Hardly five years after its incorporation, w2pS – which has sold in Spain more LVRT compensation systems for wind and photovoltaic energy than any other independent manufacturer – today belongs to Hudson Clean Energy Partners LP, a private investment fund with offices in New York, London and Beijing, dedicated exclusively to investment in renewable energies, alternative fuels, energy efficiency and storage. Just before Christmas, Energías Renovables, REM's sister publication, interviewed the general manager of w2pS, David Tuohy.
What is Wind To Power System?
Quite a young company, we took off in 2008, working with the wind energy sector and, specifically, with the quality of the energy in the wind energy sector. We were the first to develop solutions for LVRT. There is an Operating Procedure, OP 12.3, which requires producers of wind energy to provide a solution to compensate LVRTs (drops in voltage that generated the instantaneous blackout of the wind farm); the turbine generators disconnected, the wind farm blacked out and, suddenly, ceased to generate hundreds of megawatts simultaneously. Obviously, this also brought consequences to the turbine generator itself. That is, we were faced with two problems: the quality of the energy and the proper operation of the wind farm. This required the introduction of solutions to avoid producing those drops in voltage. And that is where we have been one of the pioneers and one of the players selling the most solutions to correct that problem. We have the highest market share in the Spanish market with regard to applied external solutions which we develop. That was the starting basis for our company. And with that goal we began to work in 2007, in 2008. We are speaking in this regard of energy quality.
Well, that was the launch platform for w2pS, but what is true is that such market already appears peaked in Spain. So, what is Wind To Power System dedicated now?
On the one hand, we have diversified our business geographically. Hence, we have gone to the international markets where this requirement also existed, with regard to LVRTs, such as Germany or China. And, on the other hand, we have moved to other applications more related to energy production, such as solar panels. And right now, the greatest source of financing, our greatest share of turnover comes from that package, the solar package. We are also working on energy storage, on projects that include battery and super-condensers, which in actuality once again is related to the quality of energy associated with renewable energies. We are also working on other applications that may be needed on an international scape. These applications may come from the hand of new regulations related to the quality of energy in the sphere of renewable energies.
How many people are working now at w2pS?
Where are your factories?
We don’t have factories. The model has always been manufacturing subcontracted out to approved workshops. We have collaborator workshops that are approved by us and which manufacture our equipment. These workshops are quite familiar with our technology. We have two, fundamentally. One is in Seville and the other one is in Getafe, which is where our central offices are located. And we have worked with them from the onset, since we began to operate in the market. w2ps does not subcontract out its manufacturing to fifty companies. We only have two. Two workshops, I insist, which … more than suppliers … for us are authentic collaborators. To the extent that, in some cases, they let us install our testing banks for other products within their own structures. That is, in fact we are speaking of something more than what would be a mere collaboration involving subcontracting manufacturing.
That is, in fact what w2pS does is develop product.
In effect, we develop product: the engineering, design, quality control, manufacturing control. We manufacture on the outside and later control the equipment upon exiting the manufacturing line, to check the quality of that equipment before it leaves the factory, and we always perform supervision of the installation.
With whom does w2pS compete?
Depending on the product…we have more or less competitors. With regard to what was our initial activity, solutions for LVRTs, our competitors could be counted on one hand. This, for us, evidently has been an advantage. But, apart from those solutions, we have a very specific product: a laboratory that serves to produce LVRTs. Because not only do we provide solutions to compensate LVRTs, but we are also capable of generating them. We take our equipment to the field, we produce the LVRTs and demonstrate that our solutions are capable of responding to those LVRTs. And, referring to this, we have been the only ones among all manufacturers. Yes, that has been a key element in the sale of our solution, because we went out into the field, to the customer, to the major names in electricity generation in Spain, and we would demonstrate to them in situ that our equipment was capable of compensating the LVRTs. Consequently, in the mobile laboratory to generate LVRTs, well, practically, we are without competition. That has been the key for entering the Chinese market, for getting close to the major State laboratories, which are the ones that later model the solutions to introduce in the wind turbine generators. And in that area there is practically no more than one German competitor.
And in the photovoltaic solar area?
Moreover, if we move to solar, which is what at the present time is providing us with the greatest turnover, the competitors would be … what do I know … 150,000. This is a completely different matter. It is something far more industrial, of … let’s say … traditional industry. Competitors? Well, on a global scale, the brands everybody knows: SMA, Xantrex, Siemens, Schneider, Ingeteam in Spain, Greenpower, Power-One, etc.
Fine, and what does w2pS have that the others don’t have?
We have a good product. But it’s true that many other companies are also capable of manufacturing good solar panels. In fact, that is not where there is a marked difference. The customer may feel that one brand is better than another and there may be certain differences in price. However, from the standpoint of the solution, actually we are talking about the same thing. You ask me what we have, what differentiates us. Fine, we, as a consequence of our experience, how we are, how we were born, using the expression we come from where we come – energy quality and not the manufacture of panels – well, let me tell you that we can adapt much better than others to the regulatory changes being imposed at this time. And we are seeing this especially in country such as in the Caribbean, Puerto Rico, Dominican Republic, or in South Africa, where a series of grid codes, regulations for connection to the grid (the most demanding that exists worldwide at this time) are being developed.
The most demanding?
Yes, because in those countries they wish to integrate renewables. And, of course, we are talking about islands with connection difficulties, or nations such as South Africa, which has a very weak grid, a grid that therefore requires special care at the time of connecting renewable energy facilities to the grid. Yes, those governments are imposing … some call it obstacles … but, in fact, what they are demanding of you is that the energy you produce must be of a specified quality. Hence, what I mean is that we are in a position of demonstrating that we can offer solutions adapted to those new regulations. That’s where the difference lies. That’s where the key is found. Look, the major operators, the companies that build major facilities, in and outside of Spain, Isolux, ABB or Gestamp, those players, which are the potential customers we have at this time, have to optimize costs. In order to do so, they need to have available the solutions which we can give them, solutions adapted to those new regulations. I insist: that is where the difference lies, where the key is found.
Okay, we’re talking about South Africa, the Caribbean…And Spain? Where does Spain remain in this world map of Wind To Power System?
Frankly, Spain has lost a great deal of weight for us. The latest projects we are doing here are LVRT compensation projects for solar facilities. That is, the same thing we apply in the wind energy sector we have been applying afterwards in the solar sector. And we have had great success: we are talking about five hundred photovoltaic megawatts compensated with our equipment. There have been manufacturers who gave solutions to their customers (Ingeteam, SMA)…but, as external solutions, not directly related, ours has been the one which has given the most. What is the problem now? Well, after that, there are no new facilities…so there are no possibilities.
In the short term, then, what are the most important markets for w2pS?
Basically, China and Latin America. The joint venture we have signed with the Chinese company Wolong Electric Group, for manufacture and marketing of solar panels for the Chinese market, is very important. That would be one of the markets. The other one in which we are most present from here, from headquarters in Madrid, in the area of project development, is Latin America: Panama, Puerto Rico, Mexico, Chile, Ecuador and Peru are the countries in which there is major development at this time.
Brazil is important in the medium term, more than the short term. The major development there we envision for 2014, 2015. Brazil is at this time in the phase in which Chile and Mexico were experiencing a year, year-and-a-half ago. The nations which right now have the most possibilities, because it is there where projects are being development, are those I have mentioned. Let me go back to what I pointed out before: we feed from the hand of the major players from here, because they are the ones who truly development power. We are at the end of the chain because we are solution suppliers. And it is there where they are working.
Forgive me, but let me go back to Spain. We already know that wind energy is facing a slowdown and photovoltaic energy is frozen…but, is there a way out of this?
Let’s see: it entails being able to put together a project management system that is adequate and at the level of what the market is proposing at this time. The major facilities being planned now for photovoltaic energy are based on grid parity. And it is inevitable that if the price of energy goes up and the costs of photovoltaic energy go down there comes a time in which you no longer need a premium. What you need is a push at the political level in order to develop projects. That is, what you need is that there must be a stable regulation that supports the development of more renewable energies. And that is the problem, that there is no regulatory framework. What is needed is a framework that does not give the possibility of thinking about retroactivity in the future. Because right now people can thin “if I invest here and within five years they change the market conditions on me, as they have done…what security do I have here, as a result? And, besides, the banks…what bank is going to finance this for me?” I believe the tariff system has ceased to be the valid system because the project needs to be profitable in itself, and we are in a position of being able to guarantee this. Look, the Spanish market is for us our home market. We’re not doing business here right now because there are no possibilities of doing business. However, if those possibilities appear, we’ll be here as number one.