Integrated EPC for Mexico’s electricity sectorNovember 1, 2022
Rodrigo Hernández González, managing director of HHGM, talks to The Energy Year about developments in the electrical system and sector in Mexico and the company’s activities in the country’s power industry. HHGM is dedicated to the construction of electrical infrastructure and the supply of electrical equipment.
What is being done to boost electrical transmission and distribution in Mexico?
Both transmission and distribution need to be improved in Mexico, for both high voltage and medium voltage. PRODESEN [National Electricity System Development Program] projects the system’s needs based on what we generate and what we will generate, considering the growing demand we will have in the coming years. It’s a pretty decent roadmap that projects the required developments needed to enhance the national grid with respect to generation, transmission and distribution.
While demand is increasing, Cenace [the National Centre of Energy Control] has taken no interconnection requests and the process is slow. The business plan of the CFE [Federal Electricity Commission] designates a decent percentage of their budget to boosting their transmission and distribution system between 2020 and 2025.
They are also investing in loss-reduction systems, especially in the medium-voltage system, as they are modernising infrastructure and fighting energy theft, which is recurrent. They are also repowering the 230-kV and 400-kV lines.
These investments are going to help the CFE and the whole country, and it’s going to relieve a lot of pressure on the systems so people can reconnect. We have seen many people who have had applications rejected and have had to make their own plants in other places. Moreover, the investments made in generation will also increase the need for new transmission and distribution infrastructure.
How has HHGM evolved and specialised in Mexico’s power industry?
HHGM is a fully Mexican company dedicated to the construction of electrical infrastructure and the supply of electrical material. We began in 2011, a time when the status quo in the electrical sector was on the verge of change. At the time, the market was monopolised by the CFE, which meant there was no democratisation of prices or competition.
However, when we established HHGM, the market had just opened up, which gave way to a liberalisation of the sector. The market was still very immature at the time, and we decided to make a strategy of price democratisation. That’s how we made our first breakthrough: our online unit-price quotation system. This electrical equipment quotation system has more than 2,300 products with their corresponding costs. It works as a marketplace, but nothing is sold. Rather, it gives estimated prices and compares different equipment.
In 2016, we started working on more hands-on projects. From there we started participating in tenders for projects that involved the installation of medium-voltage meters. We installed 30,000 meters on 72 kilometres of medium-voltage line, 286 medium-voltage transformers and 22 reclosers. We collaborated on this project with Acciona.
This project allowed us to specialise in medium-voltage power distribution, metering and communication. We started to focus on qualified supply to connect customers so that they could have their own meters. When the market opened up, there was a need to unlock all the customers in Mexico in order to sell power to them. We unlocked them by changing and upgrading their metering system to comply with the new market regulations.
What capabilities does HHGM have, and what is your competitive edge in the market?
Today we are a full-fledged EPC company that can do specialised and integrated projects. We now specialise in medium- and high-voltage infrastructure and metering and communication services. As an EPC player, we can carry out the executive design, development and execution of projects, supply equipment, and construct the projects. We also offer consulting services, and we help our clients address any procedures with Cenace, the CFE or the CRE.
We are unique in a sense, as we started working to develop a very green market. Over time we have managed to consolidate a firm position in the market and attract key clients.
Our competitive advantage is that we have the capacity to manage projects in a holistic way – from A to Z. We have highly skilled teams in technical and regulatory matters. We not only know the theory and laws, but we also have our boots on the ground. In other words, we know how to connect a substation or a meter. Our technical capabilities have led us to where we are today, and this, combined with our regulatory knowledge, has given us an edge.
Tell us about the 150-mini-park distributed generation project you are working on.
We are now working a lot in the area of distributed generation. This model allows a company to have a solar energy generation park operating in six to eight months and already begin selling energy to the market. We are now building 150 mini solar parks that have capacities of less than 0.5 MW each, as these do not require permitting. We are building these for the company Sujio Generación, which falls under the Volta Capital umbrella. These mini parks are located in areas where connecting them to the grid is easy. We are planning to start the first of these projects in Q4 2021. It’s our first macro project and has a value of almost USD 75 million. We intend to build 30-35 of these parks every 10 months, and finish them all in 2.4 years. There is no other company in Mexico that has that capacity.
We are a leading company in the development of these types of projects and also in the metering and communication parts of these projects. We are looking for commercial alliances with contractors in addition to the ones we already have to meet a commitment of this size. We have 75-125 locations to build these projects, and the majority of the land is already bought. In the first eight months, we need to have the first 25 plants ready.
This mega-project will follow several stages. First the civil work must be done to ensure that we do the correct soil mechanics depending on the type of land. In some cases we will be able to sink the poles into the soil, and in others we will have to make concrete footing. The second stage consists of the installation of the PV panels, and the third stage regards the interconnection. We plan to construct these different projects on the same corridor that goes from Mexico City to Aguascalientes.
What other projects are you working on, and what goals do you have for the near future?
We are involved in other renewable projects as well. For example, we have been involved in an 8-MW power generation project since November 2021. We are also building a 13-MW substation circuit in León. Furthermore, we just finished a 1.2-MW biomass plant. We are also going to build 20 biomass generation projects with a combined total capacity of 10 MW.
In the next 18 months, we have two objectives. We want to have 50 MW of distributed generation under development or installed – perhaps 25 MW installed and another 25 MW under development. It is part of our growth plan. Then, we would also like to be the leading company in communication and metering in Mexico. We have the capacity to connect 45 charging centres in six months. Thus, we are determined to keep on consolidating our position.