Uncertainty May Push C&I Players to No-Brainer Solar SolutionBy Cas Biekmann | Wed, 02/16/2022 - 11:57
Q: How has the company restructured its operations to drive success in the market?
A: A great deal has happened since the summer of 2020. Enlight has become more focused on the C&I segment instead of the residential segment and has restructured this to make it happen. Since then, the company has reaffirmed its leading position in the solar distributed generation (DG) market for C&I companies in Mexico. We have installed more than 20 percent of total capacity in the 0.2 to 0.5MW DG range. This puts us in a good position, with a project pipeline that grows every month despite the noise in the energy sector coming from the government’s reform proposals.
Additionally, Enlight has become a market leader in distributed storage and is one of the biggest partners for top technology companies like Tesla. We set up the first Tesla Megapack in Mexico. In Latin America, we focus on installing systems that feature solar energy with energy storage. We have installed over 20MWh in several Latin American countries, which gives us the expertise needed to tackle the challenging grid situations here. Enlight established itself in Chile three years ago and today it has become a strategic focus for 2022 because of the government’s energy transition strategy. Our know-how can add a great deal of value there.
Q: How can Enlight add value to commercial and industrial players using energy storage?
A: We try to add value through all of storage’s capabilities but we also try to look out for a continuity in operations for our customers. First, our storage works as a backup system. We scale the dimensions of the storage to the necessities of clients, matching their investment capabilities. For instance, in some Latin American areas, many outages occur. In other places, only the voltages drop at times. Enlight addresses each project differently based on these characteristics. Storage also adds value by managing electricity use through load shifting and peak shaving. We charge the batteries with solar energy during the day and program them to discharge during peak tariff hours. We know how utilities calculate electricity bills, so we use this information to make our systems react accordingly, lowering the energy costs of our customers.
We have also worked on projects with Sungrow and Dynapower. We often use the software that the manufacturer provides but we continue to develop our proprietary software, called Apollo, to tackle storage as well. In general, we use the most convenient tools to match each solution.
Q: How does Enlight assess the noise surrounding the electricity reform?
A: It has been a tough year. Considering the government’s discourse, there were only two weeks in 2021 where it did not directly address the energy sector, causing a great deal of uncertainty. We had to constantly explain the situation Mexico was experiencing to our investors and customers. Many potential end users decided to wait, and this affects companies like Enlight very much. The government’s electricity reform proposal from late 2021 has caused even more doubts. We had to do a great deal of lobbying and work with associations to explain in detail that DG is not the focus of this bill. With the US energy secretary and the ambassador to Mexico voicing their concerns about this bill, there is now international pressure related to this particular reform. It is still not clear what will happen to DG, although the government has shown signs it favors DG. Minister of Energy Rocío Nahle said she supports this form of private energy generation and state utility CFE has echoed her sentiments. Mexico City, for example, declared itself a “solar city” and is looking to install 18MW of solar on its Central Market. Nevertheless, it is difficult to separate the actual policy direction from political speeches, especially those aimed at investors. We will need more certainty to accelerate growth and accommodate financing vehicles, which we hope will change when the decision on the reform has been made.
Q: How can this environment become an opportunity for companies such as Enlight?
A: Many companies are seeing how the government tackles big power producers and are afraid that contracts and deals are at risk. For this reason, they are turning to other options, such as on-site solar. DG can help companies meet clean energy commitments just as well, but companies feel like they have no more options left. We have seen a great deal of interest from big companies that prior to the current situation would have looked at utility scale PPAs but are now looking to make use of their premises to build energy projects on site. In addition, the government has invested little in grid infrastructure. This destabilizes the grid, so clients look for greater energy security. Solar energy and storage can help provide security while at the same time delivering clean energy and cutting costs on the electricity bill. At the risk of sounding overly positive, DG is now a major opportunity.
Q: What would this mean for Enlight’s position in the market and its efforts to diversify?
A: Despite the noise, Enlight does not have plans to leave the Mexican market and will continue to believe in its development. The company is confident that opportunity will remain for DG because the government looks toward utility-scale projects and major power purchase agreements (PPAs), rather than to local on-site generation. We continue to look at new financing schemes to cater to our clients and are working to expand our pipeline to make use of the opportunity once there is more certainty in the market. Even without the certainty, many companies continue to believe in DG. Many are waiting for political certainty but we now have the technology available to start and obtain benefits.
The company aims to diversify its business and to use its knowledge in other markets at the same time. Countries such as Chile face similar energy issues but offer a greater regulatory certainty for the long term. Chile’s energy market functions almost entirely on US dollars and has more specific rules, such as in the case of storage.
Enlight, part of ENGIE Group, is the front-runner in the distributed generation market in Mexico. With over eleven years in the market and more than 8,500 clients as of January 2022, the company plans to strengthen its operations in Latin America.