THE NEW MEXICAN ENERGY MODEL. Special Feature Mexico Feeding the World. Negocios para exportadores

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1 Special Feature Mexico Feeding the World The Lifestyle Riviera Nayarit, Mexico s Pacific Coast Treasure Negocios para exportadores THE NEW MEXICAN ENERGY MODEL XI 2014

2 Mexico is on the move. Our country has concluded an important transformative cycle that includes 11 structural reforms. With these profound changes, Mexico is breaking the restraints that have prevented it from reaching its full potential. Six of these transformative reforms aim to elevate the productivity and competitiveness of our economy, to accelerate its growth. They form a platform that will enable us to drive development in the coming years. With the Labor Reform, Mexico advances towards a more efficient and flexible labor market that permits the incorporation of women and young adults. Meanwhile, the Economic Competition Reform establishes clear rules that set competing companies on a level footing and bring down entry barriers to new participants across all sectors. In the same way, the Telecommunications and Broadcasting Reform encourages effective competition in the sector, enabling Mexico to close the digital gap and integrate more Mexicans into the knowledge society. In addition, it generates great opportunities for new productive investments and latest technologies. The Tax Reform increases the State s financial capacity and favors public investment in priority areas for economic activity, such as science, technology, and infrastructure. In its turn, the Financial Reform gives place to the conditions that allow the robust Mexican bank to participate more actively in the country s growth, through more credit options and at lower interest rates for families and businesses. Finally, the Energy Reform will allow the participation of a higher number of companies, thus modernizing the sector with more productive investment and cutting-edge technologies. This ensures the supply of electricity and hydrocarbons at competitive prices for industries and homes. The transformative reforms are already a reality. Now, the Mexican Government is putting them into action. To do so, we follow an agenda of actions in concrete terms that will allow them to be implemented effectively. By combining the efforts of authorities, the private sector, and citizens, we are building a more prosperous Mexico.. Enrique Peña Nieto President of the United Mexican States

3 Table of Contents Special Report Green Solutions 2014: Opportunities for Green Investment in Mexico Business Tips Mexico and Renewable Energy Generation Mexico in the World Opportunities for Cooperation between Mexico and the Netherlands in the Food and Agriculture Sector cover feature THE NEW MEXICAN ENERGY MODEL 18 photo archive From ProMéxico Briefs 24 figures Special Feature: Mexican Food Industry Mexico Feeding the World La Nao Foods Intergan Prinsa CAFESCA Cool Flavors Mieles Campos Azules Comal Foods Agri-food Industry Figures Preserving Mexico s Flavors Mexico s Partner 26 Swiber Offshore México 28 3Tek Solar 30 Gamesa 32 Sunpower 34 Eosol Energy 36 Newen 38 Risen Energy México

4 The Lifestyle The Complete Guide to the Mexican Way of Life photo courtesy of cirque du soleil 66 The Lifestyle Briefs photo courtesy of fr-ee 68 Fernando Romero: Beauty, Sustainability, and Economic Development photo courtesy of fernando montiel klint 70 Mexico, a Series of Contemporary Snapshots photo archive 78 Protecting Our Water, Land, and Skies photo courtesy of pacific golf course Riviera Nayarit, Mexico s Pacific Coast Treasure Nestled between the Pacific and the Sierra Madre Occidental, in the space of just a few years this tropical paradise has become one of the country s most interesting tourist destinations, whether you want to relax, take up residence, or do business. 74

5 Negocios ProMéxico Para exportadores Reflexiones en torno a la sustentabilidad energética en México 90 De ProMéxico 82 breves 84 Encuentro 1:1, creatividad de sur a norte 87 Apuntes y reflexiones para concretar negocios en el mercado peruano 92 fotos archivo La internacionalización de servicios: Experiencias del turismo de reuniones en Francia 88 Retos para la internacionalización de las pymes Mexicanas 94 7

6 Negocios ProMéxico ProMéxico Francisco N. González Díaz CEO Karla Mawcinitt Bueno Communication and Image General Coordinator Sebastián Escalante Bañuelos Director of Publications and Content Copy Editing Felipe Gómez Antúnez Jorge Morales Becerra Contreras Advertising Cover Photo Archive Editorial Council consejo editorial Ildefonso Guajardo Villarreal Francisco de Rosenzweig Mendialdua Enrique Jacob Rocha Francisco N. González Díaz Embajador Alfonso de Maria y Campos Castelló Luis Miguel Pando Leyva Francisco Javier Méndez Aguiñaga Rodolfo Balmaceda Guillermo Wolf Jaime Zabludovsky Gabriela de la Riva Adolfo Laborde Carranco Silvia Núñez García María Cristina Rosas González Ulises Granados Quiroz Karla I. Mawcinitt Bueno Negocios ProMéxico es una publicación mensual editada por ProMéxico, Camino a Santa Teresa número 1679, colonia Jardines del Pedregal, delegación Álvaro Obregón, CP 01900, México, DF Teléfono: (52) Portal en Internet: correo electrónico: negocios@promexico.gob.mx. Editor responsable: Gabriel Sebastián Escalante Bañuelos. Reserva de derechos al uso exclusivo No Licitud de título: 14459; licitud de contenido: 12032, ambos otorgados por la Comisión Calificadora de Publicaciones y Revistas Ilustradas de la Secretaría de Gobernación. ISSN: Negocios ProMéxico año 7, número XI 2014, noviembre 2014, se imprimió un tiraje de 13,000 ejemplares. Impresa por Cía. Impresora El Universal, S.A. de C.V. Las opiniones expresadas por los autores no reflejan necesariamente la postura del editor de la publicación. Queda estrictamente prohibida la reproducción total o parcial de los contenidos e imágenes de la publicación sin previa autorización de ProMéxico. Publicación gratuita. Está prohibida su venta y distribución comercial. ProMéxico is not responsible for inaccurate information or omissions that might exist in the information provided by the participant companies nor of their economic solvency. The institution might or might not agree with an author s statements; therefore the responsibility of each text falls on the writers, not on the institution, except when stated otherwise. Although this magazine verifies all the information printed on its pages, it will not accept responsibility derived from any omissions, inaccuracies or mistakes.. Download the PDF version and read the interactive edition of Negocios ProMéxico at negocios.promexico.gob.mx. This publication is not for sale. Its sale and commercial distribution are forbidden. 9

7 From proméxico. Few countries can truly claim such a profound transformation as Mexico. The New York Times recently referred to it as radical. Probably one of the most relevant steps is the transformation of the energy sector. It opens a great attractive market to foreign investors, through services, licenses, profit-sharing and production-sharing agreements. In few words, for the first time in over 75 years, private companies can participate in Mexico s energy sector. A Citibank study estimates that the impact of the energy reform will attract over 40 billion usd in investment flows between 2015 and In addition, Mexico represents a window of opportunity for the development of renewable energies. Mexico is the third most important destination in the world for investment in solar energy projects and its wind potential is one of the most attractive. The renewable energy sector has recorded steady growth in the country during the last decade. Installed capacity for energy generation from renewable sources has grown substantially and conditions are ripe for business development in the sector, as you will discover in this issue. In order to go deeper into business development and opportunities in our country, this edition includes content related to the country s agri-food sector. Mexico has a gastronomic tradition recognized as Intangible Heritage by UNESCO. It offers a vast assortment of products that have innovated their processes and penetrated traditional and non-traditional markets. As a result, the country occupies a privileged role as a producer and supplier of food and beverages. Mexico is the leading exporter of beer, mango, mezcal, papaya, tomato and tequila, among other products. It excels in the export of confectionery, baked goods and meat products, to name just a few examples. Moreover, it is the sector s second most important supplier to the US and the third largest producer of processed foods in America. ProMéxico has driven the formation of agri-food export consortia in order to strengthen small producers and help them to export and internationalize. Foreign demand for agri-food products from Mexico has increased significantly, not only to serve Hispanic consumers, but also to supply Halal and Kosher markets. Mexico definitely has many competitive advantages. Energy and agri-food are just two we want to highlight for the international business community. Welcome to Negocios! Francisco N. González Díaz CEO ProMéxico 11

8 BRIEFS BRIEFS ELECTRIC WEG builds new plant Brazilian electrical equipment manufacturer WEG will build a new production plant in the state of Hidalgo, with an investment of 120 million usd, to provide metallurgical and machining processes for metal parts. AEROSPACE cutting edge training European aircraft manufacturer Airbus will open a Center for Research and Innovation in Aerospace Engineering under the auspices of the Autonomous University of Nuevo León. The 15 million USD center will provide training for pilots and other airline operations personnel. photo archive photo archive BIOTECHNOLOGY STRONG SEEDS FOR A STRONG INDUSTRY US-based biotechnology multinational Monsanto inaugurated a new seed technology research center in the western state of Jalisco. The new site is planned to centralize the company s efforts to develop new hybrid and genetically modified strains of corn. Monsanto expects to invest 90 million usd over the next five years in its new research center. RENEWABLE ENERGY CLEAN POWERED INNOVATION French electricity company Schneider Electric will construct Mexico s first 100% solar-powered building in the northern state of Nuevo León, which is expected to be up and running by The building, to be located in the city of Monterrey s technological research and innovation park (PITT) a hub for local tech firms will house Schneider s design center. The building, to be constructed with the support of the federal government and boasting zero electricity consumption, will occupy land adjacent to the company s offices in the IT hub. photo archive photo archive photo archive AUTOMOTIVE sumitomo targets aguascalientes Japanese auto parts maker Sumitomo Electric Industries plans to build a new manufacturing plant in the state of Aguascalientes. The projected 28 million USD facility will produce sintered parts for transmission gears and key engine parts. global-sei.com AUTOMOTIVE TOYODA GOSEI LANDS IN GUANAJUATO Japanese auto parts maker Toyoda Gosei will invest 67 million usd to establish a new manufacturing plant in Guanajuato. The site is projected to produce radiator grills, console boxes and other parts for the region s automotive OEMs. photo courtesy of airbus

9 BRIEFS BRIEFS RENEWABLE ENERGY infraestructure capturing sun power photo archive photo archive RENEWABLE ENERGY winds of success Spanish renewable energy developer Acciona Energía has signed a contract worth 111 million usd with private investors Actis and Comexhidro for the design, engineering and construction of a 49.5 MW wind farm in Mexico. The Ingenio wind farm, located in the Isthmus of Tehuantepec in Oaxaca, includes, through additional contracts, the sale of the project developed by Acciona Energía México to its new owners, plus the operation and maintenance of the wind power complex for 15 years. The wind farm will be equipped with 33 turbines, each with rated power of 1.5 MW and a rotor diameter of 77 meters, mounted on 80-meter-high (hub height) steel towers. Construction work on the site near the Eurus, Oaxaca II, Oaxaca III and Oaxaca IV wind farms, all owned by Acciona is expected to conclude in the fourth quarter of When completed, the Ingenio wind farm will produce enough clean energy to power 125,000 Mexican homes, while avoiding the emission of 206,000 metric tons of CO 2 that would have been produced by conventional power stations. Mexican solar power developer Iusasol is building a new photovoltaic cell manufacturing plant in Estado de México. The 200 million usd facility is intended to serve growing demand driven by Mexico s recently implemented energy reform. iusasol.com AUTOMOTIVE brp s third in mexico Canadian sports vehicle maker Bombardier Recreational Products (BRP) plans to begin construction on its third manufacturing plant in Mexico in The 55 million usd site, to be located in the northern border city of Ciudad Juárez, Chihuahua, will manufacture all-terrain vehicles. photo archive manzanillo is among the world s top 100 ports Containerisation International and Lloyd s List issued their traditional annual ranking of the list of the top 100 global containerized ports. According to the publication, eight ports of Latin America are among the top 100 ports worldwide. The Mexican port of Manzanillo is ranked 68th worldwide. According to Lloyd s, Manzanillo is the main commercial port for Mexico s containerised cargo and one of the five largest hubs in Latin America. In 2013, Manzanillo began operations at the port s second specialised container terminal (TEC II), that Philippines-based International Container Terminal Services Incorporated (ICTSI) will run under a 37 year concession through Contecon Manzanillo.The three stage ICTSI project will energy A positive reform According to BBVA Bancomer s Regional Sector Situation analysis, thanks to the recently implemented energetic reform in Mexico, the states of Tabasco, Veracruz, Chiapas, Puebla, Tamaulipas, Nuevo León, Coahuila and San Luis Potosí will register a higher economic dynamism by 2018 than the one they would have observed without the reform. According to the document, the largest oil production platform imply that Tabasco, Chiapas and San Luis Potosí will accelerate their growth. With the reform, Tabasco will grow 7%; Chiapas, just over 4% and San Luis Potosí, above 5%; whereas without reform, the expansion of the Gross Domestic Product (GDP) in Tabasco would be close to 4.5%; in Chiapas, 2.5%, and San Luis Potosí, under 4%. To enable greater oil production platform in the coming years is one of the main goals of energy secondary laws. The benefits of this will be reflected primarily in those states that concentrate both conventional and unconventional resources, says the report. have the capacity to handle 2 million TEU annually by TEC II, with a first phase 400,000 TEU capacity, occupies an area of 73 ha and In an exercise on energy projections, BBVA Bancomer considers that the production of oil and natural gas will increase 20% by 2018; however, it also estimates that the share of hydrocarbon extraction from waters, generally attributed to Campeche, would be 20% lower compared to will have three docks in order to handle super post-panamax vessels. Based on the potential growth of these state economies, BBVA Bancomer predicts that Mexico s GDP will grow a percentage point more than the expected without energy reform in 2019, to reach 4%. photo archive photo archive

10 Negocios ProMéxico Special Report photo archive Special Report Negocios ProMéxico Green Solutions 2014: Opportunities for Green Investment in Mexico The mitigation of climate change, economic sustainability, and care of the environment have been key components for the Mexican government, companies, institutions, and other organizations. The transition towards the use of clean energy sources, the reduction of energy consumption, and support for sustainable city models will be crucial components for Green Solutions The event has become a space for dialogue that unites the triple helix of the public and private sectors and academia, with the goal of sharing new trends and linking networks that develop into innovation and business opportunities for the national economy. Thus, the promotion of a forum of this scope is fundamental to motivate the domestic market and the growth of green business in Mexico. by francisco n. gonzález díaz* Almost a quarter of the installed capacity for energy generation in Mexico is derived from renewable sources. Installed capacity is currently at 15 gigawatts (GW), but is expected to reach 35GW by Mexico is convinced that the development of clean technologies and energy generation from alternative sources are elements that cannot be put aside. For this to be consolidated, more incentives must be put in place to attract the green investment needed by the sector. Green Solutions has been and is one of the major efforts of the Mexican government to promote sustainable business and attract green investment. As the name suggests, it is a forum to seek and find solutions that achieve greater energy efficiency, reduce carbon dioxide emissions, and optimize the use of natural resources, among other goals. The event has become a space for dialogue that unites the triple helix of the public and private sectors and academia, with the goal of sharing new trends and linking networks that develop into innovation and business opportunities for the national economy. Thus, the promotion of a forum of this scope is fundamental to motivate the domestic market and the growth of green business in Mexico. This year will be the 5th edition of this important event. Green Solutions 2014 will be held on November 5 and 6 and ProMéxico will be joined by the state of Aguascalientes, which has decisively pushed the fight against climate change and care of the environment. This edition will aim to: 1. Spread Mexico s potential and commitment to green investment. 2. Transfer public environmental policies to the business sphere. 3. Promote business meetings. 4. Offer solutions in terms of financing, liaison, knowledge of regulations, and investment opportunities related to the recent approval of reforms. 5. Communicate the investment opportunities derived from the recent structural reforms. Some 3,500 participants are expected. The main topic of this forum is Green investment to bring Mexico to its full potential. The relevance of this topic is directly linked to the transformation process the country is undergoing and the potential for the future. Structural reforms were proposed and adopted in several sectors which are of great importance for the environment, energy, and education. They give us a glimpse of the modernization and optimization of green sectors, allowing sustainable development and taking our country to a more competitive level in the global economic arena. In an effort to support the sustainable products and services industries in Mexico, Green Solutions 2014 will address the following topics: Environmental public policies. Agro-industry and sustainable manufacturing. Green financing. Renewable energies. Opportunities and green investment for SMBs. Green Solutions has successfully held four previous editions with an attendance surpassing 15,000; 5,000 business meetings and 115 conferences, panels, and seminars. In 2014, new horizons are sought. The impetus from the Mexican government towards events like Green Solutions shows the country s commitment to its environmental future, but also to attaining business opportunities aimed at promoting the use of clean energy sources. Great transformations have been made a reality thanks to a meeting of minds. Mexico is pulling together to ensure a more prosperous, greener Mexico. N *CEO of ProMéxico

11 Negocios ProMéxico Cover Feature photo courtesy of pemex Cover Feature Negocios ProMéxico The intention is to create competitive markets that enable, in the short and medium terms, the reduction of energy costs, a secure supply, and to reach all current and potential consumers in the most efficient and sustainable way. These changes throughout the energy value chain adhere to one of the central goals of the current Administration: to modernize the country s institutional arrangement to give the Mexican economy heightened competitiveness. Along with the education, financial, tax and telecommunications reforms, the transformation of the energy sector will further the dynamic performance of all the country s production forces, bringing greater prosperity to the population as a whole. Regarding institutions, greater powers are given to the Ministry of Energy (SENER) and to the energy regulatory bodies such as the National Hydrocarbon Commission (CNH) or the Energy Regulatory Commission (CRE). National energy control centers are also created to encourage competitive natural gas and electricity markets (Cenagas and Cenace), as well as an independent regulator called the National Industrial Security and Environmental Protection Agency of the Hydrocarbons Sector (ANSIPA). Finally, the Mexican Petroleum Fund for Stabilization and Development a public trust fund managed by Mexico s Central Bank was created and will be responsible for the long-term management of oil revenues. A fundamental aspect of the reform is the transformation of both Pemex and the Federal Electricity Commission (CFE) into State-owned productive enterprises, so that now they have the obligation to generate value for their owners, that is, for all Mexicans. To achieve that aim, their internal structure was modernized to resemble that of energy companies in their field, with a professional management board and the flexibility to partner with third parties, to manage their budgets autonomously and seize the business opportunities they deem appropriate. The State is no longer a manager but an owner. As a result of Round Zero process by which the State granted Pemex the fields for which it proved to have financial, technical and execution capabilities Pemex received 20,589 million barrels of oil equivalent (MMboe) in proven and probable reserves (2P), enough to guarantee A fundamental aspect of the reform is the transformation of both Pemex and the Federal Electricity Commission (CFE) into Stateowned productive enterprises, so that now they have the obligation to generate value for their owners, that is, for all Mexicans. THE NEW MEXICAN ENERGY MODEL On August 12, 2013 the Mexican government announced its constitutional Energy Reform initiative to attract investment and modernize the energy sector. After more than 14 months of open debate, the design and institutional framework stage of the Energy Reform was concluded last October 31 with the publication of the operational rules of the new legislation and institutions of the energy sector. by the ministry of energy This comprehensive Energy Reform aims to boost economic growth, promote social development and take care of the environment, enhancing the country s competitiveness and increasing its production and industrial capacity. The design of the new energy model was based on international experience and best practices, as well as on six basic principles: 1) hydrocarbons in the subsurface belong to the nation, 2) free market access and direct and fair competition amongst Stateowned enterprises and private companies, 3) strengthening of regulatory bodies, 4) transparency and accountability, 5) sus- tainability and environmental protection, and 6) maximizing the State s revenue for the Nation s long-term development. Mexico now has a modern energy model. The hydrocarbons sector allows private investment in the exploration and exploitation of hydrocarbons, in the processing, transport and storage of hydrocarbons, petroleum products and petrochemicals, as well as in distribution and marketing. In the power sector, private enterprises can now invest in the generation and supply of electricity and, on a contract basis, in the expansion and modernization of the transmission and distribution grids. photo archive 18 19

12 Negocios ProMéxico Cover Feature photo archive Cover Feature Negocios ProMéxico operation, approve the exploration and development plans and authorize the surface exploration and drilling of exploratory wells. The Ministry of Economy (SE) will monitor compliance with local content goals, while the ANSIPA will be responsible for the oversight of industrial safety and environmental protection. Finally, all public revenue, other than taxes, from hydrocarbons exploration and extraction activities will be managed by the Mexican Petroleum Fund. On August 13, an initial approximation of the blocks that will be offered up for bidding as part of Round One was announced to the public. From the geological information available, 169 blocks with high resource potential were identified 60 of them can be classified as development or extraction blocks while 109 of them as exploration blocks. The first approximation to Round One includes shallow water blocks, unconventional fields, and deep water. The goal of this diversity is to attract companies of different sizes and specialties. The expected investment for this first round, including Pemex s farm-outs, is estimated at more than 12.6 billion USD per year, that is, 50.5 billion USD over the period. The tendering of the different types of areas will be staggered throughout The terms and conditions for shallow waters will be published in the first two weeks of November, followed by extra heavy oil in the first half of December. In the case of Chicontepec and unconventional resources, the terms and conditions are expected to be published in the first half of January 2015, whereas those of onshore and deep-waters will be published in the first two weeks of February 2015 and March 2015, respectively. The first contracts are expected to be awarded between June and September 2015, so that by the end of next year, the Energy Reform will be yielding its first results in terms of hydrocarbon production. This reform opens up important business opportunities for both local and foreign investors. Mexican companies are called upon to take a leading role, either as service providers, international business partners or operators. The State is working to build thorough public policies that will create a national energy industry and stimulate the emergence of production chains and high-paying jobs, as has already happened in other industries such as automotive and aerospace. In designing the legal framework for the operation of the Mexican energy sector, priority was given to adhering to international best practices. One of the advantages of being among the last countries to open up to private investment is the opportunity to learn from previous experiences, both positive and otherwise. With the guidance of the State and strict transparency rules, the participation of private investment will inject dynamism to an industry that had been closed off for decades. With this new energy model, Mexico will be able to ensure energy supply for the development and competitiveness of the national economy for decades to come. N Mexico now has a modern energy model. The hydrocarbons sector allows private investment in the exploration and exploitation of hydrocarbons, in the processing, transport and storage of hydrocarbons, petroleum products and petrochemicals, as well as in distribution and marketing. In the power sector, private enterprises can now invest in the generation and supply of electricity and, on a contract basis, in the expansion and modernization of the transmission and distribution grids years of production at the current rate. This figure represents 100% of the company s requested reserves and 83% of the nation s 2P reserves; the remaining 17% of 2P reserves are available for future bidding rounds. Regarding prospective resources, Pemex received 21% of the nation s total and 67% of what it asked for. These entitlements guarantee Pemex s solid platform to meet the new scheme of competition, while the State ensures a minimum production level. Pemex will be able to participate in later bidding rounds on an equal ground with other bidders. Pemex also has the possibility to request the migration of its entitlements to contracts, and of forming partnerships. In the interests of transparency and suitability, the selection of its partners in these farm-outs will be the result of an international public bid conducted by the CNH. Until now, the company has announced its intention to migrate 14 fields grouped into ten contracts, with total estimated 2P reserves of 1,557 MMboe. Besides Pemex s entitlements, the State will conduct exploration and extraction activities through contracts with private companies, state productive enterprises or partnerships between the two. The design of the contractual process provides for the participation of different agencies in order to maintain an institutional framework of checks and balances. SENER will be in charge of the selection of the areas that will be up for bid, the design of the contracts and the bidding guidelines. The kind of contract will be decided based on the type of resources in the bidding areas and following international best practices. The Ministry of Finance and Public Credit (SHCP) will be in charge of defining the fiscal terms and awarding variables. In the interests of transparency and in order to minimize discretional actions, the awarding variables will be eminently economic, and could be payment to the government, a work commitment beyond the minimum or a combination of both. The bidding processes, including awarding and signing of the contracts on behalf of the State, will be performed by the CNH, which will also supervise their graphic oldemar Blocks Surface (Number) (Km 2 ) Total: 183 Total: 29, , , *Million Barrels of Oil Equivalents / **Million USD / 1 In 10 contracts 14,606 Volume* Total: 183 1,557 3,782 Exploration (Prospective resources) 4yr estimated investment** Total: 50,500 19,000 16,400 Pemex Farm-0uts (2P Reserves) 15,100 Extraction (2P Reserves) Annual estimated investment** Total: 12,625 4,750 4,100 3,

13 Negocios ProMéxico Business Tips photo archive Business Tips Negocios ProMéxico Mexico and Renewable Energy Generation With a strong commitment to the development of renewable energies, Mexico is seeking to meet its energy needs and at the same time display global responsibility by contributing to the reduction of emissions responsible for the greenhouse effect. by maría cristina rosas * In the early 19th century, 95% of the primary energy consumed in the world came from renewable sources. A century later, that percentage had fallen to 38% and at the beginning of this century it stood at just 16%. That trend seems to be reversing, as in many industrialized countries the proportion of renewable energy has grown considerably in the last two decades. Global investment in renewable energy has grown dramatically: in 2004 it was 22 billion USD, rising to 130 billion USD in 2008, 160 billion USD in 2009, and 211 billion USD in About half of the estimated 194 gigawatts (GW) of new electricity capacity in the world in 2010 was renewable energy. In early 2011, at least 118 countries had policies in place to support renewable energy or some kind of national goal or quota, well above the 55 countries that had such policies in The growing interest in renewable energies is due to several factors. First, these energy sources contribute to reducing greenhouse gas (GHG) emissions. They also reduce energy dependence and contribute to job creation and technological development. The arguments in favor of renewables have been endorsed by numerous analyses and are supported by major international institutions. As environmental sustainability policies become consolidated around the world, it is necessary for countries to include environmental impact studies in their development plans, which inevitably leads to increased use of renewables. The use of renewable energy brings with it several advantages, which include: An increase in supply and the amount of energy, enabling countries to meet their socio-economic needs. Renewability and sustainability of resources. Emissions reduction. Economically viable and abundant. Forms of energy that are close to consumers. Promotion of an intelligent cycle of production, consumption and distribution. Use of locally available energy resources, meaning they are friendly to the environment and can promote community development. Unlike hydrocarbons, renewable energies are inexhaustible. For example, the sun produces 2,850 times more energy than is needed in the world today; wind energy has the potential to meet that goal 200 times; biomass 20 times; geothermal five times; waves and tides trice, and hydropower once. According to the Research Association for Solar Power, the solar radiation that reaches Earth in a single day holds enough energy to meet current demand for eight years. Mexico can achieve the goal it has set itself by increasing wind power alone. However, it is expected that as part of that goal, it will also enjoy a boost to power generation from other renewable sources. The energy generated by renewable sources worldwide grew 8.3% in 2013, representing 22% of total energy production. Meanwhile, jobs in the sector increased 14% to 6.5 million. According to the Renewable Energy Policy Network for the 21st Century (REN21), in 2013, the world developed record power generation capacity from renewable sources of 1,560 GW, meaning that now more than a fifth of world energy production comes from renewable sources. While developed countries have energy policies that favor renewable sources, a growing trend is also observed in emerging economies to promote their development. To date, 95 developing countries have proposed promotion of clean energy generation technologies. The list of the five leading countries in energy generation from renewable sources is headed by China, a country which is responsible for 24% of renewable capacity worldwide. In 2013, for the first time, the energy derived from hydropower, photovoltaic and wind sources exceeded that produced from fossil fuels and nuclear energy in this country. The US is in second place, followed by Brazil, Canada and Germany. Throughout this decade, the falling cost of technologies that make use of renewable energy sources has led to high growth rates in manufacturing, particularly in solar photovoltaic technology but also wind power and biofuel production. Mexico made a commitment to reduce GHG emissions by 30% by 2020 and 50% by 2050, according to the Climate Change Law passed in June 2012, in order to comply with the provisions agreed at the United Nations (UN) and in the Kyoto Protocol, where the country voluntarily imposed a reduction in the use of fossil fuels for electricity generation of 65% by 2024, 60% by 2035 and 50% by In addition, Mexico has set a goal of generating 35% of power in the country from renewable sources by In that regard, numerous opportunities are emerging in the area, to which the recent energy reform must be added. Under the National Energy Strategy , the Special Program for the Development of Renewable Energies, programs on bioenergy, the Program for the Promotion of Solar Water Heaters in Mexico (Procalsol) and the wider evolution of the energy market in the coming years, we can expect an expansion of the infrastructure using renewable energy to generate electricity, heat and biofuels in the country. Mexico can achieve the goal it has set itself by increasing wind power alone. However, it is expected that as part of that goal, it will also enjoy a boost to power generation from other renewable sources. Geothermal energy, for example, presents low relative costs. If geothermal resources are achieved equivalent to the quality of steam deposits found to date, geothermal generation could amount to 2.3% of total capacity by Today, Mexico is the fourth largest producer of electricity from geothermal energy, behind only the US, the Philippines and Indonesia. There is already an initiative of public and private bodies in place to set up three research consortia for renewable technologies allocated through the Sustainable Energy Sector Fund, aimed at identifying and supporting the country s capabilities for expanding energy generation, with the emphasis on geothermal energy. In that regard, the Transmexican volcanic axis has been identified as a priority area crossing the country transversely from Colima to the borders of Puebla and Veracruz states with significant areas of thermal activity, whose development may help establish Mexico s position as one of the largest generators of geothermal energy on the planet. Meanwhile, as reported by the European Photovoltaic Industry Association (EPIA), Mexico is among the three most attractive countries in the world to invest in photovoltaic projects. States like Sonora, Chihuahua, Durango and Baja California have the land area and potential for installing electricity-generating capacity using solar concentration fields. Similarly, the levels of solar radiation along the Pacific coast and the states in the northeastern region permit further expansion of solar panel installations in the country. Thus the outlook for renewables is extremely promising. According to information from ProMéxico, from 2008 to date it has attracted 47 multiyear green investment projects from abroad mostly in the wind sector totaling more than 8.2 billion USD and more than 4,950 new jobs. According to ProMéxico, the renewable energy sector receives the second highest amount of confirmed investment, exceeded only by the automotive sector. N *Professor and researcher in the Political and Social Sciences Faculty, National Autonomous University of Mexico (UNAM)

14 Negocios ProMéxico Figures A BRIGHT FUTURE Renewable energy in Mexico infographic oldemar Figures Negocios ProMéxico Mexico has an enormous capacity to generate electricity from renewable sources. In 2013, the country s installed capacity to produce energy upon renewable sources was 14,891 megawatts (MW). That is almost one quarter of the country s installed capacity to generate electricity. It is expected that by 2024, 35% of the electricity generated in the country will come from clean technologies. By 2035 that figure will be 40% and 50% by The regions with the greater potential for wind energy in Mexico are the Isthmus of Tehuantepec (Oaxaca), the Gulf of Mexico, la Rumorosa (Baja California) and the Yucatán Peninsula. Average daily solar radiation during the year in Mexico is 5.5 kilowatt-hour per square meter (kwh/m 2 ), but in some regions it may exceed 8.5 kwh/m 2. Mexico is part of the "Sun belt", which means it is among the five most suitable countries for the development of photovoltaic projects. Mexico has the potential to generate 6,500,000 GWh per year from solar energy. That is equivalent to approximately 27.6 times the country s total consumption of electricity in Mexico has the largest manufacturing base of photovoltaic panels in Latin America, with a production capacity of over 737 MW per year. HOW MUCH RENEWABLE ENERGY DOES MEXICO GENERATE? MW, 2013 Installed capacity Capacity under construction 6,000 3,000 9, , ,000 3,000 9, ,000 2,000 6,000 3,000 9, ,000 MW MW 0 4,000 MW MW MW 11, ,638 3, Hydro Wind Geothermal 100 6,000 3,000 9, ,000 Biomass 75 6,000 3,000 9, ,000 Solar , Baja California 24* Sonora 37* WHERE IS RENEWABLE ENERGY PRODUCED IN MEXICO? Main states with installed capacity in 2013 Stations in operation and under construction, MW Tamaulipas A GROWING BUSINESS Investment in renewable energy projects in Mexico (million USD, estimated upon investment announcements) # NUMBER OF PROJECTS 7 2, , , Baja California Sur Coahuila San Luis Potosí Veracruz 572* , Nuevo León Jalisco Oaxaca * * 2, o *Only includes hydroelectric plants with installed capacity of 30 MW or less. Sources: Federal Electricity Commission (CFE) / Energy Regulatory Commission (CRE) / FDI Markets

15 Negocios ProMéxico Mexico s Partner photos courtesy of swiber offshore mexico Mexico s Partner Negocios ProMéxico Swiber Offshore México, The Treasure that Lies in Mexican Waters Having established itself in Mexico, Singaporean company Swiber Offshore has decided to double its investments over the next five years. The idea is to invest up to 700 million usd in the Mexican energy sector. by antonio vázquez Less than three years ago, Mexico was totally unknown to Swiber Holdings Limited, a Singapore company and leading global integrated construction and support services provider to the offshore oil and gas industry. After a big project carried out for Petróleos Mexicanos (Pemex) the firm was surprised at what it meant to invest in Mexico. With 18 years experience, more than 2,500 employees worldwide, and listings on the Singapore Stock Exchange, Swiber came to Mexico in 2012 to work in a project that consists in the procurement, transportation, and installation of a pipeline in the Gulf of Mexico. Antonio Villegas, President of Swiber Offshore in Mexico, clearly describes the company s first project in Mexico: A pipeline 77 km long and 36 inches in diameter almost the same distance as the Panama Canal that we built under the sea in the area of Campeche. Based on that experience, Swiber decided to settle its strategic offices in Mexico in order to expand its operations to the Americas. Also as a reaffirmation of its longterm commitment, Swiber flagged its five vessels with the Mexican flag. A good definition of what the company does is developing offshore fields. Once various studies have been carried out showing it is ready to produce, a company like Swiber comes along to build the installations for transporting the oil from the well to land. That was what we did in that first project and what we continue to do in others with Pemex, Villegas says. Internationally, the firm has an operating fleet of 51 vessels comprising 38 offshore and 13 construction vessels in regions such as Asia-Pacific, Middle East, and Latin America. In less than three years, the company has invested about 250 million USD in Mexico. In August 2014, Swiber executives announced to the press the firm s intention to invest about 700 million USD in the country by 2017, thanks to the reform in the energy sector implemented by the Mexican government. Our attention has been focused mainly on the Mexican market but we also want to explore in Colombia and we are looking at other opportunities in the region, including the Caribbean countries, Peru, Argentina, and Venezuela, virtually all Latin American countries, and we are even thinking of the US, Villegas adds. Entering Mexican waters was no accident for Swiber Offshore. Villegas explains In less than three years, the company has invested about 250 million usd in Mexico. In August 2014, Swiber executives announced to the press the firm s intention to invest about 700 million usd in the country by 2017, thanks to the reform in the energy sector implemented by the Mexican government. that the country has led to big profits for the company. It is a country with an excellent geographical position but Mexico also has a well-earned reputation in the world, backed up by economic policies, and has an excellent command of its macroeconomic indicators. It has signed free-trade agreements with several countries and has been a pioneer in the field. For example, it is in negotiations to join the Trans-Pacific Partnership (TPP), to which Singapore is a party. All that means that Mexico s business practices meet global standards, says Antonio Villegas. Following the energy reform, Pemex will be one of the main customers for Swiber Offshore in Mexico. Villegas reveals that the company anticipates the national energy sector will be one of the most important markets in the medium and long term. That will be a very important market for Swiber in the next five years; it is a question of combining the energy reform with other factors. Pemex is a very productive business [ ] and the idea is to establish capital investment of about 700 million USD, with larger modern fleets working offshore. A feature of our fleet is that it is made of vessels no more than five years old and that gives it a special value, Villegas said. The technological and innovation component is important for a company like Swiber Offshore. In India, for example, the company managed to put in place a deepwater platform weighing approximately 13,000 tons. It did so by working back-to-front: building the infrastructure on land and then using a special vessel to position it at sea by a float over method (the platform slides over the water and is installed). That represented savings of up to 100 million USD for the client. Mexico has surpassed Swiber Offshore s expectations. The future of the firm in the country will be linked to the oil and gas industry over the next few years, says Villegas. There are great expectations for the energy reform, especially for Mexico s future, and we are ready to make our contribution. I am pleased with what Mexico has achieved and the changes in the energy industry that are intended to create a more prosperous and efficient industry, as well as making it a more competitive country, he concludes. N

16 Negocios ProMéxico Mexico s Partner photos courtesy of 3tek solar Mexico s Partner Negocios ProMéxico At the Plantronics plant, the 1.16 MW photovoltaic system was installed with 4,300 solar modules occupying an area the size of two soccer fields. With such a large-capacity system, the Plantronics installation can generate close to 2 GW hours of clean energy per year, which is equivalent to an annual reduction in emissions of 1,360 tons of carbon dioxide (CO 2 ). Nationally, I know of no other company that has integrated a roof-top solar system on par with our Plantronics installation, says the director of 3Tek SOLAR. It s Time to Turn and Face the Sun 3Tek SOLAR, Inc. recently designed and installed the largest and most ambitious self-supply rooftop solar project in Mexico. Such an achievement is the optimal platform from which to lead and revolutionize the country s adoption of green energy. by omar magaña On September 27, 2014 the first gigawatt was generated by 3Tek SOLAR s sizeable photovoltaic installation on the Plantronics factory that manufactures telecommunications components in Tijuana, Baja California serving as a 70% self-sufficient clean energy producer. For 3Tek SOLAR, the company responsible for the design and implementation of the project the largest of its kind in the private sector in Latin America this is more than good news. It is a testament to the effectiveness and value of what 3Tek SOLAR has promoted over the last five years among Mexican entrepreneurs: self-supply power generation from renewable sources. According to the company, this is the ideal moment to invest in renewable energy and see the immediate financial and environmental benefits of energy self-sufficiency. Héctor Montoya, Director of 3Tek SOLAR, emphasizes that the considerable costsavings exhibited by the monitoring system in the Plantronics photovoltaic installation should clear away any doubts or myths about alternative energy generation. The significant results in projects such as this one, clearly demonstrate that investments in solar energy produce immediate and tangible results and that companies who are committed to the idea will see marked savings in their operating costs. When Plantronics commissioned 3Tek SOLAR to develop their photovoltaic energy system, its long-term goal was to maintain constant savings of 70% of its current energy consumption, remarks Montoya. He recalls a phrase used often by executives in the solar industry in relation to cost reductions from renewable energy investing: Going green makes you green (dollars). In most cases, the internal rate of return is in excess of 14%. For financial analysts, that is a very good number, if not a great one, says Montoya. Systems that capture solar radiation and convert it into electricity allow companies to fix resource costs at current prices over the long term. According to 3Tek SO- LAR, the average lifetime of photovoltaic modules is over 30 years, based on the manufacturers own standards. Moreover, since the systems have no moving parts, maintenance costs are minimal. Therefore, an investment in a solar energy system generally pays for itself eight to nine times over the course of its lifetime. Full Service 3Tek SOLAR competed with US companies to win the bid for the huge development at Plantronics. Once it had secured the contract, the company leveraged its 20 years of experience in design and implementation of construction projects in the industrial and commercial sectors operating as Tri Tektura. Additionally, 3Tek SOLAR provided its expertise acquired over five years in power-needs analysis, and integration of alternative energy generation technologies. We developed a complete EPC turnkey package: engineering; materials and equipment procurement; permitting; and system construction, Montoya recalls. During the prospecting stage, it was necessary to think about the location of the solar power installation from the viewpoint of the local geographical and spatial elements. A basic premise of Hector Montoya is that industrial building design is all about maximizing long-term operations by reducing energy costs and managing natural resources. So, for the Plantronics project it was necessary to assess how optimal energy would be produced, at what 3Tek SOLAR competed with US companies to win the bid for the huge development at Plantronics. Once it had secured the contract, the company leveraged its 20 years of experience in design and implementation of construction projects in the industrial and commercial sectors operating as Tri Tektura. times throughout the day, and how it would interconnect with the electricity grid. Further consideration was given to analyzing the best options for monitoring the system once it was in operation. For the execution of the work, approximately 100 people were hired for the better part of a year. According to Montoya, the staff was well trained to carry out a project of this magnitude with the expected quality standards, on time, and within budget. The technology providers were hired in the US, while the wiring and support systems contracts were allocated to local businesses. The advanced monitoring system was commissioned from a US company that provides the service over a five-year period. This enables the customer to obtain real-time power generation data anytime during the day, how much is being produced, and what the average amount of generation will be for a given period. Shifting the Paradigm There is a new mindset and culture to be developed in Mexico, says Héctor Montoya. From his point of view, Plantronics broke away from deep-seated beliefs in Mexico about the reliability of alternative energy systems. This highly successful giant step forward has served to trigger and expand new economic opportunities and establish an area of expertise in the solar industry in Mexico. 3Tek SOLAR markets itself as a company that bases its work on high standards of quality, safety and sustainability a company able to provide and replicate effective practices. Given current economic conditions, in which interest in green energy and the benefits of the transitioning to them is quickly spreading, 3Tek SOLAR is collaborating with ProMéxico to plan new paths for further expansion. Business leaders are going to realize that they should not miss out on taking advantage of the sun and the free, clean energy it provides. Furthermore, the openness to renewable energy is now clearly defined in local and national regulations. As part of that openness, a tax benefit has been established that will promote the growth of this sector as well as the company itself, said Montoya. Broader adoption of renewable energy systems may take some time, however it is a process that we are excited to be a part of and to take a leading role in. Together with innovative industrial leaders such as Plantronics and skilled solar integrators like 3Tek SOLAR, we will most certainly consolidate its success throughout Mexico, he concludes. N

17 Negocios ProMéxico Mexico s Partner photos courtesy of gamesa Mexico s Partner Negocios ProMéxico Gamesa Remains a Reference Point Recent announcements by Gamesa in Mexico point to its continued and growing involvement in a market where it has set itself clear goals ahead of the growing need for energy from renewable sources. by omar magaña The largest manufacturer of wind turbines in Spain, one of the top five manufacturers worldwide and one of the most important firms in the development of wind projects worldwide, Gamesa is committed to maintaining its leadership in Mexico, where it is investing heavily in the renewable energy sector and, as a result, has become the nerve center of operations for Gamesa in Latin America. Among the recent announcements by the company in the country, in addition to the designation of Hipólito Suárez as CEO, of note is the partnership with Santander bank for the development of wind power projects with a generation capacity of up to 500 MW in the state of Oaxaca over the next three years. We aim to establish a clear position in Mexico and to continue working in the other economies in the region while maintaining a strong presence in them: this is an aggressive but feasible growth plan, says Hipólito Suárez. Following a period outside the corporation, which he was part of for 15 years, Suárez returned in 2013 as Deputy Director for Mexico and Latin America. Upon his return, he acknowledges, he found a company with a more diversified position and greater international presence. According to information from the firm, Gamesa has installed more than 30,000 MW in 45 countries and manages the operation and maintenance of about 19,500 MW. As a developer and builder of wind farms, it has installed 6,400 MW and has a portfolio of 16,300 MW at varying stages of development. In Mexico, the company has installed around 1,400 MW and performs operation and maintenance services for a further 1,000 MW. As a developer it has built 244 MW and has a large portfolio under development. For Suárez there is no doubt about Gamesa s leading position in the country and future dominance in a market that will place greater emphasis on clean energy over the next decade. It depends on who you ask but overall the commitment to renewable energy in Mexico is strong. The goal set by the Ministry of Energy (SENER) in 2014 is that 35% of energy produced in the country should come from renewable sources. Then there is the Special Program for Renewable Energy, which sets a target of 8,700 MW of installed capacity of wind power by 2017, which would be around 5,200 MW more than currently installed, according to annual estimates of installed wind capacity established in the program itself, says Suárez. To get an idea of the importance of wind energy in the renewables mix, the same program sets a target of 483 MW of installed solar energy capacity for 2017, while installed capacity for geothermal power should reach 962 MW. Only generation from hydro power tops wind, with a projected installed capacity of 12,551 MW by On that basis leaving aside Brazil, which has a Among the recent announcements by the company in the country, in addition to the designation of Hipólito Suárez as CEO, of note is the partnership with Santander bank for the development of wind power projects with a generation capacity of up to 500 MW in the state of Oaxaca over the next three years. separate administration within Gamesa Mexico is recognized as the largest market in Latin America and as a result the corporation has a special focus on the country and, from there, on strategies for Central and South America. Maintaining the Differentiating Factors Gamesa is a corporation that develops solutions for the field of renewables: it manufactures and markets its own turbine models on MW and 5 MW platforms, in addition to those in the offshore division for coastal water applications; it promotes, develops and sells wind farms, including their operation and maintenance and invests in researching and designing technologies that will produce energy more efficiently from the sun, water, and wind. We have a presence across the value chain: we develop our own projects, we supply the machines a niche in which we are also leaders and we provide maintenance. In one way or another, our understanding of the entire value chain provides us with a benefit, says Suárez. In the case of Mexico, we have additional benefits due to our proximity to customers and our flexibility. In addition, our agreement with Santander for the development of 500 MW in the Oaxaca area puts us in a very good position, he adds. What lies on the horizon as a result of the energy reform in Mexico? Suárez highlights three characteristics of the emerging scenario: 1) a large market in terms of electricity demand; 2) regulatory stability: We sense it will be a market with significant legal certainty and that is a great foundation on which to take forward energy projects in general, says Suarez, and 3) local capacity for the generation of suppliers that the sector requires. In relation to that last point, Hipólito Suárez reveals that Gamesa is locating suppliers of components for their wind turbines in Mexico. As regards wind farm construction projects in the country, Gamesa is working with Mexican suppliers of engineering, civil engineering, and electrical work. The latter, according to Suárez, has involved the recruitment of a thousand people working on parallel construction projects. N

18 Negocios ProMéxico Mexico s Partner photo courtesy of sunpower Mexico s Partner Negocios ProMéxico In early October 2014, the company announced that its SunPower E-Series and SunPower X-Series solar panels manufactured in Mexico, were awarded the Cradle to Cradle Certified Silver distinction by the Cradle to Cradle Products Innovation Institute. says Ingrid Ekstrom, Corporate Communications Director at Sunpower. than 1,500 megawatts of solar power plants operating around the world today. Harnessing the Power of the Sun As a global solar energy solutions company, Sunpower designs, manufactures and delivers high efficiency solar solutions for homes, businesses and utilities. by proméxico Founded in 1985 and headquartered in San Jose, California, Sunpower operates in Africa, Asia, Australia, Europe, North America, and South America. Since 2011, SunPower has been majority-owned by Total, the fifth largest publicly-traded energy company in the world. In 2011 the company opened a solar panel manufacturing operation in Mexicali and in 2013 it established offices in Mexico City. Today, SunPower operations in Mexico employ more than 1100 people. In less than three years, SunPower Mexico has become the company s largest module assembly site by output. Our manufacturing facility is 320,000 square feet and has quickly grown to employ more than 1,000 employees to become our largest module manufacturing facility by output. Its proximity to our North American customers improves our responsiveness, delivery times and carbon footprint, A matter of quality We manufacture the most efficient and reliable solar panels on the market today, and we also design and build solar power systems and technology for residential, commercial and solar power plants, says Ingrid Ekstrom, Corporate Communications Director at Sunpower. In early October 2014, the company announced that its SunPower E-Series and Sun- Power X-Series solar panels manufactured in Mexico, were awarded the Cradle to Cradle Certified Silver distinction by the Cradle to Cradle Products Innovation Institute. Sunpower s are the world s first and only solar panels to achieve that certification which is a comprehensive product quality standard that evaluates product design, manufacturing, corporate citizenship and ethics principles, based on the sustainable manufacturing processes implemented at the company s facility in Mexicali. In addition to manufacturing high efficiency panels in Mexico, the company is also working to develop solar power plants to help reduce the country s dependence on fossil fuel-based energy sources. SunPower has more Mexico s Solar Market Sunpower expects that the energy reforms in Mexico will open the market to competition and innovation, and solar will be a big part of that. We see very interesting opportunities in the utility-scale space, combined with direct energy sales to industrial, commercial, and public customers, says Ekstrom. Since its founding in 1985, SunPower has always maintained a strong focus on research and development. We design and manufacture the most efficient solar technology on the market, and we work to continually improve our own processes and products to ensure that our customers maximize return on investment. says Ekstrom. In ensuring we are developing the highest performing products, SunPower partners with institutions such as the US Department of Energy s National Renewable Energy Laboratory (NREL), PV Evolution Labs, Fraunhofer, Atlas Material Testing Technology, and Photon. Total is a key partner today in our research and development efforts, as well as in our business development efforts in Mexico, Ekstrom concludes. N us.sunpower.com 32 33

19 Negocios ProMéxico Mexico s Partner photos courtesy of eosol Mexico s Partner Negocios ProMéxico Eosol Energy, for A Full Transition to Clean Energy The governments of countries that play an important role in the global arena should have long-term plans in place to make a full conversion to renewable energies in the 21st century. Mexico can t afford to be left behind. by omar magaña Countries that aim to play a leading role in world affairs should already be taking concrete steps to fully substitute fossil fuels for renewable sources of energy, says Eosol Energy Managing Director in Mexico Óscar Bernal. According to German authorities, nations that fail to make a full transition to clean energies in the course of the 21st century will be left behind, says Bernal, adding that Eosol Energy is confident Mexico will make tangible progress in terms of infrastructure and establishing a legal framework to support the sector. Eosol has officially been operating in Mexico since 2011 and has developed the TAI Durango Uno, a 16.8 megawatts (MW) photovoltaic park the first active facility of its kind to be hooked up to the Federal Electricity Commission s grid. We d like to be the standard bearer of renewable energies in Mexico, as we have been up until now with the first plant connected to the national electricity grid. If this country doesn t want to get elbowed out of the global economy, its government administrations need to stay firmly focused on long-term strategies that go beyond debate on how much longer we re going to be able to exploit fossil fuels. Mexico needs to bear in mind that the transition to clean energies will require the implementation of large-scale projects in this area every year for decades. We should all be praying that next year it s not 16 but at least 1,000 MW, says Bernal. A Sunny Path TAI Durango Uno is just the tip of a larger project designed to position the com- pany as a leader in Mexico s solar energy sector. Its 16.8 MW park in the Durango Industrial Logistics Center opened in the spring of 2014 and has 70,000 solar panels that take up an area of 32 hectares. According to state government and company sources, a total of 500 million pesos (approximately 37 million USD) were channeled into the first phase of the project. We have begun building an electrical substation at the same center to generate an extra 100 MW and plan to expand the park to 117 MW, says Bernal. Installed capacity could soon increase to 500 MW in the same zone, given that the government has been supportive of the company s projects. Initially, Eosol considered setting up operations in Baja California but after analyzing the possibilities of connecting to the electricity grid, and with some convincing from the Durango government, the latter emerged as the most viable option. Now that TAI Durango Uno is up and running, Eosol is more convinced than ever that Durango was the best choice, since it has enabled the company to distance itself from the competition and take the lead in certain regions. According to Bernal, Mexico has the potential to expand in other subsectors such as biomass, thermosolar and wind energy, which are also part of Eosol s portfolio. In its capacity as a developer, promoter and operator of energy projects, Eosol has been involved in the Federal Electricity Commission s (CFE) Agua Prieta II initiative Mexico s first combined-cycle power plant, which features a 14 MW solar park. Right now we re developing projects in Durango and two in Now that TAI Durango Uno is up and running, Eosol is more convinced than ever that Durango was the best choice, since it has enabled the company to distance itself from the competition and take the lead in certain regions. Sinaloa. We re also looking at options in Tamaulipas, where we re about to close a project, says Bernal. Mexico, a Global Partner Before coming to Mexico, Eosol had positive experiences working in Spain, France, the US and other countries. Its first taste of Mexico was in 2009, when it rendered engineering services during the construction of Chrysler s photovoltaic park in Saltillo, Coahuila, via its subsidiary, Injuber. That was when company executives in Spain decided who were to become their anchoring partners in Mexico. Generally speaking, Eosol Energy likes its local partners to retain a stake of at least 25% when it undertakes long-term business ventures in a country, but in the case of Mexico that figure is 50%. Eosol Energy was incorporated in Mexico in February 2011 and has since earned a reputation as a pioneering force, based on what it has accomplished in Durango. It now has offices in Mexico City and Durango and has announced a three-year investment plan through 2016, which provides for an injection of as much as one billion USD in Mexico. The company has actively promoted renewable energies at forums and other events in Mexico because, as Beltrán says, the sector needs to earn credibility: There are still people who think renewable energies are Utopian. I always cite Germany as an example. They have a plan to close all their nuclear plants by Bernal predicts that the recently passed energy reform will remove obstacles and make it easier for the private sector to work alongside the CFE, which will continue to play a preponderant role in energy generation in Mexico, in light of its experience and scope. It s a huge company. We need its support and we need for it to build new plants of its own, although that s not to say combined-cycle plants shouldn t continue to exist, concludes Bernal. N

20 Negocios ProMéxico Mexico s Partner photos courtesy of newen Mexico s Partner Negocios ProMéxico Newen, Real Change Begins in Your Own Backyard A champion of renewable energies, the company has been operating in Mexicali one of the cities with the highest solar radiation indexes in Mexico for 30 years by omar magaña It s now possible to generate clean electricity at home to cover a portion of our daily needs and integration companies are springing up to assess the requirements of individual customers and recommend appropriate technologies. Newen (Energías Alternas), which has been operating in Mexicali, Baja California, since 1986, serves precisely that market niche with modular photovoltaic systems that have a capacity of up to 10 KW the maximum permitted by the Federal Electricity Commission (CFE) for residential use. Although the residential sector is its most important source of revenues, the firm also offers rural electrification solutions, a market it entered in the mid-1980s and remained focused on until Additionally, the company offers systems connected to the national electricity grid for businesses, industries and public services, sells remote monitoring systems and components, has an R+D center where it plans to produce its own technologies and its own alternate energies theme park. The theme park opened in 2007 and showcases the various solar photovoltaic and thermal technologies currently available, with a view to educating the public about the potential of renewable energies and busting the myths surrounding them. Founder and director of newen, the engineer Mario Pavón is confident promotional efforts will gradually give rise to a natural market with a clearer idea of the products and solutions the company offers. Education can help position us and expose us to more users, not just regionally but nationwide, he says. Adapting to a Renewable Reality According to Pavón, we will gradually make the transition from fossil fuels to renewable energies as a society and on all levels the same way we made the leap from horses to automobiles. It s an opportunity to develop new businesses and new industries, and it s a global one. It s not just about selling solar panels. There s a lot more potential to renewable energies. Newen currently imports its photovoltaic modules and peripherals, mainly from the United States, Spain, Germany and China, but Mexican companies specialized in the metalworking and electrical industries are starting to produce specific parts for the renewable energies sector, such as harnesses, special connectors and structural bases with one or two moving axes. The Efficiency Drive As has occurred with other technologies, the price of equipment and systems for the generation of clean electricity has gradually dropped and more and more consumers are finding it cost effective to implement them due to the substantial long-term savings they offer. In its capacity as an integration and consulting firm, the company identifies needs and suggests ways of reducing electricity consumption. If you want to reduce consumption, residential or industrial, you re going to have to make some improvements as regards energy efficiency. We [Mexicans] are right at the bottom of the stack when it comes to energy efficiency, says Pavón. The challenge is to design a combined consumption plan, whose ultimate goal is to reduce costs, and determine which solar photovoltaic systems are most suitable for the individual customer. And because the systems newen sells are modular, customers can expand their capacity when necessary. Recouping your investment in systems of this kind will depend on the capacity of the equipment and post-installation consumption levels but, on average, it takes between two and seven years. And since photovoltaic solar modules have an average lifespan of 25 years, you get your money back cyclically. The residential sector is where there are more opportunities to sell solar systems. That is the type of customer we get the most calls from and where we close the most sales, says Pavón. The company is also working on customized packages that can be shipped to any part of the country and installed by the final consumer with the assistance of specialized technicians. As regards the industrial sector, companies like newen are helping attract fresh capital but, according to Pavón, Mexico will only be able to hold onto its position as a top destination for investment in the productive sector if it can guarantee investors that their operations in the country will be more efficient, based on better management of energy costs. Pavón agrees with his peers in the renewable energies sector that this is the time to integrate the business community and citizens in what all the signs say will be the energy model of the future, reason why newen is focusing on The challenge is to design a combined consumption plan, whose ultimate goal is to reduce costs, and determine which solar photovoltaic systems are most suitable for the individual customer. fostering new talent. Globally speaking, knowledge about renewable energies is still limited, but a lot of initiatives are emerging in Mexico and we believe that, with some training, they can offer a final product that can be used efficiently, he concludes. N energiasalternas.com 36 37