Luis Barrado
Head of Energy Department
Grupo Ortiz
/
Insight

Working in Mexico, for Mexico

Wed, 02/21/2018 - 16:40

Mexico’s utility-scale projects, born from the auctions, require reliable EPC services to ensure their operational success once financial closing is reached. Luis Barrado, Head of the Energy Department Mexico for EPC Grupo Ortiz, says the company offers turnkey services to meet emerging market needs. “We practically cover all the different phases of energy projects in the EPC format. Additionally, we offer an equally integral O&M service that covers the performance of the facility for the entirety of its operating life,” he says.

In 2012, Grupo Ortiz first entered the Mexican market through its construction division, using its international experience to build industrial and residential facilities, shopping malls and hospitals. “In parallel, the energy division developed a country-specific project approach for Mexico, performing business analyses and presenting offers for bids from Spain,” Barrado explains. “Once a project is awarded, we build a local team to lead operations, as we did with CFE." Grupo Ortiz supplies high-voltage lines and substations to the stateowned company using the Pidiregas scheme.

Due to its success in the awarded bids and the potential of the market, the Spanish group decided to formally install an energy division in Mexico, named Ortiz Energía. With its establishment in Mexico, the group is passionate about developing the local supply chain. “We are a multinational group operating as a Mexican company and prefer Mexican companies as goods and services suppliers,” says Barrado. Grupo Ortiz is in the process of confirming which local suppliers and contractors it will use. Such a strong dedication to Mexico came from the regulatory certainty the EPC company has perceived during the auctions, especially related to the design, planning and execution of the reform. Past this, Barrado sees additional potential for the company in the extension of the natural gas pipeline network. “On top of the reform, the gas network expansion plans will be decisive factors in consolidating cogeneration technologies nationwide,” he says. “It is vital for infrastructure construction plans to come to fruition.”

Grupo Ortiz is betting heavily on cogeneration in Mexico. “This technology is here to stay so we must raise awareness among the industry players that are unfamiliar with all the advantages it offers, not only economically but also in terms of energy efficiency and supply reliability,” says Barrado. The importance of cogeneration is one reason why the EPC wants to accompany its clients in the facilities’ O&M of their projects during the first years of operation.

Besides promoting cogeneration, Grupo Ortiz defines itself as a supplier of integral energy services. “We are a private company searching for profitability, with an emphasis on a social rate of return,” Barrado says. Under this mandate, the EPC looks for projects that can ensure the company's ROI and the biggest social benefit to the country as a whole. Barrado sees PV energy as an ideal way to capitalize on both.

Mexico’s market circumstances allowed Grupo Ortiz to claim a strong foothold in PV solar projects, and it already has a solar park in Aguascalientes. Barrado calls the project a “two-inone” solar park project. “Although we are building two solar parks and licenses were processed property-wise for both, the project has only one electric connection to the grid,” he explains. The project contains 140MW and 150MW in inverters, respectively, which can reach 346MW at the PV panels’ peak.

This project was developed by Alten with Grupo Ortiz as a reference shareholder. “While our investment does not guarantee participation in decision-making, it does position Grupo Ortiz in the institutional investment market. Alten presented a bid for these solar parks, assisted by our expertise in the sector,” he says. Grupo Ortiz was awarded permission for the parks, then went through the standard processes of the purchase agreement with the government and investment funds, before bidding for the project’s construction, which it won through an EPC scheme.

In the short term, Grupo Ortiz expects to increase its energy portfolio with other PV and wind projects, as well as developing and building two cogeneration and biomass projects for industrial companies that have between 5-10MW of capacity each, making them adequate for cogeneration and acting as Grupo Ortiz’ entry point in this business.