In an excerpt from his exclusive interview with Mexico Energy & Sustainability Review 2016/17, Alion’s President and CEO Mark Kingsley reveals the reasons for innovative solar technology’s success in hostile environments and details plans of Alion’s expansion into the Mexican market.
Q: You provide innovative solutions for the installation of solar panels, with robots that can cut costs by up to 75%. How did you come to develop this technology?
A: Initially, the company’s business model was based on the manufacture of a new thin-film solar panel technology, an automated installation system, and cleaning robots focused on optimizing utility scale solar. This technology was interesting for us because it could potentially be produced through a continuous process that could be easily automated. Nonetheless, we realized that the economics of the thin file technology were not attractive enough to continue with the project given the rapid fall in panel prices a few years ago, but the idea of using automated continuous processes to lower the cost of solar energy installation and O&M remained an attractive option. Considering the high costs that initial investment represents in the development of a solar project, we decided to focus our efforts on that segment. Furthermore, the use of concrete instead of metal racks not only facilitates the automation of the installation process but it allows for the utilization of otherwise unproductive land, such as brownfields. In this sense, the company’s value proposition has benefitted greatly from the experience of Alion’s team members, as we have previously worked with robotics, large-scale manufacturing, and solar energy technology, and we have applied those principles to our products.
Q: Alion’s distinctive business strategy strives to integrate technology and innovation into existing practices within the energy sector. What is the role of technology and innovation in your unique value proposition, and how much emphasis is placed on R&D?
A: R&D is a continued focus within our company. Right now, we have a classic fixed-tilt system with cleaning robots, and by December 2016 we plan to introduce an advanced tracker. The key strategy here in Mexico is investment in a tracker, which also includes automated maintenance, and in this way, the optimum amount of power can be generated by the system. Additionally, we are developing the next capabilities of the SPOT system, such as automated panel inspection and imaging.
Q: Upon entry into the Mexican market, what are the main challenges you foresee, and how do you expect to generate benefits from your operations?
A: I believe the main challenge lies in partner selection, and in any economy or industry, strategic partnerships can mean the difference between success and failure. We place a significant amount of emphasis on strong relationships, dynamics, and dialogues with our partner companies. The benefits that we see lies in the fact that Mexico is an underserved population, and based on the demographics, the country is underpowered. Moreover, solar irradiation levels are strong, and we believe that we have developed the most effective solution for this type of environment. We believe that 2016 will be a transition year, whereas 2017 has the potential to become a year characterized by breakout growth in larger solar projects.
Q: With the Energy Reform bringing new private players to Mexico, what are the distinctive factors that make Alion’s offering more attractive than that of its competitors?
A: When generating FDI, the main concerns around executing an energy project include deadlines and budgets, meaning that we immediately become more valuable by eliminating the geotechnical risk. Many significant problems in this industry are caused by geotechnical issues, such as rejection of posts, and by using our technology, the risk is considerably reduced. Importantly, we are also using local materials, which not only stimulates the local economy but also mitigates impact cause by exchange rates. Our concrete is sourced from Mexico and so comes at a relatively low cost, and the metal we use is designed with simple automotive stamping. This is currently made by a large automotive supplier in China, and in Mexico there is an extremely well-established manufacturing sector so we can easily add production here as the market grows. A third factor relates to the quality of the installation as we streamline the entire process meaning less room for error. Ensuring energy generation also plays a significant role, as large-scale solar projects require a considerable investment. A major part of any energy project is finance and currency risk, and our ability to localize projects provides a tangible benefit.
Q: Given that Alion has previously developed solutions for the solar industry, will this be the area in which your focus will remain, or are there plans to diversify your services?
A: Our main area of expansion mainly involves our evolving into the area of installing solar energy on brownfields, rocky sites and areas with heavy soiling. For the foreseeable future, or at least for the next five years, we will stick to providing solutions to the solar industry. Our system is naturally amenable to adding storage, meaning that this may evolve. However, for the time being, the focus is on reliable, renewable, clean solar energy, on the appropriate land, and at a price point that allows the resource to compete with any other energy source.
Exclusive interview with Mark Kingsley, President and CEO of Alion Energy.
This is an exclusive preview of the 2016/17 edition of Mexico Energy & Sustainability Review. If you want to get all the information, plus other relevant insights regarding this industry, get your copy of Mexico Energy & Sustainability Review 2015/16.