David Barnes
Executive Vice President
Oak Creek Energy
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View from the Top

Wind Developer Sees Value in Solar Projects

Fri, 02/01/2019 - 12:41

Q: How would you describe Oak Creek’s experience when developing projects in Mexico?

A: Oak Creek is a developer at its core. The company typically develops projects to a point where ground can be broken and then sells them as a constructible asset. Our other core business is the long-term operation and management of these assets. The development division is focused on identifying new projects and working out all the related pieces that turn it into a financeable project such as permitting, wind resource assessments, transmission and interconnection. Developing projects in Mexico has resulted in an enriching opportunity to learn the processes and understand timelines required as opposed to the US. Oak Creek has been developing projects in the country since 2012, but the company has a long track record of working in other regions of the world since 1982. In Mexico, relationships and face-to-face meetings are critically important and we spend a lot of time in nurturing this aspect.
One of the major obstacles that any company faces when developing a project is the regulatory environment. FCPA policies must be very strict as there cannot be a single hint of bribery or policy violation. In Oak Creek, we treat this issue very strongly as all of our staff undergo training twice a year to deal with these potential hazards. At the end of the day, due to this management we have earned the respect of our partners and the people we work with across the industry and regulatory environments. Another important key to the company’s success is the fact that all of its principals have had very dynamic careers in the renewables industry. Personally, I have represented the entire value chain, including the OEM, the engineer, the bank, the investor and the equity partner. This has served us well in negotiations and getting to a point where everybody can come together and close the deal.

Q: What were the main hurdles and how has the company addressed them?

A: The company’s pipeline is focused in the northern region of the country in states such as Tamaulipas, Nuevo Leon, Chihuahua and Coahuila. Oak Creek ended up in Tamaulipas by default, as the company we initially purchased was  working in the region. Oak Creek have developed and sold five phases now totaling over 600MW. The first two phases were Eólica Tres Mesas (ETM) and Eólica Tres Mesas 2 (ETM2). These first two projects represent a total installed capacity of 148.5MW and were finished in 2017 to supply energy for Alpha Group and Walmart facilities. While developing and completing these projects, one of the major hurdles was overcoming the security risk. We had to do significant work upfront to establish a security protocol, build relationships and demonstrate to investors that their investment would be safe.

Q: How do you foresee the evolution of Oak Creek in Mexico?

A: Until now, Oak Creek has focused its efforts on the development and operation of wind projects. Even though it is not the company’s core offering, we realize solar is a valuable component of the market and we have begun developing some solar projects. Until recently, solar technology was an economic challenge. There were some developed projects with reasonably low margin, but enough to draw attention. Now, equipment costs have come down and efficiencies have come up. This is driving further development of solar across the country and Oak Creek plans to be a big part of that market. Regarding Oak Creek’s operations division, Oak Creek de Mexico, we are actively seeking management and operations contracts with third parties, as well as continuing to support the projects developed by Oak Creek. Oak Creek de Mexico has over 600MW of operations management and construction management contracts. We see Oak Creek de Mexico continuing to expand and we have developed an extremely talented team of professionals and infrastructure in the country for this purpose. Our ideal prospective clients are not the big utility companies but institutional investors and funds that do not have any operational and technical background or capabilities internally.