French energy company Engie and Japanese company Tokyo Gas have agreed to form a 50/50 joint venture (JV) to develop renewable energy projects in Mexico.
The joint venture is claimed to solidify Engie and Tokyo Gas partnership which dates back to 1983. The new joint venture Heolios EnTG will develop, finance, construct, own, operate and maintain six renewable energy projects in Mexico.
Out of the six projects, which will a total capacity of 898.7MW, four are solar photovoltaic projects and the remaining two are onshore wind projects.
The six projects are capable of powering nearly 1.3 million Mexican households annually with renewable energy. The projects are located in Abril, Villa Ahumada, Tres Mesas 3, Tres Mesas 4, Trompezon and Calpulalpan.
Engie and Tokyo Gas received permission to form the joint venture from Mexico’s federal competition commission (COFECE) last month. The renewable energy projects are supported by 15-year power purchase agreements (PPAs) through the country’s power auctions.
ENGIE Latin America business unit in charge and executive vice president Pierre Chareyre said: “We are delighted to further consolidate the relationship of mutual trust between our teams and those of Tokyo Gas with the creation of Heolios EnTG. This joint-venture will combine our complementary areas of expertise and will enable ENGIE to continue to grow in a key area, the development of renewables in Mexico with Tokyo Gas.
One of the power plants, Tres Mesas 3, is a wind farm with 50MW capacity and its commercial operations began last month, ahead of schedule. Other five projects are presently in various stages of construction and are expected to enter into commercial operations, either in this year or the next.
Mexico is claimed to possess huge solar and wind resources and the government passed an energy law in 2015 to transition the country to a low-carbon system, with 35% of energy to be generated from renewable resources by 2024.
By forming the JV Heolios EnTG, Engie and Tokyo Gas aim to support the country’s clean energy ambitions.
Chareyre said:“This move is fully aligned with ENGIE’s strategic roadmap presented during our Capital Market Day on February 28th, for which ENGIE plans to add 9GW of renewables to its generation portfolio by 2021.
“The partnership scheme implemented with Tokyo Gas also highlights ENGIE’s commitment to dynamic capital allocation through sell-downs and new investments. Heolios EnTG will also enable ENGIE to actively support Mexico in achieving its national renewable targets and to decarbonize its energy sources.”