US Renewable Demand and O&M Expansion Grant Certainty

Q: How did Nordex handle 2020 in terms of demand and undertakings?

A: 2020 was a very interesting year for Nordex because it was perhaps our best year so far in terms of installations in Mexico. We had four projects under construction simultaneously with an aggregate capacity of 402MW. This can perhaps be interpreted as a contradiction against what is happening in the market; nevertheless, most wind turbine manufacturers would likely say something similar. We are seeing the results of what has been done properly by our customers in the past two years. Following the policy changes the government is pursuing, it is unlikely that we will see similar results in the next two years from now.

Regarding the four projects we have worked on, some are already fully operational. Last year, we finished the installation of the Dolores wind farm for an international utility, awarded in the third energy auction with the lowest LCOE. We also finalized Santa Cruz wind farm and started San Carlos, both with Acciona Energía. Furthermore, we are involved in a project in Central Mexico called Mesa Morenos, with a new customer for us. This project started construction last year and will be finished by mid-2021. All of the projects use the AW3000/3300 platform. However, with Nordex’s technology, we have developed the Delta4000 platform, with new products in the segment of 4 to 5.XMW. Since this is where the industry is headed, all new projects we are selling in Mexico from now on will use the Nordex platform.

Q: What distinguishes the Nordex platform in terms of design and characteristics?

A: In 2017, Nordex launched its Delta4000 platform, the most powerful platform the company has pushed since its merger with Acciona Windpower in 2016. The first product in this segment was the N149, a 4.5MW product that had great market demand. We then increased the rotors twice, with the N155 and the N163, applying different configurations from 4.5 to 5.X, meaning that under some conditions, the output can grow to 5.8MW. The first important factor was to design a product according to the needs of the market, targeted to great on-site performance. The N155, for instance, was optimally designed for conditions in North East Mexico.

Furthermore, we use mostly concrete towers instead of steel, which sets Nordex apart. We have a standard tower height of 120m, which is very competitive in pricing because concrete is cheaper than steel and just as efficient. By operating a local manufacturing facility in Mexico, we can bring down costs even further.

Q: How did Nordex come to have several projects with other renewable developers other than Acciona?

A: Since our merger with Acciona Windpower, we have wanted to demonstrate that we are competitive with any player in the market. We started selling to other international utilities and to other private power producers since 2018 in Mexico. This shows that our products can be competitive in any type of scenario, regardless of the customer.

Q: How is the company adapting its strategies to the changing regulatory framework in Mexico’s energy sector?

A: The Mexican government is considering to revert the Energy Reform. It is difficult to answer how this ultimately will affect the sector but we expect that these regulatory policies and decisions will be reverted by the Supreme Court, even though it will take some time for this to happen. We will, therefore, experience uncertainty in the short term, with projects being put on standby until the rules of the game are presented. In the medium term, our hope is that the judges will deliver similar judgements to those we have already seen; for instance, with the decision of the Supreme Court to revert in January 2021 the reliability policy promoted by SENER. Once this happens, the market will recover and attract investment again. We feel optimistic for the long term. The work towards clean energy development that we do not do today, will have to be done in the future. The fact is that if Mexico’s GDP grows by 3 percent, energy demand will grow around 2 percent. This means that the next 15-20 years, installed capacity is expected to double. Therefore, Mexico will need much more power generation. Renewable energy provides the lowest costs. We want to be ready to meet this future demand and help fulfill the country’s renewable potential, although the transmission and distribution infrastructure should be updated and increased to make this a reality.

Having said this, despite the uncertainties in the energy sector, we are focusing on finishing wind projects for our customers. We are also continuing to improve the performance of our wind turbines. Our third business unit is involved in manufacturing blades and concrete towers. We have a commitment to supply and deliver these products not only to the Mexican market but also to the US, which is one of our most important markets.

Q: What are the company’s manufacturing opportunities regarding US exports?

A: Since we started, our factories have increased their capacity every six months. We started manufacturing blades in June 2019, since then, we have increased our production significantly. The biggest factor making this possible has been US demand. This demand was already sizeable but -with the new administration, we are expecting a further increase. As a result, although we are concerned about lower demand in Mexico we expect US demand to maintain our facilities in full production. The US market is pushing forward strongly and this demand can be met by our facility in Matamoros, Tamaulipas.

Q: How is Nordex’s involvement in the area of O&M changing?

A: When I joined Nordex in 2018, we had one project under O&M, the 129MW Palo Alto wind farm. We had other projects in operation but maintenance was not in our scope. However, we ended up 2020 with almost 1,300MW under O&M, almost 10 times as much. All of it is with our new customers, although we had to adapt our business structure to ensure a smooth process to meet the new demand. O&M is among the business lines we expect will help maintain our operations when markets become unstable. 

Q: What goals does Nordex set out to accomplish in 2021?

A: The main challenge we have for this year is to finalize our construction projects successfully and to start a new project we have recently signed. Another goal is to continue improving our O&M activity to help our customers meet energy production targets. Furthermore, continuing our manufacturing business remains important to the company. We also want to explore opportunities in the Mexican market and see if we can help companies get their early-stage projects off the ground.

The Nordex Group is one of the world’s largest producers of wind turbines. Nordex and Acciona Windpower’s merger was finalized in April 2016, combining decades of experience in design, construction and operation of wind turbines.