic and its supply chain issues to the mix, this has created a more adverse environment in which companies need to thrive. Despite the many challenges, such as regulatory changes, distributed generation (DG) experienced steady growth. There are a few conclusions we can draw from this. Firstly, the industry is resilient. A supply chain crunch increased prices and caused delays in the delivery of solar modules, steel structures, inverters and wiring. Despite all the changes the sector went through and an added liquidity crunch, the industry continued to thrive. This should be seen as a success story for the industry. Furthermore, customers really like to be in power. No matter the challenges, the appetite for engineering procurement and construction (EPC) or power purchase agreement (PPA)-based DG projects has increased in the past few years. In recent years, electricity prices have not really changed, unlike the major price hike from 2017 to 2018 that became one of the main drivers for the adoption of DG at that time.
Q: What have been Top Energy’s main achievements within this market environment?
A: We have become one of the top players in this industry over the past eight years. The company has installed more than 25 MW in 2021 alone for example. Most of our growth comes from the industry, but also through team’s hard work and passion, twhich has allowed us to develop special projects. For instance, in 2020 we installed a 1.5MW solar system for a major slaughterhouse in Aguascalientes, placed on top of the location’s truck port, with a height of more than 15 meters, making it the highest installation in the continent.
Q: How does Top Energy differentiate its business in the increasingly competitive DG solar market?
A: We have developed projects in other countries and have branches elsewhere. For example, our procurement and import arm is located in the US, where we concentrate our global logistics. We have shipped steel structures to Central America. This grants us a wider experience in the international energy sector and the ability to offer more competitive prices. Nevertheless, we do not base our development on price and experience alone. In fact, our speed is our greatest asset. We are a company that can mount a 0.5MW solar system in just two weeks with a team of eight to 10 people. It allows us to be competitive, even though we offer some of the highest salaries for DG solar technicians and high wages in general. Nevertheless, Top Energy is not especially expensive. Moreover, if a customer finances a project with a credit or lease agreement, they start making payments one month after they receive the money. If your EPC supplier takes three or four months, this greatly increases the cost because the customer will be paying both the lender and the grid at the same time. Another benefit is the company’s established position in the market: we have all the necessary certifications and can comply with changes in the Labor Law much easier than a startup would.
In addition, Top Energy is unique because it offers operations and maintenance (O&M) for wind and solar energy in DG and utility scale. We have partnered with SolarCleano, a company that provides solar panel cleaning robots, as well as with Aerones, a company that allows us to support wind farms with conductivity tests and blade maintenance via technology. With a team of three people, we can cater to two to three power producers a day, a job that could take a week and a half with manual labor. This quick deployment of tech and people allows us to be more competitive compared to other companies.
Q: Considering your involvement with the Employers Confederation of the Mexican Republic (COPARMEX), how would you rate the Mexican solar energy industry as an employer?
A: The solar industry is certainly a major job creator. Mexican DG has been a promoter of many jobs.. As an added benefit, DG uses local resources, whereas utility-scale projects rely on an international EPC company. For instance, all the money is received and operated by international companies, so the trickle-down effect toward the local economy is not optimal. This is not the case for DG, a sector in which 1,000 Mexican companies operate. These companies have installed more than 2GW of solar energy according to the latest report published by CRE. All these projects happened via local employment. DG companies employ more people and hire them for longer periods of time. This effect on the local supply chain is one of the main DG benefits compared to utility-scale development, although the latter adds a great deal of value as well.
Q: How would you assess the viability of battery storage in terms of returns on investment?
A: When you talk to EPCs, everyone discusses battery storage. We all know the benefits it can provide. Nevertheless, few systems have been installed, and this creates a false expectation regarding demand: end users are much less aware of the added value. They are already used to an internal rate of return (IRR) of 20 percent with solar, which you will not necessarily cachieve with a storage project-. Battery systems are not as profitable as Solar for industrial customers, so they are less likely to be adopted by customers soon. Top Energy has allied with Quartux to offer an optimal solution that adds value by mixing the optimal size for both solar and storage projects, therefore achieving a higher IRR. One new issue the user is now considering in their investment assessments is the value of grid reliability. Even though the technology is viable and consumers are more aware, most of them still consider that the prices of electricity have not yet increased enough, just like the CAPEX for storage systems has not decreased enough due to the pandemic. If the CAPEX decreases and electricity prices rise or blackouts increase, then we will see a faster adoption of the technology.
Q: What are the company’s growth perspectives for 2022?
A: In 2020, we grew around 20 percent compared to 2019. We closed 2021 with a threefold growth compared to 2020 and we aim to grow 50 percent in 2022 in comparison to 2021. There is a great deal of potential in the market, to the point that many companies can share the benefits rather than compete. We expect it to be a great year for us. Top Energy has hired many people and has become more institutionalized, becoming the largest solar employer in Aguascalientes. Our ability to arrange O&M makes us a more reliable company overall, with 10 years of experience and a strong presence in almost every Mexican state.
Top Energy is a company founded in 2013. It is headquartered in Aguascalientes and focuses on the installation of small, medium and large energy systems for self-consumption.