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The clean energy transition is crucially important for Mexico’s numerous citizens and industrial activities to foster sustainable development, avert severe consequences of drastic climate change and cut costs toward a higher degree of competitiveness. Nevertheless, clashing governmental visions have disrupted some of the much-needed certainty to develop longterm energy projects needed to reach these goals, which has forced the industry to adapt to a new reality. Though an uncertain environment remains, Mexico’s energy sector is marked by a diversity and vibrancy that creates opportunities even though the previous models focused on utility-scale renewable development no longer excel. Distributed generation assets have gradually gained their place in the market. Meanwhile, driven by an expanding network, natural gas increases its reach. Domestic production could even replace the record-amount of natural gas import toward the future. Aligned with the government’s goals of safety and reliability, Mexico’s transmission and distribution grid requires a massive overhaul, however. Budding technologies like battery storage and green hydrogen offer new avenues to speed up the energy transition and the social aspect of energy projects remains as important as ever. Mexico Energy Forum 2021 Echo gathered the key actors that shape Mexico’s energy environment and provided a platform to discuss the opportunities and challenges in the country. In doing so, the energy sector’s leaders emphasized the potential for continuous growth within the energy industry.
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C o nfe r ence I m p act
170
companies
488
conference participants
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Breakdown by job title
40% Senior Manager/ Manager 24% VP / Director 11% CEO/CFO/CCO/DG/ Country Manager 10% President / Partner 9% Engineer/Analyst 6% Energy Manager/ Energy Director
19% Exceeds expectations 36% Greatly exceeds expectations 45% Meets expectation
45
speakers
9
sponsors
4,973
visitors to the conference website
Conference social media impact
Pre-conference social media impact
17,080 direct impressions during MEF Echo 0.032% click through rate during MEF Echo 3.99% conference engagement rate
46,336 direct pre-conference LinkedIn impressions 0.030% pre-conference click through rate 4.84% pre-conference engagement rate
Mexico’s leading B2B conference organizer introduces the world’s leading event networking platform. Delivering intent-based matchmaking powered by Artificial Intelligence that connects the right people. Network, no matter where you are.
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198
1,503
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4,248
358 Recruitment 1,002 Investment 546 Networking
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C o m p an y Attendance • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
27 Pivot 3M Electrical Markets AB Energy Mexico ABB POWER GRIDS MEXICO S.A. DE C.V. ACCIONA ENERGIA AES México Agencia de Energía del Estado de Puebla AILA Energy Aisin Mexicana, S.A. de C.V. Alleans Renewables Almexa AMDEE (Asociación Meicana de Energía Eólica) AME Ammper Argus Media Arteli Artelia Cal y Mayor Asociación Mexicana de Gas Natural, A.C. ASOLMEX Baker McKenzie BioPappel BOCAR GROUP Bombas Rodase BP Energia Mexico Brella Ltd BUAP Burgess Norton Cacheaux, Cavazos & Newton Capwatt Mexico CENACE CENAGAS Centauro Energia CFE CALIFICADOS Chint Mexico CIRCUTOR México, Centro América y Caribe Coca-Cola FEMSA Comexhidro Comisón Reguladora de Energía Corporativo AGA GAMI Costco CRE Cuprum DeAcero Deloitte DGPIE DNV GL Dominion México Edison Enegy El Puerto de Liverpool Element Fleet ENEL Green Power Mexico Energía Real Energia renovable Conmar, SA de CV Energy Agency of the State of Puebla Energy to Market ENESTAS
• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
Engie México Enicon Energy and Infrastructure Co. Enix Enphase Energy Exterran Fermaca FIH Mexico Industry Finergreen Finsolar Forefront Power Fresh Energy Consulting FRV FSE Suministradora Fenix Gallo Abogados, S.C. GE Gas Power GED Generac GNU Gas Natural Gonzalez Calvillo GreenPowerMonitor a DNV company Gruma Grupo ABSA Grupo Bimbo GRUPO CUPRUM Grupo Desarrollo Infrastructura Grupo Mexico Infraestructura Hartree Consulting Haynes Boone, LLP Heineken México Hitachi ABB Power Grids HOLLAND & KNIGHT LLP Hotels & Resort Bahía Principe: Riviera Maya Iberdrola México IEnova IGSA indra INERCO México International SOS Invenergy Jones Day KEMET de Mexico SA de CV Kiewit Kilpatrick Group KPMG Cardenas Dosal SC Latin American Rainmakers LONGi Solar MANDO CORPORATION MEXICO / PURCHASING Marcos & Asociados, consultoría energética MERM/EGP Mexico Business Mexico Energy Review Mexico’s National Energy Control Center MexicoView Ministry of Economy and Labor of Nuevo Leon MINSAIT Mitsui & Co. Power Americas Naturgy
• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
Nemak Nexus Energía Mx Nordex Northland Power Energía OCA Global Oleum ON Energy Storage ORBIA ORGANIZACION SORIANA Panasonic de México PFIFFNER Instrument Transformers Ltd. Picarro, Inc. - Energy POWER ELECTRONICS PPG INDUSTRIES PQ Barcon Prana Power Promotora Energetica e3 SA de CV PROTERRA CAPITAL Real Alloy Mexico RER Energy Group Rolls Royce Power Systems Rosatom Latin America ROSEN Group Mexico Royal Eagle Capital Partners Saint Gobain Santamarina y Steta Schweitzer Engineering Laboratories Seadust Cancun Family Resort SECRETARÍA DE DESARROLLO ECONÓMICO SUSTENTABLE Secretaría de Economía y Trabajo de Nuevo León Secretaría de Energía Seisa Energia SEL Servicios Tecnicos Consutec SHAB INGENIERIA Siemens Energy SJSU SKF DE MEXICO SMP Four Seasons de Mexico Smurfit Kappa State Government of Nuevo Leon Surtigas S.A E.S.P Taghleef TC ENERGIA Tecnimont México S.A. de C.V. Ternium Terra Energy The Brattle Group Trafigura Tuto Power TUV Rheinland Mexico UL Vector Renewables Vera & Asociados Vernell Industries S.A. de C.V. Von Wobeser y Sierra Wärtsilä
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P r o g r am D ay 1
SEPTEMBER 1 ST, 2021 09:00
NUEVO LEON’S ENERGY SECTOR DEVELOPMENT
Speaker: Jorge Gorozpe, Energy Director at the Ministry of Economy and Labor of Nuevo León 09:30
SONORA’S ENERGY SECTOR DEVELOPMENT
Speaker: Dr. Rafael Cabanillas, Energy Representative at Transition team of Next Sonora’s Government
09:15
LEGAL CERTAINTY IN MEXICO’S ENERGY REGULATION ENVIRONMENT
Moderator: Yolanda Villegas, Founder & Partner at Oleum Servicios Panelists: Edmond Grieger, Partner and Head of Energy & Environmental Practive at Von Wobeser y Sierra Valeria Vazquez Maulén, Maulén, Energy and Resources Leader Mexico-Central America at Deloitte Sofía Tamayo Gutiérrez, Regulatory Affairs at AES México Claudio Rodríguez-Galán, Partner International Energy Practice at Holland & Knight 11:00
NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS
12:00
BEHIND-THE-METER STORAGE OPPORTUNITIES
Speaker: David Fernandes, CFO and Country Manager Mexico at ON Energy Storage 12:15
HYBRID PROJECT POTENTIAL IN MEXICO
Moderator: Mirjam Schipper, Energy Industry Lead at Mexico Business Panelists: Raul Carral, Business Development Latin America North at Wärtsilä David Fatzinger, VP & Country Manager Mexico at Invenergy LLC Bruno Riga, Country Manager Mexico at Enel Green Power 13:00
ON-SITE GENERATION, THE VIABLE SOLUTION
Speaker: Ricardo Zúñiga, Country Manager at CapWatt 13:15
ENERGY MANAGEMENT STRATEGIES
Moderator: Guillermo Bilbao, Director of Energy Business Mexico at Minsait Panelists: Carla Ortiz, Country Manager Mexico at RER Energy Group Sean McCoy-Cador, Director of Energy Supply at Edison Energy Santiago Villagomez, CEO of Energía Real Katya Somohano, Energy Director at Deacero
7
P r o g r am D ay 1
14:00
NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS
15:00
CRUCIAL STEPS TOWARD MEXICO’S GRID-CODE COMPLIANCE
Speaker: Monica Samudio, Country Managing Director Mexico & Central America at Circutor 15:20
TECHNOLOGY FOR POWER QUALITY OPTIMIZATION
Speaker: René Mendoza, Segment Leader Power Quality at Hitachi ABB Power Grids Mexico 15:40
TRANSMISSION & DISTRIBUTION OF THE FUTURE
Moderator: Karla Albarrán, Member of the Association of Women in Renewable Energy Mexico (MERM) Panelists: Santiago Barcón, Director General at PQ Barcon Fidelmar Molina, Government Affairs and Power Generation Business Development at Hitachi ABB Power Grids Ivette Castillo, North LATAM Commercial Executive at GE Grid Solutions 16:30
THE STATE OF AFFAIRS FOR DECARBONIZATION OF MEXICO’S ENERGY INDUSTRY
Speaker: Arturo Carranza, Independent Advisor at the Federal Electricity Commission (CFE) 17:00
END OF DAY 1
8
P r o g r am D ay 1
SEPTEMBER 2 N D , 2021 09:00
ELECTRICITY GENERATION: AN ENABLER FOR THE WELL-BEING OF EVERY MEXICAN
Speaker: Ramon Moreno, President of the Mexican Energy Association (AME) 09:30
A BRIGHT FUTURE FOR NATURAL GAS IN MEXICO
Speaker: Warren Levy, CEO at Jaguar E&P 10:00
THE FUTURE OF GAS-FUELED POWER GENERATION
Moderator: Jorge Sandoval, Director General of the Mexican Natural Gas Association (AMGN) Panelists: Ramon Moreno, CEO of Mitsui & Co.Power Americas Marco Vera, Managing Director at GE Power Mexico 11:00
NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS
12:00
GAS INFRASTRUCTURE, TRANSPORT AND DISTRIBUTION
Moderator: Malvin Delgado, International Energy Business Director at Picarro Panelists: Gustavo Nunez, Managing Director Sector Mexico & Central America at ROSEN Alvaro Corona, COO of Gas Transportation and Distribution at ENGIE Mexico Areli Covarrubias, Commercial Director at IEnova Rafael Mercado , Commercial Director at Naturgy Mexico 13:00
PUBLIC-PRIVATE COLLABORATION TO SET SOCIAL IMPACT STANDARDS
Speaker: Héctor Sánchez López, Independent Member of the Board of Directors at the Federal Electricity Commission (CFE)
13:15
ENERGY PROJECTS: OPTIMAL SOCIAL AND ENVIRONMENTAL IMPACT
Moderator: Julia González Romero, Elected Counsel at González Calvillo Panelists: María Cristina Hernández Calzada, Partner at Vera & Asociados Montserrat Palomar, Head of Sustainability at Enel Green Power MXCA Héctor Sánchez López, Independent Member of the Board of Directors at the Federal Electricity Commission (CFE)
14:00
NETWORKING OPPORTUNITY - AI-POWERED 1:1 MEETINGS
9
P r o g r am D ay 1
15:00
GEOTHERMAL ENERGY: OBJECTIVES AND OPPORTUNITIES
Speaker: Enrique Papadimitriou, Director General of GEOTER Renovables de México 09:15
MEXICO’S NUCLEAR FUTURE
Speaker: Manuel Fernández Ordoñez, Radioactive Waste Director at Tecnatom 00:00
PANEL TITLE
Moderator: Veronica Zapata Oviedo, Member of the Association of Women in Renewable Energy Mexico (MERM) Panelists: Fernando Tovar, CEO and Country Manager of ENGIE Mexico Jeroen Visser , Global Director Hydrogen at Northland Power Israel Hurtado, President of the Mexican Hydrogen Association 09:15
ELECTROMOBILITY IN THE MEXICAN CONTEXT
Speaker: Indira Kempis, Senator of the State of Nuevo León 17:00
END OF DAY 2
10
C o nfe r ence H ighlights NUEVO LEON TO KEEP UP WITH ENERGY CHALLENGES Nuevo Leon, one of the most economically
Energy efficiency is one of the state’s
dynamic states in Mexico, aims to continue
priorities. Nuevo Leon became one of
g rowing in th e e n e rgy se c to r, wh e re
th e fi r st states to im ple m e nt e n e rgy
oppor tunities and challenges emerge
m a n a g e m e n t s y s te m s i n t wo p u b l i c
i n si m il a r a m o u nt s . T h e o b j e c tive of
buildings, resulting in a decrease of over
affordable and clean energy, included
4.2 million kWh in consumption and savings
in the UN’s 17 Sustainable Development
of MX$1 million (US$50,000) per year,
G o a l s , i s c l e a r, b u t th e tr a n siti o n to
according to Gorozpe.
clean, efficient energy requires project promotion and continuity.
The local government is also working on “awareness campaigns focused on public
“(The Energy Reform) attracted foreign
officials” and collaborates with federal
investment in the energy sector. Nuevo
institutions like CONUEE, “hosting in-
Le o n d o u ble d it s e n e rgy p ro d u c tio n
person and virtual workshops on energy
and is now the third state in wind energy
efficiency in the hospitality, real estate and
investment and second in distribution,”
air conditioning industries,” said Gorozpe.
said Jorge Gorozpe, Energy Director at the Ministry of Economy and Labor of Nuevo
The government of Nuevo Leon has worked
Leon (SEyTNL).
closely with municipalities, learning about their specific needs and supporting them,
Manufacturing plays a key role in Nuevo
while promoting gender equality in the
Leon’s economy. With US$37.8 million in
sector, through vir tual and in-person
exports, which represents 9 percent of the
seminars. The Energy Direction of SEyTNL
national manufacturing exports of 2020, this
has also implemented polls to have more
sector represents 26 percent of the state’s
precise data of each territory of the state
economy. Mass production also means
and hosted energy projects in collaboration
mass energy consumption. Nuevo Leon
with public and private universities, such
is the biggest electricity consumer in the
as ITESM, UANL, UDEM and UR, working
country and the challenge is to keep energy
closely with the Embassy of Denmark, one
production at sustainable levels, considering
of the leading countries in clean energy
a smooth transition to clean, efficient energy.
matters. “We created the ‘Wind Race’ in
This is the purpose of the Energy Direction
collaboration with Cubico, which was a
of SEyTNL, which also promotes the growth
literal race around a wind farm to promote
of energy infrastructure and strengthening
these projects and raise environmental
of human capital in the state. “Electricity
awareness,” said Gorozpe.
consumption will keep growing and we will have to continue producing. Our goal is to
D e s p i te t h e i m p e n d i n g g ove r n m e n t
be the most efficient energy consumers (in
transition in Nuevo Leon , the Energy
the country),” said Gorozpe.
Direction of SEyTNL has pending projects, such as signing the Energy Policy of Nuevo
“(The Energy Reform) attracted foreign investment in the energy sector. Nuevo Leon doubled its energy production and is now the third state in wind energy investment and second in distribution.”
Leon, the gender equality agenda in the sector and the promotion of renewable energy and new technologies. To ensure continuity, the federal government will play a key role in Nuevo Leon’s energy sector’s growth. “We are the second state with more
Jorge Gorozpe
energy project and we have to work with
Energy Director at the Ministry of Economy and Labor of Nuevo Leon (SEyTNL)
the federal government to keep growing our transmission and distribution grid,” said Gorozpe.
11
C o nfe r ence H ighlights 1GW SOLAR PLANT PART OF SONORA’S GRAND ENERGY TRANSITION PLANS Sonora is gearing up to become a crucial
Sonora is mostly reliant on imports to
cog in Mexico’s energy transition. Aiming to
produce the power it needs. Cabanillas
make good use of its brilliant solar radiation,
explained that most of the electricity
the state wants to wean itself off natural gas
consumed in Sonora is generated by
imports through a much-discussed 1GW
burning dry natural gas imported from the
solar project. The project is expected to not
US. “Sonora has an index of 0.18 in terms
only benefit Sonora but the grid-isolated
of energy independence when looking at
Baja California peninsula.
figures from 2017. The national index is at 0.76,” he stated. The price of imported gas
“ Sonora has a strong dependence on
is less of an issue: “Imports are not an issue
out side energy sources ,” said Rafael
of cost, as importing dry gas from the US is
Cabanillas, a researcher at the University of
quite cheap, but of energy independence,
Sonora (Unison) and a member of the newly
which the federal government values, too,”
elected state government’s ‘Transition Team’
emphasized Cabanillas. Mexico’s pipeline
on energy and sustainable development
infrastructure is expanded constantly
issues. “There is still a long way toward self-
as testament of the benefits of low-cost
sufficiency to supply the state’s industry.
natural gas.
Yet, our yearly solar radiation is among the highest around the world.”
Still, this dependency can cause problems. The fact that Sonora is reliant on imports
With a population of close to 3 million
means that the state is vulnerable to the
and a surface stretching past 179km2, the
conditions in Texas , as seen during a
Northern Mexican state of Sonora uses
winter storm that halted gas production
quite a lot of energy for its residential,
in February. When exports were halted,
commercial, industrial and agricultural
Mexico’s energy mix took a hit. Sonora,
a c tiviti e s . T h e s t ate ’s th e r m o m ete r s
however, has access to another important
often show figures higher than 35°C in
energy source: solar. The state’s Direct
the summer months, which means that
Normal Irradiance lies between 6.26 and
a decent quality of life makes energy-
7.89 Kwh/m2 per day. Using only a fraction
intensive cooling processes essential.
of the Sonoran Desert, the state could
Unfortunately, this makes energy costs rise
generate more energy than Mexico needs
rapidly. Around 4,488 kWh are consumed
in its entirety. Private companies, attracted
annually by Sonoran homes on average,
to the Mexican market after the 2014 Energy
more than four times the consumption of
Reform, already benefit from this excellent
a home in Mexico City. Almost 5 percent
irradiance. Companies such as Iberdrola,
of the nation’s energy use is consumed
IEnova, Engie, Acciona and X-Elio all have
in Sonora. To make prices bearable, the
photovoltaic solar parks in various places
federal government needs to heavily
across the state.
subsidize energy rates. Newly elected governor of Sonora, Alfonso
“There is still a long way toward selfsufficiency to supply the state’s industry. Yet, our yearly solar radiation is among the highest around the world.”
Durazo, knows the potential solar energy brings to the state, as well. Enjoying a good relationship with President Andres Manuel López Obrador, Durazo has been tasked to make Sonora a key state for Mexico’s clean
Rafael Cabanillas
energy transition. “López Obrador asked
Energy Representative at Transition team of Next Sonora’s Government
Durazo to ensure Sonora would spearhead a solar-based pilot project, which would boost renewable energy generation. This
12
C o nfe r ence H ighlights move also disproved rumors that the
California perhaps stands to gain the most
government was against renewable energy,”
because the project will be paramount in
said Cabanillas.
interconnecting the heretofore electrically isolated northern part of the peninsula. Baja
At the heart of Sonora’s solar mission lies
California Sur would also be connected to
the notorious Puerto Peñasco project. With
this local grid through a submarine 400kV
a titanic 1GW capacity, the project would be
transmission line.
among the world’s 10 largest solar power plants and the largest in Latin America. It will
To make these landmark projects a success,
feature a 100MW battery storage addition,
Sonora aims to improve the legal framework
too. Sharing the load of the predicted
on which it bases its energy transition. The
US$1.685 to US$2 billion investment, state
state’s energy commission needs reinforcing
utility CFE is to own 56 percent of Puerto
and the state company to be involved in the
Peñasco, while a newly formed Sonoran
solar project needs to be founded. Puerto
state company would own 46 percent.
Peñasco will not be Sonora’s only focus.
Cabanillas described the project as a “home
The state plans to promote Sonora in the
run” for the state’s sustainable development
energy sector via the construction of further
initiative. Sonora’s state-owned company
solar projects, boosting electric and hybrid
opens a range of interesting possibilities,
vehicles, biofuel use, distributed generation
too, although Cabanillas points out that the
(DG), cogeneration, wind energy and much
full scope of what Sonora can do with this
more. Forty DG solar projects, each 0.5MW,
company remains to be defined.
will bring 20MW of capacity at a cost of US$20 million. Ann additional 20MW wind
T h e b e n e fi t s o f P u e r to P e ñ a s c o g o
farm will require US$22 million, according
beyond Sonora. In fact, the state of Baja
to Cabanillas.
ENERGY REGULATION: OPPORTUNITIES IN COLLABORATION The attempted changes proposed by the
The fear and ambivalence that has marked
current administration to Mexico’s energy
the energy sector during this tumultuous
reality are still clouding investors’ vision,
regulator y period in M exico, even
but industry experts assure that there are
internationally, has led to a more organized
still plentiful opportunities in the sector
and cohesive sector in which concerns and
and underline the necessity of public-
technical analyses are shared, with the
private collaboration to ensure Mexico’s
latter also being encouraged, said Valeria
successf ul e n e rgy tra nsition into th e
Vázquez, Partner at Deloitte. “As actors in
21st century.
the energy sector, we need to understand regulations, their implications and how they
Legal uncertainty has fraught Mexico’s
could affect the sector.”
energy sector since Congress passed President Andres Manuel López Obrador’s
Readiness and understanding are key to
renewed Electrical Industry Law (LIE)
pivot according to regulatory changes,
bill in March of this year. The proposed
should they come to fruition. For this
reform has met resistance from private
h oweve r, a s p o i nte d o u t by C l a u d i o
companies whom have pointed to the
Rodriguez-Galán, Partner at Thompson
administration’s obvious effort to reform the
and Knight, companies must first make a
economic hierarchy with state companies
clear distinction of what is legally binding
Federal Electricity Commission (CFE) and
and what is dogmatic. Doing so will help
PEMEX at the top. A clear violation to the
companies make strategic decisions based
principles of free competition anchored in
on legal certainty instead of fear and
the 25th article of the Mexican Constitution’s
speculation. This thought process puts into
Energy Reform.
perspective how preemptive risk-adverse
13
C o nfe r ence H ighlights decisions may be premature, considering
remaining 46 percent to the private sector.
how the LIE bill has been continuously
This is the first sign of compromise and
stunted since its introduction to Congress.
readiness to work with private energy
Only 24hrs after its promulgation, the bill
providers, although the resubmission was
had been definitively suspended by Judge
met with a wave of amparos. Lifting these
Gómez Fierro due to violations to the right
will be no easy task: “These matters do
to free market competition as underlined in
not have a black and white answer. Not
Art. 25th of the Constitution.
all rulings will move the same way,” said Vázquez in previous interview with MBN.
It was feared that during the mid-term
“The issues will be interpreted differently
e le c tio ns (J u n e 6th), th e p resid e nt ’s
by va rious cour t s . H oweve r, I do not
political party MORENA, would be able
believe that the energy sector’s model
to gain th e sup e rmajorit y n e e de d to
will be changed through these decisions.”
amend the constitution and push the LIE
All that remains now is to observe how
bill through. However, people placed a de
these cases play out in court and prepare
facto referendum on the administration
accordingly.
which had been notably hostile towards foreign investors given its nationalistic view
As the battered sector looks towards an
on the utilization of resources. The market
inevitable global energy transition, experts
reacted positively, gaining nearly 1 percent
emphasize the need for public-private
during early Monday, June 7, trading after
dialogue and combined efforts to not only
months of volatility. A month later and
meet growing energy demand but to ensure
after a court lifted the indefinite judicial
Mexico’s successful energy transition.
suspension issued against the LIE bill – as
Despite challenging conditions plaguing
judges ruled that there were no general
2020 and 2021, demand has not been
direct effects on companies – private
stifled, not from direct consumers or other
players had the option to push for new legal
energy sectors that are also racing against
protection measures against specific parts
the clock to reduce their carbon footprint,
of the reform that could directly affect
according to Edmond Grieger, Partner at
their business. The Supreme Court will
Von Wobeser y Sierra.
have the final say; results are unclear but industry insiders highlight how the entity
As the sector moves for ward, energy
has fulfilled its role as a political tie-breaker.
producers must work within their current
In other words, even though private market
limitations to offer creative ESG solutions if
players have observed a volatile market,
they wish to remain competitive. Although
the judicial system has repeatedly stood
CFE has reduced the number of market
firm in the face of political pressures and
competitors, it has established tenders
interested parties.
for companies to offer services, a possible opening for future cooperation. This is an
Given the circumstances, the president
opportunity for the private sector to fill
draf ted a new, more palatable reform
energy sector niches in which they are
in which he granted CFE the capacity
more knowledgeable and efficient. “Public
to produce and distribute 5 4 percent
and private sectors should come together
of the nation’s energy, while leaving the
to generate a much higher value in the energy sector, instead of competing with
“As actors in the energy sector, we need to understand regulations, their implications and how they could affect the sector.”
each other,” said Rodríguez-Galán. There are limitations, but even within that narrow space, there are still business opportunities that can be exploited “through creativity
Valeria Vázquez
and a proper regulatory strategy,” says
Partner at Deloitte
S o f í a Ta m ayo , R e g u l a to r y A ff a i r s a t AES México.
14
C o nfe r ence H ighlights Beyond the federal level, energy actors
de Puebla, increasing costs by hundreds of
should look to work directly with state
millions of dollars.”
and local groups involved in the regions where they hope to develop projects to
In conclusion, although this may have not
avoid disruptions and delays. Tamayo
been the regulatory framework that market
h i g h l i g h te d th e C F E a n d TC E n e r g y
actors envisioned upon entering in 2015, it is
Tuxpan-Tula gas pipeline in Puebla that
the existing one, and just like any other market
got delayed for having “caused problems
disruption industry actors must adapt or die
for the indigenous residents of the Sierra
out. In this case, a strategic development map must account for regulatory contingencies
“Public and private sectors should come together to generate a much higher value in the energy sector, instead of competing with each other.”
and ESG practices that consider social and environmental implications. The good news is that energy demand is here to stay and unequivocally essential to the development of Mexico’s economy, therefore there should be
Claudio Rodriguez-Galán
plentiful business opportunities for companies
Partner at Thompson and Knight
to fill were CFE alone cannot and it waits for the Supreme Court to deliver a verdict.
ON-SITE ENERGY PROJECTS, BASIS FOR THE ENERGY TRANSITION Driven by regulatory changes and a need
interconnected grid or even to an adequate
for excellent power qualit y in places
fuel supply,” said Zúñiga. Taken together,
not optimally connected to the grid, the
these factors are greatly increasing the
development of energy projects in Mexico
demand for on-site power solutions.
is increasingly moving from utility-scale toward on-site distributed generation. Here,
On-site power production facilities are
technologies such as solar, storage and
far from a new trend, emphasizes Zúñiga.
cogeneration take the lead.
B efore the onset of the 2014 Energy Reform heralded colossal investments in
“As we all know, this is not the best time
utility-scale projects, private power plants
for the power sector in Mexico. But tough
focused on self-supply. Now that the
times also mean that there are different
regulatory certainty necessary to develop
o p p o r t u n iti e s to m a ke u s e of,” s a i d
utility-scale projects has taken a hit under a
Ricardo Zúñiga, Country Manager Mexico
governmental restructuring of the industry,
of Capwatt, a company that focuses on
Zúñiga sees projects turn toward fewer MWs
developing clean energy projects for
and on site generation for large-scale energy
customers in the commercial and industrial
users. For this reason, Capwatt has elected
(C&I) environment.
Mexico as its third location after Portugal and Spain. The company is not alone, as
Especially for projects on the smaller scale,
many other companies turn their attention
perspectives remain attractive. Under
to smaller-scale project development and
0.5MW capacity, no permitting is needed.
aim to cater to the growing demand of C&I
But even larger projects ranging from 5 to
clients, who look for competitive prices
10MW are viable because they do not have
and cleaner energy supplies to meet ESG
a severe impact on the grid’s functioning
benchmarks.
and can provide energy to remote locations or isolated areas, such as in Mexico’s two
“Efficient and well-designed power plants
peninsulas. “Baja California and Yucatan
are the best options for companies,” said
need capacity to grow economically, but
Zúñiga, stressing that reliability, quality and
they do not have access to the nationally
energy efficiency are of the essence. “What
15
C o nfe r ence H ighlights we consider to be most important for on-
Zúñiga highlights the company recently
site projects is that they are tailor made,”
saw a permit go through. “We saw it as a
he added. In terms of the technology used,
message that projects will run and have
solar is often mentioned as an excellent
a future. Projects will flow again soon,
solution. Especially in combination with
hopefully,” he continued.
battery storage, it is a stable and costefficient solution. Albeit less popular in
Another issue is the funding of smaller
the Mexican context, natural gas-fueled
projects. “Financing is difficult. Development
power production facilities provide a great
and commercial banks only looked at
opportunity for companies too, especially if
projects on the large scale; 5-10MW projects
their production processes need significant
were not considered interesting at all. But
heating or cooling.
the situation is changing because banks are adapting and evolving,” he said. In the
“What we consider to be most important for on-site projects is that they are tailor made.”
Ricardo Zúñiga Country Manager Mexico of Capwatt
current environment, it is becoming less viable to build US$500 million power plants and more logically to build a large amount of DG-based power plants. Zúñiga emphasizes that the time to act is now for clients interested in addressing their energy supply. Reservations can be taken away by showing the benefits that could
These energy projects are not without
have been achieved in the past. “Every time
issues to solve, however. Zúñiga mentions
clients take more than five years to make
the problem of permitting needed for
a decision, they can see the money being
projects above 0. 5MW, a process that
left on the table,” he said. “I really want
has stopped almost entirely during the
to send a message to industrial and other
COVID-19 pandemic. This leads to despair
large energy consumers: we really cannot
for some. “Clients sometimes think they
wait and should take measures into our
need to wait for years before a project
own hands to make the transition. Let us
comes online,” he said. Never theless ,
do better,” concluded Zúñiga.
MAKING SENSE OF ENERGY MANAGEMENT AND ITS CLEAR BENEFITS For commercial and industrial players in
Somohano, Energy Director at globally
Mexico, there are plenty of options available
leading steel and wire producer Deacero.
to gain cheaper electricity prices and boost sustainability rates. So many, in fact, that
Cutting energy costs, often a Top 3 expense
the possibility is almost dizzying. Industry
for companies, and addressing sustainability
experts shine a light on how companies can
are among the main reasons why companies
make the best decisions with the options
would switch to the electricity market or
available.
build an on-site energy project. “Being able to meet ESG goals and have visibility
“We now live in a world of options,” said
on energy costs while achieving savings is
Carla Ortiz, Country Manager Mexico at
essential,” said Santiago Villagomez, CEO
solar energy developer RER Energy Group.
of solar developer Energía Real. Villagomez
“This has not always been a reality for
said that his clients of ten used to be
Mexico, where the market was covered by
“frustrated,” not only with the lack of options
a single entity, state-owned utility CFE,
available to them but because they did not
until the Energy Reform was instigated in
understand their untransparent energy bills
2014. Today, there is an option to address
at all. This is a crucial issue for energy users,
your own energy supply,” pointed out Katya
said Guillermo Bilbao, Director of Energy
16
C o nfe r ence H ighlights
Business Mexico at Minsait. “Visibility and
are signed up to the market, and a qualified
transparency give power to the energy
supplier that facilitates the access of the
user,” he said. Yet many companies are a
user to the WEM. Somohano highlighted
little fearful of entering a new environment
some of the benefits of these PPAs. “Energy
like the energy market. Nevertheless, Sean
users can directly decide which energy
McCoy-Cador, Director of Energy Supply at
technology they want to use, so 100 percent
Edison Energy, believes that it is better to
renewable energy is a possibility, often at
make the switch sooner rather than later.
a low cost.” Through creative solutions, a
“If you wait too long, your decision will
tailor-made energy supply can even hedge
never be the optimal decision. It is all about
risks. But the biggest advantage of singing
entering the market to unlock the benefits
a PPA is cost. “The long term gives you the
in the longer term even if it does not pay off
big advantage of a low price,” said McCoy.
right away,” he said.
Some companies prefer to buy electricity in the short term on the spot market, but
The motivations to move to Mexico’s
many consultants advice toward the benefit
wholesale electricity market (WEM) are
of a 10 to 15-year contract, a solution that
therefore clear. Even though it is still a young
perfectly suits power producers too.
market, it already shows vibrant activity. According to CENACE’s latest figures, the
Although the supply-focused PPA remains as
market features two basic suppliers catering
popular as ever, innovative solar developers
to conventional domestic energy users, 53
such as RER Energy and Energía Real offer
qualified suppliers, 109 power generators,
a different model. They construct a small
21 non-supplying commercializing entities
solar installation for clients, absorbing the
such as natural gas suppliers and CFE as
risk of the investment in the technology on
the only so-called intermediation generator.
behalf of the user. They then sign a long-
Deacero is the only qualified user to also
term PPA with the client. After this period,
actively participate in the market due to
the client can keep the installation if they so
its large capacity demand and the type of
choose. According to Ortiz, this approach
electricity it uses.
has another benefit: “There is no regulation slowing down behind-the-meter solutions.”
One of the main options available is the
Villagomez, whose company recently
ever-popular power purchase agreement
attracted important capital from Riverstone
(PPA). This is a contract signed between
Holdings, highlights the potential of these
an offtaker, a qualified user in this case as
players to attract financing. Taking on
they have a demand of more than 1MW and
debt to build even small solar projects can
17
C o nfe r ence H ighlights be challenging, “but banks are looking to
efficiency comes first, then people will
sponsor energy experts that facilitate small
tailor their options and finally companies
energy projects because they can mitigate
will improve their consumption,” outlined
the risks of their investment,” explained
McCoy. Ortiz stressed that in the realities
Villagomez.
of the market, this often goes differently. Clients begin by adapting an on-site energy
Plenty of opportunity remains on the table,
solution and become a more sophisticated
but industry experts agree that one issue
energy user in the process. “Solar can
is essential to make any form of supply a
be a good start to become more energy
success: energy efficiency. “If you cannot
efficient,” she said.
make a good use of your supply, you leave most of the benefits on the table,” said
One added advantage of becoming a
Somohano. This efficiency can be more
more knowledgeable energy user is that
complicated than expected at a first glance.
companies can comply more easily with
Extensive monitoring and data gathering is
the grid code, an issue that regulatory
required to fully understand C&I operations.
commission CRE will likely soon enforce
Once energy use is adequately understood,
through high fines for those that do not
companies often need to change their
meet stringent requirements. “However,
productive processes by turning on heavy
the grid code is not only about regulatory
machinery when electricity prices are
compliance, it helps to save costs and be
lower, for example. “Understanding energy
optimally efficient, too,” said Bilbao.
INNOVATIVE SOLUTIONS FOR BEHIND-THE-METER STORAGE Battery storage systems are increasingly
ON Energy Storage is focused on C &I
playing a pivotal role in the balance between
opportunities in various markets across Latin
renewable energy and the replacement
and North America, with over 50 in-house
of fossil fuels. Companies like ON Energy
software, engineering, operations, data
Storage are starting to offer behind-the-
science and power markets professionals.
meter battery energy storage systems
The company offers end-to-end solutions
(BESS), aiming to help clients reduce costs
built around a management platform
and become more efficient consumers, but
for peak-shaving, UPS, microgrid, green
these systems still have road to cover to
hydrogen, frequency regulation, energy
become an industry-wide solution.
shifting and wholesale market prediction. What differentiates ON Energy Storage
“There are very few BESS solutions for
from its competitors is that it has a fully
commercial industrial customers, the market
a uto m ate d , 1 0 0 p e rce nt p ro p ri et a r y
is really fragmented and it is hard to find a
electronics manufacturing service (EMS)
single entity that can take responsibility and
and wholesale market predictive software
the risk of a project,” said David Fernandes,
i n t e g r a t e d i n to i t s b a t t e r y s to r a g e
CFO of ON Energy Storage.
technology. The company has 12 registered patents in energy hardware, software and 5 projects in construction in Mexico, which
“As developers, we offer easy-tounderstand and clear commercial offers. These can be no-money-down, zero investment offers or capital sales of equipment.”
total 13.5MWh. B E S S proje c t s a re in th eir “ infa ncy,” according to Fernandes, who mentioned that hardware vendors prefer to only offer “one-size-fits-most” solutions, while
David Fernandes
software vendors “refuse to customize
CFO of ON Energy Storage
their US-designed platforms to emerging markets.” Storage is not a “set it and forget
18
C o nfe r ence H ighlights it” technology, however. “Customers are
customers at 100 percent and we do all
getting disjointed offers and there are a
the design and engineering of the EPC,
lot of false expectations being created. If
operating our own systems and providing
you do not control the software, it is very
guarantees of their performance,” said
difficult to offer performance guarantees in
Fernandes.
terms of an integrated hardware/software solution.”
B E S S p ro j e c t o pti m iz ati o n is o n th e revenue side, according to Fernandes.
The energy storage market continues
The possibility of storing energy from
growing and so does ON Energy Storage,
renewables, such as solar and wind sources
which recently signed a joint development
to use them when needed the most is
a g r e e m e n t w i t h E n e l X t o fi n a n c e
crucial for BESS applications. “In both Peru
Storage-as-a-Service projects. With this
and Mexico, ON Energy Storage offer the
partnership, ON takes care of 100 percent
most aggressive performance guarantees
of th e te c h n o l o g ic a l so l utio n s , f ro m
in terms of production, capacity, power
concept to operation and maintenance, for
consumption rate correction and energy
common clients.
shifting,” said Fernandes.
ON Energy Storage offers end-to-end
“As developers, we offer easy-to-understand
service delivery as it fully controls data
and clear commercial offers. These can be
generated by the software, allowing us to
no-money-down, zero investment offers or
do value stackings, explained Fernandes.
capital sales of equipment,” said Fernandes.
“One-stop shopping for these applications
Savings generated by ON Energy Storage’s
is the effective way to mitigate risks. It is
system can reach up to 40 percent in certain
less expensive, more reliable and has a
markets, depending on their structure and
higher ROI. At ON Energy Storage, we
the customer’s consumption profile. “We
develop innovative commercial models. We
have in-house tools to do all the necessary
finance certain systems for credit-worthy
analysis.”
THE FUTURE OF HYBRIDIZATION IN MEXICO Hybrid energy projects – the integration of
energy comes from renewable sources.
renewable energy generation technology
Their penetration will only increase due
with traditional energy generation systems
to economic reasons,” said Carral, who
– are growing in popularity across the world.
explained that the problem to solve is
Industry experts agree that affordability,
the intermittency and reliability of these
reliability and sustainability make these
sources. Hybridization offers a solution
systems an ideal alternative for Mexico.
through the combination of cheap energy from renewables and flexible generation,
“With hybridization and battery storage,
which comes from power plants based
you basically store excess of energy that is
on natural gas and future fuels, such as
generated with renewable power in batteries
hydrogen, that are mainly generated via
or, potentially, in other types of fuels in
green sources.
the future. It is incredible what we can do, putting emissions down while having very
Mexico’s need for hybridization has to do
reliable, economical and efficient systems,”
with the market’s commitment to support
said Raúl Carral, Business Development
renewables and to boost transmission
Latin America North at Wärtsilä.
systems’ capacities. “When there is less capability in the transmission system or a
Hybrid systems combine renewables and
lacking commitment to the introduction
fossil fuels efficiently and in the most
of renewables, we start leaning toward
economical way. “Today, the cheapest
solutions that are closer to load points. The
19
C o nfe r ence H ighlights
closer we get to the load, the more reason
allows greater renewables participation,”
we have to move toward hybrid solutions
said Bruno Riga, Country Manager Mexico
that could better fit the demand profile,”
at Enel Green Power. While there is big
said David Fatzinger, Vice President and
potential in the Mexican market, a clear
Country Manager Mexico at Invenergy LLC.
regulatory framework and requirement standardization is needed for hybridization
Behind-the-meter storage remains crucial in
to consolidate in the country.
the balance between renewable energy and fossil fuels. “It provides flexibility; you can do
Wind and solar, in particular, are mature
a lot with the storage to shift the generation
enough to cover the technical, commercial
to your peak hours or you can use it for
n e e d s i n th e i n d u s tr y wh e n wo r k i n g
stabilizing supply of electricity. We used
to g eth e r with s to r a g e te c h n o l o g i e s .
to always focus on the largest generation
“Hybridization of power plants promises
assets because they were the most efficient
to increase the load fac tor thanks to
and that drove us to these large wholesale
complementarity, improving the stability
solutions. The smaller generation options,
of the electricity supply and speeding up
however, are now getting a lot closer to
connection times,” said Riga.
the efficiency of large generation systems, making them a more adequate option. As
Enel Green Power is already exploring
the battery cost comes down, we will see
the possibilities of building these kinds of
more hybrid solutions closer to the load,”
flexible power plants in other countries,
said Fatzinger.
according to Riga: “We are leaders in hybrid renewable energy storage projects, with five
According to Carral, power plants can
plants under construction in Texas, which
now turn on an off very efficienty, even
are part of a big business plan in the US.
considering variations in load and generation.
We are also exploring new opportunities
“If you compare this to large combined
in other country, such as Chile, where we
cycles, today we can achieve even better
operate a photovoltaic solar park coupled
performance. It is incredible what you can
with a wind farm.” Positive as this may be,
do today with a lower investment,” he said.
companies like Invenergy, Wärtsilä and Enel also have the responsibility to those kinds
Hybridization in the Mexican Market
of examples to Mexico to help the country move forward, according to Fatzinger.
Currently the big discussion in Mexico is
“This is especially true when introducing
the future of renewables in general. “We
technologies that still are not well defined
look for a balanced energy dispatch that
in the country.”
20
C o nfe r ence H ighlights With isolated renewable projects across
Enel is already advancing toward hydrogen,
Mexico, there are opportunities both in
another element that could play a role in
adding hybrid elements to existing projects
renewable energy projects in Mexico.
and building new ones right from the start.
“Hydrogen is best used as a complement
“If clients really understand the way they
to electrification and it can support the
use electricity, then they will probably
decarbonization in some industries. It
come up with a new hybrid solution. Those
needs to be 100 percent produced from
are opportunities for a one-stop solution.
renewable sources to reduce the impact
If you are not completely aware of the
of carbon. The main problem today is
way you use electricity, then staging into
its cost, but advancing technology and
a solution over time will make sense,” said
hydrogen’s competitiveness, this may be a
Fatzinger.
big opportunity for Mexico,” said Riga.
ENERGY COMPLIANCE BETTER THAN THE ALTERNATIVE As global economies ramp up their energy
Compliance is essential to the economy as
transition efforts to meet commitments
a whole. Although standards are strict, they
m a d e u n d e r t h e 2 0 1 5 P a r i s C l i m a te
were fomented to avoid energy disruptions
Ag re e m e n t , e n e rg y g r i d co m p l i a n ce
like the one observed at San Carlos Solar
w i l l p l ay a c r iti c a l ro l e i n e c o n o m i c
Park in December 2020. The event forced
development, while reducing energy costs
the national grid operator to shut down at
through increased operational efficiency
2:27pm during peak energy consumption
and longer asset life at an individual level.
hours in 12 states, representing an unknown
“As the new ‘Grid Code’ is implemented,
loss of economic productivity.
benefits in cost reduction and operational improvement will be accessible,” says
“The challenges of implementing the ‘Grid
M ó n i c a S a m u d i o , C o u n tr y M a n a g i n g
Code’ include mainly implementation
Direc tor Mexico and Central America
deadlines, standards and technical and
at Circutor.
financial exper tise,” said Samudio. To address this, Circutor works with clients
“The challenges of implementing the ‘Grid Code’ include mainly implementation deadlines, standards and technical and financial expertise.”
to establish an action plan built around consumer needs. This expert analysis not only looks at compliance gaps, but at financial optimization so the investment in compliance standards pays for itself in the
Mónica Samudio
long term thus adding value to the client.
Country Managing Director Mexico and Central America at Circutor
Moreover, before even starting, Circutor works with FIDE to assess the feasibility of any given project so clients are completely convinced that their investment will pay
Currently, Mexico’s renewable energy
dividends. “Aside from financial concerns,
generation stands at 20 percent of total
updating compliance helps increase worker
energy consumption, less than half of what
safety, reducing 25 percent of reported
is needed to reach the 43 percent set for
fatalities associated with the energy sector
2030 by the federal government. However,
in Latin America,” said Samudio.
the energy sector and the regulator y environment surrounding it have changed
After all modifications have been made,
drastically since Mexico joined the Paris
Circutor engages in continuous monitoring
Climate agreement, with new market
to properly escalate operations if at any
players in generation and compliance
point clients decide to increase production
that help to ensure the stability of the
or expand their capabilities. Overall, they
energy grid.
cover the process end to end so when CRE
21
C o nfe r ence H ighlights compliance agents come to check, clients
price to pay to strengthen the backbone
can avoid costly fines.
of the energy sector relative to system failures and their crucial implications to
Even though this added investment may
the country’s economic competitiveness,
seem unnecessary, compliance is a small
added Samudio.
MUCH LEFT TO DO FOR MEXICO’S SUSTAINABILITY GOALS Climate change has already forced many
The end of this price drop is not in sight yet,
countries to act but to complete the clean
either. “In 2020, a dollar invested in wind
energy transition, much work remains to
and solar projects generated four times
be done. For developing economies like
more than a dollar invested in the same
Mexico, the challenge is even greater. How is
technologies 10 years ago,” said Carranza.
Mexico doing regarding the decarbonization
The social aspect is equally essential toward
of its energy industry and what can it do
the energy transition. According to Carranza,
to improve?
10 percent of the global population lives under extreme poverty, struggling to meet
“We find ourselves in a decisive year, at
basic needs including energy. In general,
the start of a decisive decade, when it
Carranza stresses that poorer areas need
comes down to really kickstarting the
to rely on dirtier forms of energy to generate
energy transition,” said Arturo Carranza,
electricity, giving governments plenty of
Independent Advisor at CFE. According
incentives to rectify this inequality through
to Carranza, there are several reasons why
a more sustainable and inclusive economy.
this transition is picking up speed. First, the
“The energy transition should leave nobody
effects of climate change are downright
behind,” Carranza underlined.
unsettling and people are strongly aware of this. To stave off effects worse than a
A growing number of countries has signed
temperature increase of 1.5°C, which is
up to reach net zero emissions by 2050
already expected to happen, as well as all
to prevent the world’s temperature from
the disastrous effects that would come
increasing too much. Higher temperatures
with it, global greenhouse gas emissions
have already worsened the frequency
need to be practically zero by 2050. The
and effec t s of natural disasters such
global energy sector causes 75 percent
as hurricanes, floods and droughts. A
of these emissions, which means that
common, shared responsibility is crucial,
decarbonization needs to be addressed
said Carranza: “ We are all responsible
the most urgently.
to reach the same global sustainability goals in the end . To achieve this , we
“To decarbonize, we need to mobilize
need to completely transform the energy
massive amounts of financing and work
systems that support our economies.”
together to obtain optimal results,” Carranza
This transformation requires investment,
said. Another crucial reason is economics,
infrastructure and technology, all working
as renewable energy is cheaper than ever
at optimal levels. “It requires talent and
beating fossil fuel-based power generation.
insight from decision-makers to build the instruments we need to make the
“In 2020, a dollar invested in wind and solar projects generated four times more than a dollar invested in the same technologies 10 years ago.”
Arturo Carranza Independent Advisor at CFE
green energy transition happen,” he said. Reducing emissions means that energy use should become more efficient too. “By changing consumption habits drastically, 55 percent of global emissions can be avoided,” continued C arranza. People should not only think about how they produce energy but how they use it, as well.
22
C o nfe r ence H ighlights The transition is already well underway.
2030, against numbers from 2013. The
“Renewables were the only energy sources
country’s growing share of clean energy
that did not suffer during the worst of the
helps in this regard: the share of clean
pandemic lockdowns,” explained Carranza.
energy in the power production matrix
But the same pandemic has caused a lot
has grown by 12.19 percent from 2020 to
of problems: “The economic recession has
April 2021. This increase is driven mainly
deepened in several countries and their
by wind and solar projects that were
ability to drive a sustainable recovery is
undergoing operational tests when the
limited,” he warns.
last PRODESEN concluded, giving clean energy a boost from 25,594 MW to 28,714
The different speed at which countries
MW. Nevertheless, industry insiders warn
embrace sustainability deeply impacts
that renewable energy development is not
the global energy transition. “Developing
going as fast as it should in an uncertain
economies represent two thirds of the
environment. Carranza agrees that more
global population but only one fifth of the
renewable capacity is needed. Furthermore,
clean energy investment. What is more,
energy use should be optimized, promoting
they only have access to 10 percent of the
electric vehicles, sustainable financing and
world’s financial capabilities,” he stated. This
a cleaner economy.
poses a problem: if the energy transition does not accelerate, the goals that need
The role of the government is paramount:
to be achieved remain forever out of sight.
“The government has the opportunity to
The low costs of wind and solar energy
develop and implement credible plans to
luckily can turn the tables for developing
meet reasonable targets that foster investor,
economies, thinks Carranza. “Finding and
industry and citizen confidence,” stressed
establishing the right conditions for these
Carranza. Through concrete action, the
grand investments and installing renewable
integration of sustainable financing and
e ne rgy rapidly is on e of th e biggest
the construction of the energy transition
challenges of our time,” he said.
under a long-term vision can ensure Mexico becomes a sustainable economy. “The
So, what is the status of Mexico’ developing
upcoming economic package for 2022 and
economy within this transition? Carranza
a potential third package of infrastructure
said that Mexico has committed to reducing
re p re se nt exce ll e nt o p p o r tu n itie s to
greenhouse gas emissions by 22 percent
advance this on the short term,” Carranza
and carbon emissions by 51 percent by
concluded.
TECHNOLOGY SOLUTIONS FOR INCREASED OPTIMIZATION Grid code compliance ensures the working
In this new regulatory landscape, energy
integrity of the national grid as a whole and
producers were given three years to meet
taking into consideration the number of
compliance in two main areas, power
market players and ongoing development
quality and information communication
of infrastructure, a lot can go wrong. To
technologies (ICT) to avoid legal and fiscal
avoid disruption, hefty fines are meant
consequences. Penalties, outlined in Art.
to incentivize compliance. However strict
65 or the Electrical Industry Law, entail
guidelines make this process difficult,
between 2 and 10 percent of the gross
which means that outsourcing this problem
income received in the previous year and/or
to specialized partners is sometimes best.
a fine of 50 thousand to 200,000 minimum
“Hitachi ABB can provide solutions to
wages. Clearly, the bigger operations
comply with the Grid Code depending
are, the more inclined companies are to
o n s p e c i fi c s c e n a r i o s , f r o m p o w e r
comply with the standards established by
factors to imbalance parameters,” says
CRE. More so, improving power quality
René Mendoza.
in elements like the load factor reduces
23
C o nfe r ence H ighlights energy consumption thus reducing costs
var compensators, static synchronous
and improving production processes.
co m p e n s ato r s a n d SVC lig ht . L a s tly, dynamic compensation solutions that
Hitachi ABB has experience working with all
are typically associated with renewable
power producers and has power solutions
energy producers can be compensated
depending on the established investment
with series capacitor banks, voltage source
and technological needs. Inrush capacitor
converters and SVCs. These varied solutions
bank solutions are normally applied to
demonstrate Hitachi ABB’s flexibility and
bigger projects that face potency problems.
varied approaches to technology solutions
Harmonic problems can depend on scale
for energy production as demonstrated in
so filters, detuned capacitor banks and
the company’s expansive portfolio.
high-pass filters come in different models and sizes to accommodate the scale of
In reality, more often than not, it is not
energy generators. Flicker and unbalance
hard to find the technology needed to best
issues are typically addressed with static
address a specific problem, said Mendoza. Before determining what technologies and
“The company’s work is guaranteed in every aspect from start to finish to, above all, ensure a favorable outcome for clients.”
solutions are needed, data needs to be generated for analysis. After determining a solution, analysis and approval from client is required so Hitachi ABB can follow through with its implementation. “The
René Mendoza
company’s work is guaranteed in every
Segment Leader Power Quality at Hitachi ABB Power Grids Mexico
aspect from start to finish to, above all, ensure a favorable outcome for clients,” said Mendoza.
TRANSMISSION, DISTRIBUTION: CHALLENGES OF THE FUTURE Mexico’s transmission and distribution
and using more devices. Also, industrial
lines face all kinds of challenges, from
users are changing consumption behavior,”
geographical to operational. While the grid
said Castillo. These changes are making
is mature and no expansion plans are in the
it impossible to ignore the issues the
works, it does need modernization to help
grid faces.
the country head toward a brighter future, according to industry experts.
Whether it is modernizing the grid or recurring to battery energy storage and
“There is 20, 25, 30-year-old equipment, also
hybrid systems, it is urgent to take action
analog tools still migrating to digital. Given
in Mexico with investments, explained
Mexico’s geography, this grid is exposed to
Santiago Barcón, Director General of PQ
natural disasters, earthquakes and now also
Barcon. “When auctions opened, modern
to new challenges due to climate change,”
transmission lines that enable the use of
said Ivette Castillo, North LATAM Commercial
renewables should have been constructed
Executive at GE Grid Solutions.
and not the other way around. Now, we do have renewables but cannot dispatch them,”
As it lays exposed outdoors, the grid could
said Barcón. He also warned that “The grid is
suffer many types of damages, which
reaching its renewables handle limit.”
is forcing operators to use budgets for operational and repairing purposes rather
Given the difficulties of operating the
than in its modernization. The grid is also
Mexican grid, CFE’s staff has to be ready
“exposed to demand and consumers’
for new challenges every day, said Fidelmar
behavioral changes caused by the pandemic
Molina, Government Affairs and Power
because people are consuming differently
G eneration B usiness Development at
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C o nfe r ence H ighlights
Hitachi ABB Power Grids. Under these
Castillo. He also highlighted that capacity
circumstances, Molina labeled CFE
limitation and climate change were the
engineers and managers’ job as titanic:
main issues challenging the Mexican grid.
“Mexico has the best electrical engineers
“We should be talking about reducing the
taking care of the grid , with a lot of
impact to the planet, decarbonizing our
experience in the managerial level.”
generation base. We have to talk about modernization and technology but also
In terms of challenges for the grid across the
about our responsibility and investments to
world, natural disasters and the renewables
reduce the climate change,” added Castillo.
transition are not inherent to Mexico, according to Molina. “CFE has the same
The grid code also plays a key role in the
worries as other electric companies in the
transmission and distribution lines, so both
world and is following the same path as them,
the private and public sectors have to work
aiming to make the grid digital, intelligent
together to ensure the stability and reliability
and more resilient. For instance, the US$1
of Mexico’s transmission and distribution
trillion infrastructure plan includes US$70
infrastructure, according to Barcón. “The
billion destined exclusively to electricity,
grid code, published five years ago, aimed
with only US$2.5 billion intended for new
to change the regulation in the load centers.
transmission lines and roughly US$15 billion
There used to be a lot of discretion in this
to make a more resilient grid,” said Molina.
regard and industrials complained about it. However, now they are still having problems
The progress made with the combination
with these regulations and there is an
of fossil fuels and renewable resources
inconsistency there. We want the generation
brought new challenges to the electricity
side to be upheld but we do not want to be
industr y and challenged the stabilit y
subject to the grid code because it is very
within th e grid . H oweve r, suppor ting
costly,” said Barcón.
te c h n o l o g i e s , s u c h a s s y n c h r o n o u s , voltage and balance condensers, help
There is a wrong perception in the industry
alleviating this instability.
about the system and how responsibilities should be shared, said Molina. He explained
“Technology is very important. We need
that CFE is not the only one responsible of
monitoring to understand where and why
the grid’s stability because everyone in the
failures happen. There is a lot of protection,
industry has to contribute. “It is a shared
production, automation and monitoring
responsibility. For instance, from everybody
technology and intelligent systems not
turning on the A/C in Sinaloa at the same
only on our grid, but across the world,” said
time to an electronic oven in a steel plant
25
C o nfe r ence H ighlights or wind farms, all our actions matter,”
how the grid is modernized and on the
said Molina.
collaborative work of key players, both public and private, to help maintain its
Mexico’s transmission and distribution future
stability as it transitions to more efficient,
will depend on important investments, on
cleaner energy sources.
ELECTRICITY GENERATION: LAST CHANCE TO PREVENT A CLIMATE CRISIS Climate change has pushed companies
struggling to recover, others such as
from all sectors to accelerate the energy
technology have not fared too poorly. In
transition toward renewables. However, time
Mexico alone, exports of technology goods
is running out and the chances of stopping
to the US fell by only 2 percent in 2020, while
a climate crisis are dwindling. “We are all
all other exports fell by almost 11 percent.
involved in this issue: civil society, the public sector and private companies in the
The digitalization driven by the crisis has also
electricity sector. We take it as our own
sparked a change in corporate culture, with
commitment in which we must not fail,” said
energy companies being no exception. The
Ramón Moreno, President of the Mexican
transition to renewable energy has been one
Energy Association (AME).
of the pacesetting trends for organizations in recent years. Between 2000 and 2020,
Although the Mexican economy has not
renewables’ installation worldwide has
yet overcome the effects of the pandemic,
gone from 750GW to 2, 800GW, while
according to estimates by the International
costs have fallen drastically by almost 85
Monetary Fund (IMF), economic growth
percent during that same period, said
this year is expected to reach 6.3 percent,
Moreno. Among renewable energies, he
particularly due to the rebound from a
adds, solar has been crowned the king of
very low base in 2020. Globally, growth is
all and will be one of the most produced by
expected to reach 6 percent in 2021 and
2025 compared to coal, according to the
4.9 percent in 2022. “Mexico’s growth has
International Energy Agency (IEA).
been uneven compared to other countries such as the US and China, where GDPs
D riven by consumers’ need for more
are already higher than they were before
energy, the pandemic also demonstrated
the pandemic,” says Moreno. “This has
to suppliers that electricity systems can
been driven by factors such as the pace of
absorb more renewable energy production
vaccination strategies.”
than originally thought. Thus, the pace of renewable power plant installation has
This uneven growth has not only been seen
continued unabated, with record-breaking
among countries but among industries,
installations in 2020. The pace is expected
as well. While sectors such as tourism,
to continue and gradually increase. However,
aerospace and entertainment are still
Moreno warns, the clock is ticking and the rate needs to be even further sped up if we
“Mexico’s growth has been uneven compared to other countries such as the
are to keep the global temperature rise at adequate levels.
US and China, where GDPs are already
“We are already seeing the effects of climate
higher than they were before the
change through events that have happened
pandemic.”
around the world this year,” Moreno said.
Ramón Moreno
“The consumer is becoming more and more
President of the Mexican Energy Association (AME)
aware that they are looking for renewable and clean energy in the ser vices and products they use.”
26
C o nfe r ence H ighlights The Mexican Energy Association,
include companies such as Naturgy, Fisterra
present in 22 states in Mexico, seeks to
Energy, Iberdrola Mexico, IEnova and Mitsui
coordinate power generation companies to
Power Americas, are all committed to global
strengthen their operations in the country
and local emissions reduction and climate
and encourage investment and project
change mitigation goals, said Moreno.
development. “These are companies that
Companies are not only dedicated to
invest for the long term and therefore want
investing in renewable energy but are also
the country and the national electricity
trying to explore new options “focused on
system to do well above all else,” Moreno
digitalization toward reducing emissions,”
explains. Members of the association, which
said Moreno.
MEXICO IS READY TO BE A NATURAL GAS PRODUCTION GIANT: JAGUAR E&P Although renewable energy is gaining
neither pipelines nor compressed gas
ground, in a country like Mexico, limited by
are accessible, people are forced to burn
the constraints of an aging transmission grid,
even more primitive and pollution fuels to
the energy mix should perhaps be more
generate energy. In the north of the country,
conventional and diversified. The equally cost-
economic development has moved ahead
efficient and effective use of natural gas is an
much faster than in other parts because
attractive prospect. This fuel might still have
it has the easiest access to natural gas.
a fair share of emissions but it burns much
Spreading the benefits of the fossil fuel to
cleaner than many other solutions used today,
the south can lead to significant economic
especially in remote and underprivileged
benefits. “By switching to natural gas,
areas of the country. “It is a tragedy that we
Mexico can fundamentally change its carbon
are using high-sulfur bunker oil to produce
footprint toward the future and boost its
electricity today. The reason is simply that
development at the same time,” said Levy.
many power producers do not have access to natural gas,” said Warren Levy, CEO of Jaguar
Most natural gas in Mexico is produced as a
Exploration & Production, a private producer
byproduct of oil production, which adds the
of oil and gas found on land.
complication of releasing harmful emissions into the air through ineffective flaring. Gas
“By switching to natural gas, Mexico can fundamentally change its carbon footprint toward the future and boost its development at the same time.”
production is not at all a priority for Mexico’s NOC, PEMEX, which uses almost all the natural gas it does produce for its own business processes. Consequently, Mexico needs to import its natural gas from the US,
Warren Levy
more specifically from the state of Texas.
CEO of Jaguar Exploration & Production
Gas prices coming from Texas’ famous Burgos Basin are low, so Levy emphasizes that cost-effectiveness is not the issue at all. “But it is a risk in terms of self-sufficiency, as we could see in February of this year
Just like most experts in the Mexican energy
when 40 million Mexicans were left without
sector, Levy knows that natural gas use has
ele c tricit y b e c a use ex tre m e weath e r
risen significantly over the past decades
conditions in Texas led to a temporary halt
and will likely only increase in the decades
in exports,” he said.
to come, as Mexico trades in fuel oil and coal for cheaper and cleaner natural gas
Through these imports, Mexico leaves a
sources without exchanging the stability
lot of money on the table that could be
that conventional power generation is
otherwise gained by producing the resource.
known for. In more remote areas where
Using government data regarding natural
27
C o nfe r ence H ighlights gas sales, Levy estimates Mexico loses out
exploration efforts highlights that much
on US$6.7 billion dollars of value per year.
of the geography that makes Texas such a
“The real problem is not just the billions of
great location for natural gas production
dollars, it is the trickle-down effect that the
stretches right across the border and into
local supply chain could take advantage of,
Mexican territory. Across the Mexican side
which would effectively multiply this value,”
of the Gulf of Mexico, more opportunity for
explained Levy.
exploration exists in states like Veracruz and Tampico. Even offshore production would be
Mexico used to be a net exporter of natural
viable, although oil platforms would need to
gas. In fact, most of the infrastructure that
be adapted to make this possible. Plenty of
is now used for imports was originally
investment would be needed, however. Using
construc te d to fe e d gas into th e U S
the company’s estimations for its own goals,
instead. So why is Mexico no longer a
around US$4-5 billion would be necessary
hub for production? Levy said domestic
to address 7 percent of Mexico’s natural gas
production dropped off steeply after 2008,
demand. “But the real challenge is how to get
when PEMEX actively decided to focus its
truly creative and ensure the entire country
investments elsewhere and make use of
gains access to this gas,” Levy warned.
cheap pipeline gas coming from the US to reach higher profits.
Private companies can play an important role in these effor ts . “Companies like
Levy, however, does not agree with this
Jaguar can help the government in ensuring
approach. “Some people believe producing
that environmental safet y and social
in Mexico is not a profitable business. We
development happens the way it should in
wholeheartedly disagree.” The expert on
Mexico,” said Levy.
NATURAL GAS’ ONGOING REVOLUTION Until the battery storage capacity needed
urgency to address the current pitfalls that
to battle renewable energy intermittency
Mexico currently faces related to natural
becomes more accessible, the cleanest fossil
gas, including climate change, expanding
fuel, natural gas, will continue to hold an
distribution infrastructure, storage and
essential role in the global energy transition.
increasing domestic production capacity.
As Mexico’s energy demands continue to grow exponentially in tandem with a swelling
“Gas is a very important fuel. Mexican
population, there is an understandable
geography and access to this resource make
28
C o nfe r ence H ighlights
it the best solution for energy demand in
As natural weather events become more
the country,” said Marco Vera, Managing
f re q u e nt a n d m o re ex tre m e , clim ate
Director at GE Power Mexico.
change has come to the forefront and become the central concern of international
In Mexico, addressing demand means
governments given its known capacity to
expanding natural gas infrastructure to
destroy critical energy infrastructure. With
regions with energy deficits, namely the
such salient implications it has become
southeast region. Bringing natural gas to this
an unmistakable priority to reinforce and
underdeveloped region is a priority given
expand existing infrastruc ture to not
that “states with natural gas enjoy greater
hamper economic activity and growth. After
development. This resource generates
freezing subzero temperatures swept Texas,
industry, new companies and employment.
leaving some 4.7 million users in Northern
Gas impacts the whole economic chain,”
Mexico without electricity for several days,
according to Jorge Sandoval, Director
it was clear not only that climate change
G e n e ra l of th e M exi c a n N atu ra l G a s
vulnerabilities should be assessed in future
Association (AMGN).
projects but, perhaps more importantly, that Mexico’s dependence on imports had to be
Deficiencies in the natural gas pipeline
addressed.
are present across Mexico. Even states with existing and functional infrastructure
There are plenty of international producers
lack proper interconnectivity between
to choose from, including Mexico’s USMCA
pipelines. “This includes large interstate
trading partner Canada or sanctioned
pipelines or last-mile pipelines that connect
Russia. Another possible avenue, as pointed
with lo c a l dis trib utio n co m p a n ie s o r
out by CNH Commissioner Héctor Moreira,
individual projects,” Geoff Street, Director
is to start developing the country’s natural
of Natural Gas Origination at Tenaska
gas production capabilities, especially if
Marketing Ventures, told MBN. Before this
the country intends to meet its growing
infrastructure gets built, however, Mexico
exponential demand and reach energy
needs to consider how it is going to feed
sovereignty. Mexico has vast untapped
the system the natural gas volume it needs,
natural gas resources it could it exploit but
which currently depends heavily on imports
Mexico currently lacks production capacity.
from Texas, which has been struggling with
Until Mexico reaches this point, however,
climate disruptions of its own.
it could also look at storage capacity to
29
C o nfe r ence H ighlights prevent disruption. Natural gas storage is a
undermine the purpose of using natural
solution that only recently has been revisited
gas in cogeneration and efforts to reduce
but José García, President of AMGN, sees
Mexico’s global carbon footprint.
this as the ideal solution. “It is important to push storage policies to prevent situations
Looking towards the future, although natural
like these from happening,” he said.
gas plays an important role in cogeneration now, what will happen when this transitional
Considering sustainability targets, Mexico
resource is no longer needed? Ramon
needs to be wear y of methane leaks
Moreno, CEO of Mitsui & Co. Power Americas
stemming from burning other fossil fuels.
recognizes natural gas’ contribution to
Daniel Zavala, a senior scientist at EDF
the energy sector will eventually come
reports that 4.7 percent of the methane
to a close and in preparation, industry
produced in Mexico is leaked into the
leaders are looking at hydrogen as the next
atmosphere, an average twice as high as
evolutionary step for the sector. Vera points
that of the US. Zavala notes that this is a
out that GE Power has been working with
very high rate even at the global level. While
hydrogen technology for the past 30 years
it is difficult to avoid, it is absolutely possible
and counts with 75 turbines that run either
to erase methane leaks from existence.
completely on hydrogen or a combination
“There is no need for this pollution. It is
with other fuels. What has changed however
just completely unnecessary,” said Steve
is the technology surrounding hydrogen has
Hamburg, Chief Scientist at EDF to The
recently made it cleaner and more efficient
Scientific American publication. “There are
to produce. Yet, this sector is still in the
cost-effective strategies to capture harmful
early stages of development and just like
emissions. It is about paying attention and
with photovoltaics back in the day, “more
making the necessary investments.” Failure
investment is needed to get past the initial
to take preventative steps threatens to
technology curb,” said Vera.
NATURAL GAS ACCESS: ENGINE FOR ECONOMIC DEVELOPMENT Natural gas is nowadays seen as one of the
Acco rdin g to th e M in is tr y of En e rgy
main and most relevant energy sources. Its
(SENER), it is estimated that by 2031 the
high power efficiency for both domestic and
demand for natural gas in the country will
industrial use, as well as its environmental
increase by 30 percent compared to 2016.
per formance, have positioned it as a
While it is true that Mexico has important
transition source towards decarbonization.
natural gas reserves in states like Tabasco,
However, the challenges to increase access
Tamaulipas, Veracruz and Nuevo Leon and
to this fuel and the lack of awareness of its
in territorial waters, it is also a reality that
benefits continue to be a stumbling block to
the US, without having the largest reserves
reaching its full potential.
of natural gas, has positioned itself as the largest producer of this resource worldwide
In Mexico, natural gas consumption has
with a production close to 25 percent of
increased considerably in recent years.
what the whole world consumes. “This makes it clear that natural gas is the most
“This makes it clear that natural gas is the most abundant, reliable and secure energy source available to leverage Mexico’s development.”
abundant, reliable and secure energy source available to leverage Mexico’s d eve l o p m e n t ,” s a i d M a l v i n D e l g a d o , International Energy Business Director of Picarro.
Malvin Delgado International Energy Business Director of Picarro
Areli Covarrubias, Commercial Director of IEnova, says the key to seize the advantages of natural gas is to keep in mind its role as
30
C o nfe r ence H ighlights a driver of economic development. “Where
Licensing is one of the biggest challenges in
natural gas is available, industry, jobs and
developing a pipeline transportation system
indirect economic spillover arise naturally,”
or any other energy infrastructure project,
she says. “The greater the presence of
explains Covarrubias, adding that while this
natural gas, the lower the levels of poverty.”
has always been a huge hurdle, companies
In Nuevo Leon, one of the entities with the
knew that if they met the requirements
highest demand for natural gas, GDP is
and established mitigation plans focused
expected to increase from 3.4 percent to 5.2
on taking care of the environment and
percent by the end of 2021, Nuevo Leon’s
communities, infrastructure could be built.
Chamber of the Transformation Industry
Now, however, this is not enough. According
(CAINTRA) said in April. By comparison,
to Covarrubias, the rules of the game
Mexico City would have to show an average
have changed and today it is necessary
annual GDP growth of more than 4 percent
to demonstrate that construction brings
over the next three years to reach pre-
value to the area where the project is being
pandemic levels.
built. “This has to be demonstrated not only in front of government agencies but now,
Targeting regions that do not yet have as
more than ever, in front of society.”
much demand for natural gas as others is also an important step toward creating
“In Mexico, we need society to ask for this
greater access and economic benefits for
infrastructure. Communities must know
more than just a few parts of the country.
what the long-term benefits of these
“Unfortunately there are still many places
projects will be; they accept them and
where families use wood or coal to generate
embrace them as their own,” she says.
energy,” says Rafael Mercado, Commercial
Non-standardized requirements for each
Director at Naturgy Mexico, a multinational
municipality and region of the country pose
pioneer in natural gas distribution
a challenge for companies in the natural
founded in 1990.
gas sec tor, never theless , says Alvaro Corona, COO of Gas Transportation and
Bringing this resource to every corner
Distribution at ENGIE Mexico. A common
of the country and meeting the growing
front needs to be formed among companies
demand in the coming years poses major
to raise awareness of what natural gas
challenges, however. While private sector
projects mean for communities and their
investments will continue to be necessary,
development, adds Corona. In addition,
th e te c h n i c a l k n ow- h ow to o pti m ize
public policies that encourage the use
infrastructure and make it safer and more
and deployment of this infrastructure
accessible will be one of the main obstacles
are crucial.
toward reaching natural gas’ full potential. “Coh e re nt p olicies supp or tive of th e
Despite the challenges, companies in the
development of the natural gas sector in
sector have not neglected technological
the country must also be implemented,”
in n ovatio n to g e n e rate a ccu rate a n d
Delgado said.
reliable information for the safe operation of their projects, says Gustavo Nunez, M anaging Direc tor Sec tor for M exico
“By switching to natural gas, Mexico can
and Central America of ROSEN. “There
fundamentally change its carbon
are already solutions that can identif y
footprint toward the future and boost its
faults and threats as small as 3mm up
development at the same time.”
to very critical threats such as fissures,”
Héctor Sánchez López Independent Member of the Board of Directors at Mexico’s state-owned utility CFE
he explains. AI, Big Data and machine learning are already bearing fruit in the industry through corrective and predictive maintenance of pipelines to avoid greater environmental impacts.
31
C o nfe r ence H ighlights EMPHASIS ON SOCIAL IMPACT KEY TO MEXICO’S ENERGY TRANSITION A significant part of Mexico’s population
is evaluated by the sector’s regulatory
is indigenous, living on land valuable to
commission, CRE. Sánchez highlights that
renewable energy developers and therefore
renewable energy projects often have a
to th e e n e rgy tra nsition . S et ting th e
profound impact on the local economy and
highest social impact standards for energy
on the way of life of these communities,
companies is essential to ensure that
making a social evaluation essential to the
these projects are fair and sustainable, but
success of the project and the well-being of
regulation remains somewhat undefined.
the community involved. This consultation i s n o t t h e o n l y p r o c e s s d eve l o p e r s
Data from the Mexican government shows
need to keep in mind. In addition, they
that Mexico counts about 16.9 million
n e e d to co m p l e te a n e nv i ro n m e n t a l
indigenous citizens, representing around 13
impact assessment, which is judged by
percent of the entire population. This already
SEMARNAT. “The environmental impact
suggests that infrastructure projects are likely
assessment does not only aim to protect
to intersect with indigenous communities,
the environment; it works to preserve and
but the reality of Mexico’s geography ensures
restore the land and its flora and fauna as
that this becomes even more likely. “The
best as possible,” Sánchez said.
state of Oaxaca is a prime example. Here, both a high number of indigenous peoples
Foreign investment laws protect developers
and excellent renewable potential for wind
against the loss of previous investment if
energy, for example, are found,” said Héctor
social engagement does not go as well as
Sánchez López, Independent Member of the
planned, mentioned Sánchez. He explains
Board of Directors at Mexico’s state-owned
that social issues can strand projects
utility CFE.
indefinitely, which makes a good ending for either community or company a much less
To g u i d e e n e rg y d eve l o p e r s i n th e i r
likely outcome. While this protection exists,
interactions with communities, Mexico has
it is simply not the preferred outcome for
established an indigenous consultation
lengthy project development processes.
process, which is carried out prior to any
Companies therefore have every motivation
development to assess its social impact
to engage communities the right way from
and aims to be “ free, informed and in
the beginning. But this is no simple task:
good faith.” The consultation process
“There is no set of laws that explains exactly how the consultation process should be done or that really show us the right way,” Sánchez stated. While laws state that indigenous communities have the right to determine their own development and that they should share in the benefits of infrastructure constructed on their land, the way this pans out is not written. At times, these rights can even clash. For Sánchez, this issue needs to be addressed. “We need to solve these issues, so the clean energy transition can develop further and benefits from clean energy projects can be shared in a fair manner,” he said. The global energy transition is not standing still and indigenous communities themselves could greatly benefit from having access to
32
C o nfe r ence H ighlights renewable energy on their land, so they can
Even though the state can intervene to
replace harmful fossil fuels. Expanding on the
set the rules of the consultation, Sánchez
legal framework will ensure that companies
emphasizes that companies have the
have better guidelines available. “Secondary
responsibility to do all they can to meet
laws can help to clarify what really needs
community needs. Communities, on the
to be done,” he said, warning that in some
other side of the equation, can consider
cases, companies wrongly thought of the
the benefits of becoming an integral part
consultation process as a “formality”.
of Mexico’s clean energy transition.
POSITIVE PROJECT IMPACT: LEVER FOR GLOBAL SUSTAINABILITY Scientists warn that the world can no
sustainably in every sense of the word. “If
longer stall the energy transition and
energy is clean and sustainable, it can serve
must halt disastrous climate change. For a
as a root for greater sustainability across
more sustainable world, companies need
other sectors and segments,” said Palomar.
to ensure that projects at the root of this
Building sustainable projects is not at all
transition leave a net positive impact, too.
impossible because many stellar examples
Addressing the social and environmental
already exist in Mexico and elsewhere.
responsibilities of these projects is the way to start, agree experts.
One major factor is collaboration, Palomar said. “This change does not depend on
The energy sector has a major role in battling
government, population and business
climate change: “The energy industry has
separately. We need to work together.” If
a huge environmental responsibility. If our
projects have a negative impact, everyone
sector does what it has to do, we could
involved loses, said Julia González Romero,
decrease the world’s CO2 emissions by 90
Elected Counsel at González C alvillo.
percent,” said Montserrat Palomar, Head
“Tackling this process the wrong way means
of Sustainability at Enel Green Power. But
that projects get halted and communities
renewable energy projects are not without
experience harm. Nobody benefits from
environmental and social impact. If the world
such a situation,” she said.
is to make a sustainable energy transition, it is to be sustainable through and through.
Héctor Sánchez López, Independent Member of the Board of Directors at CFE, completely
Palomar stresses the responsibility companies
agrees on the responsibility various actors
have in ensuring that projects are done
have in making the world more sustainable
33
C o nfe r ence H ighlights through an equitable and fair process. He
accountability, Sánchez firmly believes that
particularly highlights the responsibility
this is an issue that should be arranged
of those that have the capital to enact
between companies and communities. “The
change. “Investors have to be socially and
Mexican government used to get involved
environmentally responsible,” he said, adding
in the past, but addressing local impacts
that “selfish” investments for pure financial
is truly the responsibility of companies. In
gains should no longer be part of anyone’s
the end, communities can benefit a lot from
portfolio if crucial climate goals are to be
renewable energy,” he said.
achieved. In that sense, investors can focus on new technology such as storage. “If we
María Cristina Hernández Calzada, Partner
have sufficient storage, we can truly boost
at Vera & Asociados, agrees with the notion
the energy transition,” said Sánchez.
that some companies are perhaps not doing enough. Nevertheless, she argued
“Overall, geothermal energy offers a very attractive ROI, minimal maintenance costs and is easily operable...”
that the government has done a good job in strengthening the environmental requirements that intersect with indigenous consultation processes. “We are headed
Enrique Papadimitriou
the right way. The government might be
Director General of GEOTER Renewables
a bit short on human resources to do its evaluations efficiently but it is setting very positive and higher standards,” she said.
Responsibility, duty and accountability
The optimal approach differs for every
are especially applicable to companies
project because social and environmental
developing energy projects, added Sánchez.
characteristics are never the same. To really
He lamented that while individuals can even
know how the table is set, it pays to invest
go to prison for breaking environmental laws,
in adequate research and then formulate
large companies often get off easy. Sánchez
an optimal engagement plan. “The social
also criticized the notion of “offsetting”
investment companies make always pays
negative effects in one area by generating
itself right back. It translates to a healthy
benefits elsewhere. Even though more
relationship with communities during the
stringent legal requirements can help foster
entire project’s life cycle,” she said.
REDISCOVERING THE POTENTIAL OF GEOTHERMAL TECHNOLOGY Geothermal technology has been around
Enrique Papadimitriou, Director General
since the 60s, yet it still remains relatively
of GEOTER Renewables.
unknown in comparison to other renewable energy technologies. As this technology
The Spanish company made its way to
garners more attention through proven
Mexico in 2016 establishing itself in energy
successes and adaptabilities, GEOTER
efficiency consultancy and impor ting
Re n ewa b l e s i nte n d s to c a p it a lize o n
technical solutions in climate control
the technology’s growing interest and
systems, domestic hot water, and even
is even exploring hybrid systems with
electricity generation. Just last year, the
p h o tovo l t a i c s . “ O n e o f t h e b i g g e s t
company completed its first infrastructure
challenges of introducing technology to
project in Aguascalientes producing 840kW
a new market is to present it to potential
of electricity for a country club. As a nascent
clients. The recent challenges involving
sector, the company suffered with the arrival
the Energy Reform have hampered the
of the pandemic losing potential clients to
advance of renewable energies but our
trimmed expenditures and/or inactivity.
goal is to show clients the workings and
Nevertheless, it was able to secure a project
b e n e fit s of ge oth e rmal e n e rgy,” s aid
in Valle de Bravo, which has expectedly
34
C o nfe r ence H ighlights moved at a slower pace compared to other
involve photovoltaics says Papadimitriou.
projects due to the current financial and
This unconventional approach provides
regulatory circumstances.
significant economic benefits and has a lot of potential, he adds. The company is now
With an end to the pandemic crisis in sight,
exploring how to scale this hybrid solution
GEOTER is looking forward to a revitalized
and looking at investment options. “Overall,
economy so that it can resume its efforts to
geothermal energy offers a very attractive
capture interest in geothermal technology.
ROI, minimal maintenance costs and is easily
At the moment, the biggest opportunity for
operable, making it particularly attractive for
the company has been in geothermal heat
residential consumers says Papadimitriou.
pumps, mainly to warm up pools, opening projects in the Rivera Maya, Queretaro,
So far, Mexico has installed 951MW of
Baja California and Mexico City. Overall,
geothermal energy, coming from five
the company’s main objective is to give
operational fields: Cerro Prieto, Los Azufres,
this technology greater exposure so that
Los Humeros, Las Tres Vírgenes and Domo
hesitant clients feel more comfortable
de San Pedro. 97 percent of this is owned
adapting these technologies after seeing
by state utility CFE, according to IEA
the savings and adaptabilities it could offer.
Geothermal, although exploration permits have been granted to private companies.
GEOTER has recently run into a new area
As this technology builds on its merits and
of exploration after finding a geothermal
gains its rightful notoriety it is expected to
energy niche through hybrid solutions that
see wider application at different scales.
REVISITING NUCLEAR TECHNOLOGY TOWARD GREATER EFFICIENCY It is time to revisit the potential of nuclear
250 projects a year through 10 international
energy technologies as Mexico attempts
subsidiaries. It starts its analysis with the
to reconfigure it s ene rgy ge ne ration
Kaya Identity, which calculates the expected
infrastructure to move away from fossil
carbon emission of a country based on four
fuel dependency. “It is not only about how
main variables: population, GDP per capita,
many renewables you use but how many you
energy intensity and carbon intensity.
do not use. Closing nuclear plants with no carbon emissions while leaving carbon plants
Mexico currently has 127.6 million people
operating will not help in the fight against
and is expected to reach 137 million by 2030
climate change,” says Manuel Fernández
according to demographic forecasting from
Ordoñez, Radioactive Waste Director
Euromonitor international. The country’s
at Tecnatom.
GDP has steadily grown 33 percent since 1990 and Our World Data, indicates that
The Spanish company focused on nuclear
the country’s energy consumption has
technology solutions, management and
decreased in tandem with technological
optimization technologies works on over
advances, highlighting break throughs in more efficient energy consumption
“In light of these revelations, it may make more sense to redirect investments toward an energy mix that ensures energy security and both economic and environmental sustainability.”
despite higher demand. Lastly, Mexico’s carbon intensity is on par with the global average, remaining relatively stable for the past thirty years. Collectively, these va ria b l e s in d ic ate th at M exico h a s a growing population, a growing economy, refined energy consumption and a stable
Manuel Fernández Ordoñez
carbon emission rate. Going for ward,
Radioactive Waste Director at Tecnatom
Mexico stands to reduce carbon emissions through the holistic application of different
35
C o nfe r ence H ighlights renewable energy technologies, but it still
an energy mix that ensures energy security
needs to address inefficiencies in its energy
and both economic and environmental
sector, which produces the most carbon
sustainability,” said Fernández. “Nuclear
emissions.
is a key contender in this transformation.” Mexico already produces 4 percent of
It is widely known that M exico has a
its electricity through a nuclear plant in
salient overreliance on natural gas, as
Laguna Verde, which also represents 14
it compromises 8 0 percent of energy
percent of its clean energy. Fernández
production. “To better understand the
highlights that the operation factor has
implications of relying too heavily on
only increased at both of Laguna Verde’s
natural gas, we point to a comparative
units, delivering 141TWh and 127TWh since
study between France with over 40 GW of
they came into operation, respectively.
nuclear energy and Germany with less than 15 GW of nuclear energy. Unsurprisingly,
Toward the future, Mexico considers a
nuclear technology has allowed France to
strong nuclear plan that will represent
cut carbon emissions significantly. As of
11,509MW by 2050 according to CENACE’s
September 2021, the country had a carbon
revised PAMRNT (2021-2035) document.
intensity of 44g. Meanwhile, even though
However, the technology to be used in
it has installe d signific a nt re n ewa ble
these new developments is still unknown,
generation plants, it has also phased out
w i t h d i ff e r e n t a l te r n a t i ve s av a i l a b l e
less polluting options, leading to a carbon
including SMR, fast and thorium reactors.
intensity marker of 399g,” said Fernández.
Regardless , “nuclear technology is in constant evolution and the future looks
“In light of these revelations, it may make
very promising for this energy source,”
more sense to redirect investments toward
said Fernández.
GREEN HYDROGEN POTENTIAL FOR PROJECT DEVELOPMENT Beyond reducing its carbon footprint,
through the production and use of green
Mexico can attract investment and foster
hydrogen. However, there is still a long way
economic growth in neglected regions
to go before this resource is recognized as a viable alternative by society and businesses in the country. “Today, more than ever, it is clear that a country with energy availability is a country that will experience economic growth,” said Fernando Tovar, CEO and Country Manager of ENGIE Mexico. This has boosted hydrogen’s potential as an alternative energy source. The trend toward green energy, driven by new consumer demands, has also boosted the recognition of this energy resource. “It is no longer a choice that a company or a country makes but a matter of consumer demand for products with a lower carbon footprint. This includes not only the materials from which a product is made but also the energy used to manufacture it. Producers, faced with demand, have been looking for green energy alternatives,” said Tovar.
36
C o nfe r ence H ighlights G r e e n hyd r o g e n i s g e n e r a t e d f r o m
According to Jeroen Visser, Global Director
renewable energies through a process
for Hydrogen at Nor thland Power, 30
called water electrolysis, through which
percent of economic activities can be
oxygen is separated from hydrogen. Unlike
electrified. This percentage represents 45
grey or blue hydrogen, this process is
percent of global CO2 emissions. “Hydrogen
considered clean and an essential piece
provides access to clean and affordable
in the energy transition puzzle, explained
energy. This resource makes clean energy
Veronica Zapata Oviedo, Member of the
global and democratized. Global trade is the
Association of Women in Renewable Energy
game-changer for me,” he says.
Mexico (MERM). Global efforts towards energy transition The electrification trend has permeated
and decarbonization established in the
several industrial and consumer activities,
2030 Agenda approved in 2015 and the
a l t h o u g h e l e c t r i c i t y g e n e r a ti o n s ti l l
Paris Agreement signed in 2016 have also
considers fossil fuels. However, hydrogen
paved the way for green hydrogen, says
can also participate in this transformation
Israel Hurtado, President of the Mexican
and there are specific niches where this
Hydrogen Association . This new fuel,
green fuel can be an ideal alternative. “For
however, has several milestones ahead,
industries like steel, chemicals or oil and
including a decrease in its cost, which is
gas that need a gaseous energy source
predicted to start falling in 2025 following
and currently rely on natural gas, hydrogen
its widespread use. “This already happened
provides an answer,” said Tovar.
with solar energy eight years ago. It used to cost around US$3.5 million to install
In February this year, multiple severe winter
a Megawatt of solar power and now it
storms caused power outages in Texas.
is around US$600,000,” Hurtado says.
Record-low temperatures caused the state’s
Today, there are already diverse uses and
electric grid operator to lose control of
applications of hydrogen in industries like
the power supply, leaving millions without
automotive, maritime and aerospace. Just
access to power, water and food for days.
in August, the 24 Hours of Le Mans, the
Without a resource to warm themselves,
oldest active endurance event in the racing
the total death toll rose to more than 210,
industry, announced that hydrogen cars
according to the New York Times. Further
will be able to compete in 2025. “I do not
investigation later revealed that one of the
see any other solution in the short term to
causes was inadequately winterized natural
reduce and stop global warming,” Hurtado
gas equipment.
says. “Efforts so far have failed.”
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