| VIEW FROM THE TOP
MANY ‘FIRSTS’ AS ENERGY REFORM UNFOLDS ENRIQUE ALBA CEO of Iberdrola México and President of the Mexican Energy Association
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Q: What is Iberdrola’s main contribution to Mexico’s energy
A: Mexico has approximately 75,000MW installed capacity,
transition and what are the main challenges ahead?
as of 2017 data. These continue to incorporate generation
A: Iberdrola has been working in Mexico for 20 years and
from diesel, coal and fuel oil. If we look 15 years ahead,
we have a long-term view of our bet in the country, which
it is clear that the energy matrix will need to include
translates to constant operational growth. We are going
other outputs to meet demand growth, which is around 3
through a key turning point in the energy and electricity
percent annually. This requires building new plants and the
sectors. We understand that our best contribution in this
rehabilitation and substitution of old ones to ensure eco-
scenario is to participate in all the initiatives promoted by
friendly and sustainable generation. The goal is to shift to
the Energy Reform. For example, before we could sell to
a more economic and environmentally-competitive energy.
industrial clients under a self-sufficiency scheme but the new
Also, I think that Mexico is the most competitive region in
market opened-up the wholesale electricity market and we
the world for natural gas, given gas availability in the south
were the first private electricity company to sell to a private
of the US and Mexico’s own production. While the latter is
customer in Baja California with Soriana supermarkets. We
not being exploited to its fullest yet, the country has great
also were the first to announce a combined cycle specially
reserves and potential. These conditions lead Iberdrola to
built to operate in a wholesale market, the first facility of
believe that natural gas prices will perform steadily for the
its kind to be built in Mexico. Also, we participated from the
next 15 to 10 years. Gas should gradually substitute other
beginning in the long-term auctions as sellers and when the
sources such as diesel, coal and fuel oil.
possibility to join as a buyer was opened in 2017, we jumped in as the first private company.
Q: What is Iberdrola’s growth strategy in Mexico? A: The previous model of selling to industrial clients under
Mexico has a significant electricity market which is growing.
a self-sufficiency scheme was oriented to big consumers
The sector will require a great investment in transmission,
with a sophisticated structure, including an electrical
generation and distribution infrastructure of approximately
department, and demanding a tailor-made solution.
US$100 billion over a 15-year period. When you combine
The implementation of the reform in 2014 liberalized
a big market with high industrial demand and increasing
procurement to clients of even 1MW of installed capacity.
industrial investment, you need to create a tool to allow
This changed the paradigm under which we operated and
the joint public-private collaboration to face market
hence we needed to adapt and change our strategy to
challenges and meet demand. We must keep working to
cater to smaller clients. For example, within our commercial
fulfill the ambitions of the Energy Reform. For example,
team, we created a special division called MeDem to
some aspects will require process re-engineering to adapt
oversee SMEs. Any energy strategy must be aligned with
to the results from the first four years. Another challenge
the country’s energy policy in the long term. Our strategy
is having more market participants, such as qualified users.
visualizes commercial activity and client portfolio growth
Transmission is another objective to overcome in obtaining
as foundations. Commercial growth must be backed up by
more even prices across the country. While the reform has
generation growth. As the Ministry of Energy’s discourse
been very successful for renewable generation, investment
is that Mexico needs more gas and renewable generation
for baseload energy must be further fostered. In short, there
over the next 15 years, Iberdrola has been focusing on these
is a clear need to cope with the sector’s future demand and
during its 20 years in the country. We have operational
meeting it will only be achieved through close collation of
wind parks and gas generation with combined cycles. This
all the actors involved.
strategy fits the country’s forecasted demand.
Q: What midterm role will natural gas have in energy
Our 2018-2022 Strategic Plan will focus on finishing the
generation in Mexico?
eight projects we currently have under construction, that
