Mexico is among the top 10 most attractive countries in the world with the highest investment in renewable energy.
Currently, Mexico is in a situation of uncertainty and risk because the new Government of López Obrador has positioned itself against renewable energy auctions. In turn, the president of CFE (Federal Commission of Electricity) has requested the three previous auctions project contracts to be renegotiated.
So far, in Mexico, three auctions have been carried out in the years 2015, 2016 and 2017, and a fourth was planned for 2018, however, last January, the last clean energy auction was cancelled.
Despite this, the situation also represents an opportunity to obtain high returns for those willing to assume this risk. The abundance of solar resources, the high prices of energy, the decrease in technology costs and the growing need for diversification of resources combine to place Mexico among the world leaders for photovoltaic development.
The Mexican economy is growing at a good pace. The Secretaría de Energía (SENER) expects energy demand to grow at 3% during the period 2018-2032, as well as retirement of nearly 12 GW of existing capacity in the same period.
SENER is implementing a Clean Energy Certificates market, based on the obligation of large consumers to have a minimum level of consumption from clean energy, from 5% in 2018 to 13.9% in 2022.
Also, price of electric power in Mexico is very high: in nominal terms, it is 73% higher than in the United States. Citizens do not realize this because 95% of households obtain an electric subsidy that covers up to 90% of their receipt. Even after the subsidy and adjusting for purchasing power, electric power in Mexico is still 25% more expensive than in the United States. Mexico spends 0.75% of its GDP subsidizing electricity tariffs.
Despite the negative impact of the cancellation of the 4th auction, the current uncertainty, and the multiple challenges that await it, solar energy in Mexico is still in very good shape. Bilateral PPAs viability is already a fact in Mexico and the expansion of this segment could lead to a more sustainable market. It is worth mentioning as recent success stories of long-term PPAs the one of the French Engie with the steel producer Gerdau Corsa for a photovoltaic installation of 130 MW and a Balam Fund’s 35 MW photovoltaic plant that supplies Farmacias del Ahorro.
According to a report published by Bloomberg New Energy Finance, worldwide, the volume of energy consumed by companies that have decided to be supplied by clean energy and specifically through the bilateral market reached a record of 13.4 GW in 2018. Mexico is part of this global trend and between 2008 and 2017 PPAs were signed for a total of 3.4 GW, mostly from wind projects. Main sectors that have led this trend are: cement, malls, financial, mining, steel, consumer and automotive godos.
Vector Cuatro M&A and Financial Advisory business line provides its clients with tailor-made market reports covering, inter alia, country and sector analysis, development and connection process description, market price hedging (PPA and auction) description, tax memo, asset valuation analysis including expected returns and comparable transactions in the market, financing structures definition.
In addition, Vector Cuatro M&A and Financial Advisory business line is well experienced on the valuation of PV and wind projects through the preparation of financial models covering development, construction and operations.
Finally, Vector Cuatro provides potential investors with local investment opportunities according to the specific investor requirements and intermediates between large consumers and project owners in order to negotiate bilateral PPA agreements.Read More
The company has recently closed two agreements for the management of 17 more solar PV projects totaling 35 MW. With these contracts, Vector Cuatro increases its portfolio of assets under management in Japan to a total of 470 MW.
In November 2015, Vector Cuatro announced the beginning of its activity as an asset manager in Japan for a 3.5 MW solar PV plant, owned by one of the most important companies in the Pacific energy sector. Three years later, the Spanish consultancy surpasses the 450 MW mark, already taking care of the asset management for 28 projects in Japan.
Since 2007, when the company began to operate in the Renewable Energy Industry, Vector Cuatro has been able to increase its portfolio of assets under management to 2,5 GW for operational projects and plants under construction.
Currently, the company manages solar PV and wind power plants in America, Europe and Asia, with Japan being one of its core markets. Vector Cuatro entered the renewable energy markets in Asia first in 2012 as a Technical Advisor and providing support in transaction services for solar PV plants. Since then, the Nippon delegation has grown up positioning itself as a key reference in the local renewable industry with an international client portfolio to which belong the most active banks and companies in Japan.
Besides providing asset management services and support in transactions, the company has also rendered feasibility studies, technical due diligences and consulting services in Japan for projects that total more than 10 GW.
Vector Cuatro Japan アセットマネージメント450MWを超える
最近、Vector Cuatro Japanは、17の太陽光発電プロジェクト、合計35 MWのアセットマネージメントに関する2つの契約を締結した。これらの契約により、日本の運用資産ポートフォリオを合計470MWに拡大した。
2015年11月、Vector Cuatro Japanは、太平洋エネルギー分野で最も重要な企業の1社が所有する3.5 MWの太陽光発電所の資産運用会社としての活動開始を発表した。 3年後、このスペインのコンサルタント会社は450MWを超え、すでに日本国内の28のプロジェクトの資産管理を担当している。
Vector Cuatroは、再生可能エネルギー業界で事業を開始した2007年以来、運用プロジェクトおよび建設中のプラントのアセットマネージメントのグローバルポートフォリオを2.5 GWに増やすことができた。
現在、同社はアメリカ、ヨーロッパ、アジアの太陽光発電所と風力発電所を管理しており、日本は中核市場の1つである。 Vector Cuatroは、2012年にテクニカルアドバイザーとしてアジアの再生可能エネルギー市場に参入し、太陽光発電所の取引サービスを支援した。 それ以来、日本現地法人は、国内の最も活発な銀行や企業に属する国際的な顧客ポートフォリオを持つ地元の再生可能エネルギー業界における重要なコンサルタントとしての地位を確立してきた。
The spanish multinational, Vector Cuatro, has acted as Technical Advisor in the 30 MW solar PV project Noboribetsu, developed by Renewable Japan. It is the first time that a green rating is given to a project bond.
Vector Cuatro has acted as Technical Advisor for the Noboribetsu project, a 30 MW project developed by Renewable Japan. Renewable Japan holds one of the 3 publicly listed solar funds in Japan. The project has received a preliminary rating by the Japanese rating agency Rating and Investment Information (R&I), in order to be incorporated into the fund. R&I evaluated the project and confirmed the bond issuance with GA1 level (preliminary).
In addition, this is the first project with unlimited curtailment to be successfully rated in Japan. As technical advisor Vector Cuatro performed the feasibility study and the technical due diligence, including the curtailment analysis of the project.
Vector Cuatro entered the renewable energy markets in Asia first in 2012 and has positioned itself as a key reference in the local renewable industry with an international client portfolio to which belong the most active banks and companies in Japan. Currently the company provides support in transactions and rends feasibility studies, technical due diligences and consulting services total more than 4 GW. Vector Cuatro also provides Asset management services and has topped the 400 MW mark, taking already care of the asset management of 28 projects in Japan.Read More
Vector Cuatro has been working closely with Engie Solar to ensure the quality of Intipampa PV solar plant, located in the Peruvian district of Moquegua and with a power capacity of 40MW.
The firm has supervised the engineering design, the factory acceptant test and has carried out the quality control during the Construction phase and the Commissioning of the plant, with a mixed work team of on-site and back office staff in Spain and Peru.
Intipampa PV solar plant, owned by the French energy company Engie, through its subsidiary Engie Peru, is one of the two projects selected in the national electricity tender held in 2016. Being the second largest plant in Peru, Intipampa PV solar plant covers an area of 322 hectares. It’s expected to provide electricity to 90,000 households in southern Peru.
At the moment, Vector Cuatro has carried out more than 1000 projects in 25 countries worldwide and is internationally ranked as one of the most important companies in the renewable energy industry. It has over 2.4 GW of power under management, 4 GW in financial advice and owns a track record of 22 GW throughout the entire value chain of the projects.Read More
Last week, a group of 10-year-old kids came to Vector Cuatro, seeking enlightement and inspiration for their final project of renewable energy for school. It was a very fun and illuminating session, where several members of Vector Cuatro Spain explained the basics of Renewable Energy to 4 children from an international primary school in Spain.
In this VC Kids Talk, They learnt how a PV plant works, what thermographic camaras are used for, and they also built a handmade anemometer with recycled materials by themselves. At the end of the journey with Vector Cuatro Spain, all the employees introduced the company and explained the main functions of each department.
On June 18, our four Vector Cuatro kids presented their final project of renewable energy, demonstrating great talent and determination for building up an eco-friendly society.
Children are the world´s most valuable resource and the best hope for the future. Nothing could be more delighful than seeing the light in their eyes when explained what we can do to keep the earth energetic. We hope in the future we can organize more similar activities so we can spread out the great energy we have in Vector Cuatro!
EVENT ORGANIZED BY VECTOR CUATRO
On June 7, Vector Cuatro hosted the event ¨Present and Future of Renewable Energy in Spain », a seminar that took place in Madrid, in which the leading exponents in the renewable energy industry gathered to talk about the development, financing and project management in the country.
During this seminar, with several specialized presentations and round table discussions, the most current topics were discussed, such as the new regulatory and financial framework for project development, legal security, the impact of renewable energy on the electricity system, and trends in asset management.
José Donoso (President of the Spanish Photovoltaic Union, UNEF) and Juan Virgilio Márquez (President of the Spanish Wind Association, AEE) opened the event as representatives, talking about the current situation and perspectives of the wind and photovoltaic sectors in Spain. Both highlighted the need for a stable regulatory framework, in order to give investors confidence and allow progress towards the energy transition.
Joaquín Monfort (X-Elio), Luis Martínez (Hive Energy), Juan López (Circle Energy) and Carlos Relancio (Cox Energy) participated in the first panel of the seminar, under the title « The New Scenario for the Development of Renewable Projects », hosted by Hugo Álvarez (Head of Engineering Department at Vector Cuatro). The speakers pointed out that obtaining the connection point and the administrative process are the main difficulties in project development. Additionally, they discussed how the lack of « ready-to-build » projects has produced a certain price bubble andthe concern that the obligation of connecting projects awarded in auctions before 2020 may cause a shortage of supplies and increases in construction costs.
The second panel « Trends in Project Management », had. José Benito García (T-Solar), Jordi Francesch (Glennmont Partners), Juan Manuel Fernández (Sonnedix) and Domingo Vegas (Gransolar) as speakers. In this panel, hosted by Miguel Pérez (Head of Asset Management at Vector Cuatro), the importance of seeking a flexible management model that makes sense from an economic point of view was highlighted, stressing the added value of having long-term collaborations with companies specialized in asset management.
Manuel de Vicente-Tutor (Equipo Económico) gave a presentation on the challenge of environmental taxation and renewable energy. Following, Juan Manuel Rodríguez (Red Eléctrica de España) emphasized on the challenges for the safe integration of renewable energy into the Spanish electricity system.
To conclude the seminar, Raúl Rodríguez (Engie), Josep Montañés (Banc Sabadell), David Díez (Watson Farley Williams), Carlos Rey (Foresight),) and Álvaro Pérez de Lema (Saeta Yield) discussed the investment and financing of renewable projects from different perspectives. In this panel hosted by Beatriz Llorente (Global Head of Transaction Services in Vector Cuatro) and Rafael Echegoyen (Head of Legal Services in Vector Cuatro), different models of development in the market and the possibilities of financing were discussed in first place. Subsequently, the speech focused on commercial and legal aspects of power purchase agreements (PPA). At the end of the seminar, the investments approach and expectations of profitability according to the project type were also discussed.
Throughout the day, it became clear that even though the auctions in Spain were not especially attractive regarding its profitability for investors, they served as a catalyst for the reactivation of the renewable energy sector, and for the emergence of alternative development models that were so far nonexistent in the country. Moreover, the high number of attendees, both national and international, showed the great interest companies in different fields all have in the Spanish market.
Spain is undoubtedly one of the key markets for renewable energy in the coming years. Besides the 8.5 GW awarded in the auctions, in the past months, we can see a great activity of projects development without subsidies. In addition to the new developments, Spain, with 23 GW wind energy and 5 GW solar energy, is one of the countries with the highest installed capacity in Europe.
Mexico remains committed to renewable energies and announces the rules of its fourth long-term electric auction
On March 28, 2018, Mexico’s Energy Regulatory Commission (CRE) and National Center for Energy Control (CENACE) launched the bases of the fourth long-term renewable energy auction in Mexico.
This will be the first long-term auction administered by the Mexico’s Energy Regulatory Commission (CRE) as the previous three auctions were administered by CENACE. The publication of the final version of the auction rules will be published on May 30, once the questions and clarification period ends.
Submission of the prequalification application for sale offers will be done on Aug. 21st-22nd and the delivery of the economic proposals of the sale offers on Oct. 17th and 22nd. The results of the auction will be announced on Nov. 2nd. As in the previous auction, prequalification requests must be validated by an independent expert.
Vector Cuatro has actively participated in the three renewable energy auctions held so far as independent expert for over 200 projects and providing also commercial and financial advice (including the construction of financial models and sensitivity analysis), previous technical due diligence studies of project portfolios, and annexes for electricity coverage contracts. Specifically, Vector Cuatro has analyzed 10 GW of projects, of which 2.6 GW were awarded to its clients and has strategically advised and prepared financial models for the auctions for a total of more than 15 projects.
Vector Cuatro is present in Mexico since 2013, providing asset management services, construction supervision, and technical and financial advice. Its 88 MW portfolio under management includes some of the first utility-scale photovoltaic projects operating in the country, developed under the schemes of ‘Pequeño Productor ‘ and ‘Autoabasto’. In addition, to date Vector Cuatro has participated as Owner’s Engineer and Independent Engineer in the construction and commissioning of five projects for a total of 180 MW, of which three are already in operation. Also, and in relation to financial and transaction services, Vector Cuatro has participated in the acquisition and sale of photovoltaic projects under the schemes of ‘Pequeño Productor ‘ and ‘Autoabasto’, analyzing a total of more than 600MW, has advised on operations with Contracts Private Supply, has acted as an independent expert in courts and arbitration and has provided financial modeling services in many of this operations.Read More
Vector Cuatro enhances its presence in México and joins ASOLMEX (Asociación Mexicana de Energía Solar) and AMDEE (Asociación Mexicana de Energía Eólica), the largest associations of renewable energy in the Mexican market.
ASOLMEX and AMDEE were established with the aim of promoting the development of renewable energies in Mexico. As new member of ASOLMEX and AMDEE, Vector Cuatro expect to strengthen its presence in Mexico and Central America generating new business opportunities.
Vector Cuatro is present in Mexico since 2012, providing asset management services, Construction supervision and Financial and Technical advisory. Vector Cuatro’s 88 MW portfolio under management includes some of the first ‘utility-scale’ PV projects in operation in the country, developed under the ‘Pequeño Productor’ and ‘Autoabasto’ schemes.
Mexico has become one of the key markets for Vector Cuatro. There, the company has participated as Technical and Financial advisor in the three renewable energy auctions held so far, totaling 2.8 GW awarded for its clients.Read More
VC provides technical advice to more than 50% of the renewable power awarded in the third long-term auction in Mexico
The company worked as « Perito Independiente » in 50% of the MW allocated in the third long-term auction for the sale of large-scale clean energy in Mexico.
On November 22th, CENACE (National Center for Energy Control) and SENER (Secretariat of Energy) published the names of the winners in the third electricity tender for the contracting of energy from renewable sources in Mexico.
The objective is to allocate ‘Power Coverage Contracts’ for a 15 years period for Power and Electric Power, and 20 years period for Clean Energy Certificates.
A total of 2.73 GW of PPAs, 2.18 GW from solar and wind energy, have been awarded to an average price of 20.57 dollars per MWh, one of the lowest internationally reached. Thus, 16 projects from 9 different companies have been selected in a very crowded auction where 46 bidders initially submitted economic offers.
The clean energy acquired in this auction is equivalent to approximately 1.78% of the annual generation of electricity in Mexico; a significant contribution to achieve the goal of generating 35% of electric power in Mexico from clean sources by 2024.
Vector Cuatro has actively participated in the three renewable energy auctions held to date in Mexico, accumulating 2.8 GW of power awarded to its clients, providing both technical and financial services. In addition to technical advice, Vector Cuatro has 36 MW of solar photovoltaic technology under management in Mexico (Asset Management).
Vector Cuatro opened its Mexico office in 2013. From there, provides Engineering / Consulting, Financial and Asset Management services and controls its projects in Guatemala, Dominican Republic, Ecuador, Peru, Honduras, El Salvador and the rest of the region.Read More
VC Transaction Services team has worked as the sell-side transaction advisor on the selling process, since the initial structuring (June 2017) until the final closing (October 2017), of a 5 MW operational PV project located in Albacete (Spain).
Vector Cuatro has provided advisory services during the selling process of the project (5MW, Albacete) leading the transaction from the investors scouting, preparation of all transaction documents, coordination of the DD process with potential buyers, communication with the bank and negotiation and closing of the terms and conditions under the Sale and Purchase Agreement.
At the end of June, the Transaction Services department received the mandate to launch and lead the selling process that finally took place last October 11th for a final amount over 30 million Euros (Enterprise Value).
Since its foundation in 2007, Vector Cuatro has been a leading advisor in the renewable energy transactions (selling and acquisitions) as well as in the financing and refinancing of renewable energy projects worldwide, taking as a competitive advantage its knowledge of the main players in the sector and its experience in the management of renewable energy facilities.
Through its three service lines (Asset Management, Engineering and Transactions), Vector Cuatro has carried out more than 600 projects in Europe, America, Asia and Middle East. It has over 1.7 GW of power under management, 4 GW in financial advice and counts with a track record of 22 GW throughout the entire value chain of the projects. In September 2014, the company was incorporated into the Italian Falck Renewables Group (FKR.MI), a leading player in the European renewable energy industry and listed at the Milan Stock Exchange.Read More