With Vigor Coral Gablesbased Mastec Discovers Its Great Opportunity In Energy
By Zachary S. Fagenson
When MasTec CEO José R. Mas took the reins in 2007, he declared energy the next great opportunity, setting a goal for the sector to generate half the company’s revenue.
The Coral Gables-based firm today has a hand in several facets of that industry, including renewable energy and oil and gas, and is one of the largest wind farm builders in the world.
Four years later it’s stepped away from being a sole telecommunications contractor, nearly hitting its goal of making energy 50% of annual revenue, says Vice President of Business Development Ben Gilbert.
In 2010, MasTec’s revenue was $2.3 billion, 42% more than the $1.6 billion it took in 2009, according to a press release. Additionally, net income was up 28% from $70.7 million in 2009 to $90.4 million.
Though about half that came from energy, how much came from building modern-day windmills is unclear.
"We don’t break them out by category, we only report a whole number," Mr. Gilbert said of how much wind projects specifically contribute to revenues. "It’s an important piece."
Through a subsidiary, the wind farm operation has eight projects in Texas, Iowa, North Dakota and Montana, according to the MasTec website, though none in Florida.
The state "has a lot of wind," Mr. Gilbert said, but not the right kind. Central states like Texas and Iowa see a steady wind flow throughout the year, but Florida’s spotty gusts would drastically reduce the efficiency of building turbines
Florida Power & Light recently tried to put turbines on a beach in St. Lucie County, Mr. Gilbert added, and ran into hurdles with the community over concerns for shore preservation.
That, coupled with high real estate prices for the best wind farm locations, which are those closest to the ocean, make wind power’s future in Florida shaky at best.
MasTec’s entry into the sector came not organically but through acquisition.
After Mr. Mas took over the company and charted a new course, it acquired commercial contractor Wanzek, which has offices in Houston and Fargo, ND, in 2008 for $200 million.
"About half Wanzek’s business at the time was wind farm construction work," Mr. Gilbert said.
The company’s clients, according to its website, include Babcock & Brown, Duke Energy, Edison Mission Energy, Florida Power and Light (FPL), Iberdrola, Montana-Dakota Utilities (MDU) and MidAmerican Energy.
It’s also responsible for most of the research and development in energy technology.
"We’re exclusively a construction company," Mr. Gilbert said.
While MasTec will work with clients even before a contract is signed to figure out the most cost- and energy-efficient strategies to build a wind farm, "research and development is mostly done by our clients, who are always out there looking for better technology."
In prospecting projects, MasTec looks at the size rather than an average cost range.
Cost "all depends on the terrain, technology and location," Mr. Gilbert said.
The ideal size is a farm that produces 75 megawatts, enough to power 15,000 to 20,000 homes annually.
Those "are the most economical to build," he added. "Anything less gets a little bit more expensive."
Despite the growth that MasTec hopes for from the wind business in coming years, it’s not operating in a vacuum.
"The low natural gas prices have kept the price of energy suppressed over the last three years, and that has made the difference between the cost of wind versus the cost of a traditional gas plant [being] not as close as its use to be," Mr. Gilbert pointed out.
Though wind remains "a good source of clean renewable energy," he added, it will always be one in a mix of energy sources compared by price and environmental repercussions.
Read the entire issue of Miami Today online. Subscribe to e-Miami Today.