Playing the long game: UK firm RES looking to expand renewable asset management business in LatAm

British multinational RES has a 6GW portfolio of wind and solar power projects that it operates and maintains in Latin America. 

Besides the potential growth for services in this area, the company intends to invest in the asset management business, global service CEO Juan Gutierrez tells BNamericas.

In this interview, he also talks about the outlook for Mexico, Chile and Brazil.

BNamericas: What does your portfolio consist of currently?

Gutierrez: We have 43GW globally between both asset management and O&M [operation and maintenance]. Half of it is about solar and BES [battery energy storage] and half is wind. We provide preventive, corrective, minor repairs, major correctives, blade repairs, inspections, the full scope.

In Latin America, we have about 6GW of maintained fleet, distributed between Mexico, Chile and Brazil. Mexico and Chile are actually bigger than Brazil, which surprised me when I started in this position. Brazil has a large installed base, and we have only 1GW there, so, for me, it’s the best place to grow. 

BNamericas: What kind of demands do you see in the pipeline in Latin America? 

Gutierrez: Our target is basically the wind farms that are getting out of warranty. Normally what we see is customers getting the turbines with a three- to five-year warranty with the O&M [provider]. After that period, they will look for options. So this is where we come in, offering full scope agreements.

We’ve developed a catalog, all the documentation, safety and technical procedures to be able to serve them. It's mostly the legacy fleet that we’re targeting, with preventive, corrective work, repairs. We see a lot of inspections that are needed, like blade inspections.

It's a pretty attractive business, as I notice a lack of interest from other technology partners in the region. Our situation is the opposite. We want to be in the region. 

BNamericas: Do you have plans to install new service units in Brazil or elsewhere in Latin America?

Gutierrez: We have a hub in Chile and another hub in São Paulo. Like I said, our current business in Brazil is very small compared to the market potential. So we’re definitely assessing how we can grow in Brazil. What type of inventory do we need? Warehouses? A repair network that we can partner with some people to do local repairs? 

We're looking at Mexico, Chile, Brazil as a region and then define which is the right place to put the spare parts and the specialized teams. Brazil, of course, is very special because it's a very large market.

BNamericas: The wind sector isn't going through its best moment in Brazil. Solar seems to be faring better. What’s your view on that?

Gutierrez: We do see, let's say, a higher growth rate for solar than for wind, and I think that wind will continue to grow at a slower pace.

For us, the target is the installed base. The opportunity is huge, considering all the gigawatts that have been installed in the last 10 years, that’s where we're focusing. And then we'll follow the trends on the solar side. In Brazil, our 1GW is 50-50 solar and wind.

BNamericas: What about the other countries in which you operate in Latin America, like Mexico, Chile? How do you see the prospects for the renewable energy sector there? 

Gutierrez: It depends a lot on the government's support. I think that’s the tricky point. In Chile, we don't see many new wind, solar projects. What we do see is a lot of interest in battery projects, because there's a lot of curtailment in the projects.

Adding BESS would actually help the overall finances of the projects. Instead of being curtailed, they would be able to store in the battery and then sell. So that’s what we see in Chile specifically: not too many new additions, mostly batteries. 

In Mexico, I think there's a lot of hope now with the new administration, which appears to be more supportive. Everybody's waiting to see if there will be new growth in the renewable market. But, again, for us, it's not too much about the growth of new renewable energy assets; it's about maintaining and optimizing the existing assets, and that’s pretty huge in all these countries. 

There’s also a fourth pillar of RES, which is digital solutions. I'm actually very close to them on the board, and they're working on optimizing the operation of the assets, with monitoring and inspection technologies. 

BNamericas: Do you have any figures on future investments that you plan to make in Latin America?  

Gutierrez: We'll basically capture the future contracts. We want to create a backlog. And then, based on that, we'll be investing in the people, training them. 

I believe we’ll double the size of our business in LatAm in the next three to five years. 

We're also looking at expanding the asset management business in LatAm. Right now, we only have operations and maintenance, but we’re very good at asset management in places like Australia, France, the United Kingdom.

BNamericas: What's the difference between asset O&M and asset management? 

Gutierrez: In operations and maintenance, we have technicians that go inside the plants and perform preventive, corrective work and repairs. On the asset management side, we have basically three offerings. 

One is the technical asset management, mostly focused on private equity funds that don't have a technical team. We manage the asset operationally, which means that we can actually outsource an O&M solution either from us or from a third party.  

We also carry out financial asset management where we’ll basically build and report the whole P&L [profit and loss projection] of the project. So the bank or the investor would basically know exactly how the asset is performing, what the risk opportunities are. And then the commercial management, where we’ll manage all the contractors. 

BNamericas: Do you have any concerns from a service provider point of view regarding climate change and extreme weather events that seem to be taking place more often, not only in Brazil but other countries in the region, considering how solar and wind parks could be affected by these phenomena?  

Gutierrez: We’ve seen some issues in APAC [Asia-Pacific] and the US, with hurricanes and tornadoes that have destroyed a lot of the solar plants. The probability of that happening, let's say, is low, but I think it has to be considered when you make the investment.

For me, the biggest challenge is how we find the people, train and retain them. Because if you look at renewables, it's growing significantly.