VIEW FROM THE TOP
ENGINEERING A SUCCESSFUL AUCTION-BASED BUSINESS ADRIÁN KATZEW Director General of Zuma Energía 48
Q: What are the main challenges in obtaining awarded
that we are defining unprecedented financial structures —
auction projects and how did Zuma Energía overcome
meeting the requirements of annual energy volume, CELs,
these?
alternate markets that used to honor those obligations —
A: Auction participation implies different stages in business
and studying their intrinsic risk in relation to our business,
procurement, mainly development, participation and
among other things.
execution. These different stages present a particular set of challenges, while each company’s configuration in the
Zuma Energía was designed as a project-oriented
market heavily influences the peculiarity of these trials.
platform. Our mission is to present our company as a
In Zuma Energía’s case, we are an independent Mexican
reliable partner, an ally for developers, offering our full
energy producer. As such, our equity capital is raised and
structuring capacity and capital base to turn projects into
committed but we depend on project financing to launch
success stories. Our reliability rests on our vast expertise
projects. In comparison, large utility-scale companies can
in structuring project financing, managing procurements
self-finance their projects, creating a different level of
and construction, operating assets and winning long-term
complexity. Understanding the typology and segmentation
auctions. We go beyond what is commonly known as
of the different players involved in the auctions and their
project development, which is usually limited to terrain
distinct advantages and disadvantages is an important
transactions, measurements and obtaining permits and
factor in talks with the authorities or when exploring
licenses.
business opportunities in the sector, even for suppliers spread across the value chain. In turn, this shapes the
Q: Will you continue participating in the auctions or seek
auctions’ regulatory framework. Even among independent
alternative ways of participating in the renewable markets?
power producers, there are those like Zuma Energía that
A: We are primarily focused on the auctions. Zuma Energía
take a long-term perspective to solidify their market
invested a considerable amount of time in collaborating
presence and cumulate assets, whereas others take a
with the authorities and participating in the public and
project-by-project approach. When looking at Zuma
private-sector dialogue and designing efficient contracting
Energías’ preparation for the auctions, we can boast a
schemes, providing the lowest generation costs to secure
particularly diligent, multidisciplinary effort in mapping the
more contracts. We noticed some players strategically
competitive context.
believe the new commercialization options available can offer more cost-effective opportunities. These will mature
The auctions in Mexico were conceived as national,
over time and we will see greater certainty and credibility
multi-technological, multi-product bids. To win, there are
cemented around published prices; some projects are
serious intricacies in discerning who your competition is.
starting to sell CELs to private players, for example. Certain
Identifying your desired placement in the offer structure
elements still require analysis and implementation for
and assessing your acceptable risk according to price levels
commercialization to truly work, such as financial rights
is also imperative. So far, two strategies have dominated
of transmission. Buyers are also experiencing a learning
the auction process: either you equate your offer price
curve. Zuma Energía is not closed to future opportunities
to your cost structure and see if it sticks or you take a
but auctions remain the primary source of the agility that
deeper look at the market, the competitive context and
ensures our continuous growth.
converge accordingly with the value chain to identify the prices that need to be reached. In contrast, the execution
Q: How would you evaluate the performance of and
phase is highly specialized, working with banks and
interaction with the energy regulators and authorities?
contractors to close pending contracts and begin project
A: First, we need to acknowledge the effort put in by the
construction. This stage is particularly fulfilling in the sense
authorities to implement an in-depth transformation like
