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strategies. “We experienced snow and a lack of water and electricity in Texas last month. These unprecedented black swan events need to be included in the risk assessment of every new project,” said Méndez.
Cruz reaffirmed investors’ interest in the country but also used the oil and gas sector as an example of the variety of responses that private players could have. “A lot depends on the risk appetite and long-term vision of investors. We will see which companies consolidate in the market and find new niches and which ones pull out.” Amkie also said that Citi’s strategy is yet to be defined depending on the market’s response. “We will have to look at new opportunities depending on how the government renegotiates its contracts with private players and how it sets the new rules of the game.”
MEXICO’S POWER PRODUCERS READY TO SUPPORT ENERGY TRANSITION
The paradigm shift in the Mexican energy sector was the main topic of discussion during the fourth panel of Mexico Business Forum 2021 on Wednesday, Mar. 10, entitled “Power Producers’ Priorities.” Experts agreed on several topics including the legal framework, protecting investments, transmission and distribution, the energy transition and new technologies to help drive the sector forward. Moderated by Patricia Tatto, Vice President America of ATA Renewables, the conversation furthermore included Fernando Tovar, CEO and Country Manager of Engie México; Ramón Moreno, CEO of Mitsui & Co. Power Americas; Gerardo Pérez, Vice President and Country Manager of EDF Renewables México and Bruno Riga, Country Manager of Enel Green Power Mexico.
Tovar, spearheading the French energy multinational, acknowledged that there is “tremendous uncertainty” in the sector as a result of numerous regulatory changes and measures in recent years. “This poses a risk for existing investments but also for potential new investment,” he said. Because of this, Engie is could make use of the instruments provided by law to protect its investments. “It is even more important to look forward, however,” Tovar said. “Engie is a multinational company that respects the rules of the country where it operates. If the government wants to change those rules, we will adapt to the new situation and look for new opportunities.” In this regard, natural gas storage offer interesting prospects. Both cogeneration and new thermal power generation CFE plants are among the main opportunities, but it is also necessary to strengthen the electricity system. Tovar sees a possibility in a sector where CFE and private players complement each other. “The environment seems to be us or them; CFE against the private sector. I do not subscribe to this way of thinking because there is space for both. There is no conflict between strengthening CFE and having private participation in the market, after all.”
“CFE is a crucial player in the energy market and will continue to be so. Private companies need to operate in the space that is granted to them,” agreed Moreno. “We will always try to grow further here and position ourselves where possible,” he said, noting that combined cycle and other large-scale power plants are key to Mexico’s future. Mitsui would also protect its investment through the tools provided by law. The area of power generation and commercialization would remain as important as ever for the Japanese energy giant’s Mexican arm, as distributed energy generation, lower gas prices and digitalization offer interesting new opportunities for the company.
“We maintain our commitment to Mexico’s energy transition. This includes public and private consumers, as well as communities throughout the countries. Our projects should benefit Mexican families first and foremost,” said Pérez. He noted that EDF Renewables adapts quickly to changes in the sector but that it has also learned to be patient. “Of course, rules can change but they should not be applied retro-actively,” he pointed out. Furthermore, he noted that the company’s
Country Manager at Enel Green Power Mexico
experts could help solve Mexico’s challenges regarding its transmission network.
Enel’s newly appointed Country Manager Bruno Riga started his speech by acknowledging Mexico’s great renewable potential. “It is a country in which we want to continue to invest,” he asserted. Despite momentary challenges, Riga concurred that a long-term perspective is crucial for Enel. “We are all lucky to work for companies that have a long-term vision. Problems can always arise in the short term but we need a clear vision of where we want to go.” After all, the advancement of renewable energy can no longer be halted. “Renewable energy is not just the future; they are already very much present,” Riga added, pointing out the growing demand for electromobility.
One of the biggest challenges that needs to be addressed is the aging distribution network in Mexico. Because of its fragility, intermittent renewable energy integration has become a particular focal point for the government. “The discussion about renewable energy’s reliability and stability is a valid discussion,” Moreno pointed out. But after the last gas shortage in Texas, Mexico faced problems due to its high reliance on gas imports. “We need to invest in the transmission network. It is the key to reliability, to decarbonization and even energy independence,” he said. Flexible power plants that can start up fast when needed, as well as battery storage, can help foster the system’s reliability. But auxiliary services, providing storage and stability, are currently not adequately incentivized or rewarded. Tovar, whose company already owns and operates a solar power plant featuring battery storage, agreed with this notion. Other than battery storage, hydro capacity and even hydrogen could be used to store energy. “This is the future,” Tovar said about green hydrogen.
“We already have hybrid power plants, with integrated wind and solar developments,” Riga said, adding that these technologies could help to improve the energy system. “Hydrogen will be incredibly important for decarbonization,” said Riga, although a golden business model has not yet been established in this area, he highlighted. Other trends mentioned by Riga were distributed generation, smart grids and electric vehicles. “We have to change the paradigm of how we see the market. We need to generate new models that enable the transition to green energy,” Riga pointed out.
Pérez agreed that storage could offer many benefits, even to end-users. “Storage represents a great potential for solving the main difficulties faced by transmission and distribution networks,” he said. Clients are key and companies should listen to their demands, the panelists concluded.
MIGRATING TO A NEW MARKET DYNAMIC: PROS AND CONS
Experts participating in the panel “Guiding OffTakers to Success With PPAs and Distributed Power Generation” at Mexico Energy Forum 2021 on Wednesday, Mar. 10, agreed that the current situation in the Mexican energy sector is pushing companies toward a new energy market dynamic, something that in their opinion has to be seen not as a challenge but as an opportunity. “Despite the new reforms and uncertainty, companies want to move forward with PPA contracts. We can help them to meet their needs,” said Edmond Grieger, Partner and Head of Von Wobeser & Sierra’s Energy and Environment Practice. Diego Blumenkron, Sales Director at Northland Power Energía, explained the importance of understanding the current needs and trends in the Mexican energy sector. For him, in 2016, the energy sector was marginalized but today it is a highly competitive sector.
Blumenkron also explained that since Northland is a buy-side and sell-side company, it wants to have a strong, competitive and stable internal matrix and the right tools to solve its customers’ problems. “Consumers want new supplies and products that promote ESG practices, such as clean energy,” he added. He shared that the company is offering a very attractive system for the energy market that includes natural gas, distributed generation, coal, clean energy, among other alternatives, which allows the customer to stop relying on a single resource. “We are combining the best of each offering and taking advantage of the resources we have in the market to offer a better proposition to our customers,” he said.
Pablo Rivero, Country Manager for Mexico at ForeFront Power, explained the main differences between distributed energy and centralized generation. According to his presentation, the former needs fewer customers to cover market risk, while the latter is more suitable for larger projects and more vulnerable to market prices. Rivero added that there are two reasons for companies to finance distributed generation: lack of capital, which increased due to the pandemic, and high maintenance costs. He also agreed that uncertainty caused by recent laws and the pandemic have pushed many companies to switch markets. “Buyers have been concerned about the impact this new regulatory framework could have on their contracts. They are hoping contract migrations to this new market will be possible,” he said.
“The new market to which companies are migrating includes more than 4,000 companies. This represents a new opportunity for the market to provide more certainty, better contracts and more tailored solutions,” said Ruth Guevara, CEO and Founding Partner of Zumma Energy Consulting. Guevara added that Mexico has grown in clean energy, especially solar, as it has been the most accepted by customers and the easiest to implement. The main motivation for this shift has been environmental objectives, as customers are increasingly looking for cleaner energy. “This is a dynamic market that will continue to grow. With the COVID-19 pandemic, we have learned that our offer has to be more flexible,” said Guevara, who concluded that uncertainty in the sector has always been present. However, companies are protected by contracts, which he believes allows both sides to understand each other better. Blumenkron discussed the opportunities opening up this year for the energy sector in areas such as storage and batteries, which can serve as an option to offload distribution lines. “We need to identify the new trends that are coming and what customers need to offer more flexible solutions to help them in this new energy migration,” he concluded.
Ruth Guevara
CEO and Founding Partner of Zumma Energy Consulting
ELECTRICITY MARKET WALKS BUT NOW IT MUST RUN
The Mexican wholesale electricity market is still incipient despite the many opportunities that exist to accelerate its growth. This was the general principle that was discussed and agreed upon during the fifth panel of Mexico Energy Forum 2021 on Wednesday, Mar. 10: “Unlocking the Electricity Market Via Assets, Supply and End-Users.”
The panel was moderated by Angie Soto, Managing Director of Nexus Energía MX, who offered the panelists a space in which they could contribute not only their experiences but also their own theories and explanations as to why, as she said, “are there still not millions of qualified users in the Mexican wholesale electricity market.”
“Even though the growth of qualified users seems slow, you have to compare it to previous years. In reality, the growth rate has increased a lot if you compare the small growth from 2016 to 2017 with the much faster growth seen after 2018. This is a process of change and restructuring that has taken up to a decade in other countries, so this transition in Mexico has been much faster,” Panelist Lilian Alves, Director of Strategic Planning at Mitsui & Co. Power Americas, noted. Alves also evaluated her company’s experience in the market as positive. “As the second largest operator of power plants in Mexico, our sales in the wholesale electricity market have been significant. Our portfolio of services includes the representation of customers who are entering the wholesale electricity market.
These representation services will be increasingly necessary as government changes are likely to grow the need for commercial and industrial customers to find comprehensive energy solutions for their operations. We want to be much closer to what would be the downstream segment of the market. Since last year, we have been developing our distribution capabilities and this amounts to a vote of confidence in the future of the Mexican wholesale electricity market.”
Alves’ statements were echoed by Hans Kohlsdorf, Founding Partner of Energy to Market. “We have to explain to customers how they can incorporate solutions regarding their energy supply while taking advantage of energy efficiency and demand control technologies. We have failed to convey how relatively easy it is to become a qualified user. It is a fairly easy and uncomplicated process,” Kohlsdorf said. He also made it clear that on-site generation is a global trend that will not stop. Moreover, trends like that make it imperative for more customers to seek their place in the wholesale electricity market. “This is the time to buy power. The more people get scared, the more opportunities arise. All we have to do is talk to our customers about the changes they would have to implement,” Kohlsdorf said.
Panelist Víctor Ureta, Director of Operations and Risk at Acclaim Energy, agreed on the existence of an information problem. “There is still a great lack of knowledge at the end-user level. We need to make a big effort to reduce this problem.” Ureta pointed out that the market exploded between 2019 and 2020 but a large number of questions remained unanswered among qualified suppliers. He also stressed the need to promote investment to ensure energy supply and its quality. “Securing energy supply is a risk management effort, especially if customers opt for experienced qualified suppliers and consultants. Scary stories about the nature of the wholesale electricity market need to be dispelled.”
Alves pointed out that “there are several options available to qualified users in the electricity market. The number of possibilities can be a bit dizzying, so we have to work to advise on the most optimal solution. For some customers, service interruption can mean long delays if their operations and assembly lines take a day or more to get back online, so uninterrupted service is their top priority. Other customers may have very tight budget policies, so price predictability will be their top priority. The pandemic has caused companies to define their needs and objectives much more clearly, so we can help them translate this into better contracting conditions. While it is true that the new energy laws complicate our offerings, our faith in the future development of
Director of Operations and Risk at Acclaim Energy
Mexico’s wholesale electricity market has not been shaken.”
Panelist Sean McCoy, Director of Energy Services for Mexico at Edison Energy, concurred, albeit with some reservations, with the panel’s conclusions. “Access to reliable and immediate information should be a fundamental part of the electricity market. It is what has made other markets so successful. However, this will not fix the fact that if CRE does not release more permits, we will experience a shortage in the supply of renewable energy in a few years.”
THE UK: CASE STUDY ON THE ROAD TOWARD ENERGY TRANSITION
The UK is increasingly seen as a world leader in decarbonization. Coming from a high dependency on coal, the government has implemented various policies to boost its clean energy development. The Carbon Trust acts as a partner, helping companies and governments like the UK to decarbonize. Mauricio Riveros, Manager of Carbon Trust México, outlined the UK’s energy transition as a case study during a presentation at Mexico Energy Forum 2021 on Wednesday, Mar. 10.
The UK’s climate change policy was launched in 2008, when the government committed to reducing emissions by 80 percent by 2020 compared to 1990s levels. In 2018, it introduced its Clean Growth Strategy, focused on industrial activity, which greatly boosted the development of offshore wind energy. In 2019, the country updated its Climate Change Act to make the 2050 target legally binding. “The government’s projections continue to show that there is still some way to go to reach the targets. However, the country has shown that economic success and environmental sustainability can go hand in hand,” Riveros said.
The UK’s electricity mix has switched from being based mostly on coal and natural gas to focus on gas and renewable energy. Nuclear power still plays a role in the matrix, as well. “Distributed solar and wind are the main renewable sources in the UK,” added Riveros. Offshore wind, however, is the biggest component of renewable energy.
“The UK currently has the highest installed capacity of offshore wind in the world,” showed Rivero. With the Offshore Wind Sector Deal, the country committed to installing 30GW of offshore wind by 2030, which increased to 40GW in recent years. However, experts predict that the country will need between 75 and 85GW to reach its net-zero emissions target. Riveros stressed that this is not impossible, as wind
energy may soon not require incentives. “Wind projects are becoming increasingly profitable and have reached a point where they no longer need subsidies to be profitable.”
Decoupling the UK economy from coal was crucial to meeting 2050 targets and the pandemic seemed to have at least one positive effect on the country in this regard. “In 2020, the UK experienced its longest coal-free spell, one of 67 days, partly due to lower energy demand,” Riveros said. Despite this, the UK’s energy matrix is still dominated by fossil fuels. “The government is promoting electrification, greenhouses, heating networks and clean hydrogen as alternatives,” Riveros said. Hydrogen and battery storage are key to the UK’s energy transition for another reason, as the government plans to use them to make the national electricity system more flexible.
In the UK, buildings are the second largest source of emissions, after transport. With 90 percent of buildings still relying on fossil fuels, energy efficiency measures implemented at a large scale will also be important. Investment is needed in other areas as well, said Riveros. Increased distribution and transmission driven by peak demand increase. Back-up generation needs to be enhanced as well to deal with renewable intermittency, among other measures. “Furthermore, smart technologies enabled by our increasingly digital world can help consumers to take control of their energy use and reduce their bills,” said Riveros.
However, one of the largest components of the energy transition will come from the public sector with the Ten Points Plan for a Green Industrial Revolution, featuring an estimated private investment of US$58.5 billion in energy, buildings, transport, innovation and the natural environment by 2030.
Manager en Carbon Trust México
ESG INVESTMENT FOR HIGHER PROFITABILITY
Investments in equipment and infrastructure may be seen as an additional expense at the beginning. However, they will turn into savings in the long run. This was one of the conclusions reached during the last panel of Mexico Energy Forum 2021 on Wednesday, Mar. 10, titled “Corporate ESG and Energy Efficiency: Best Practices in the C&I Sectors.” Experts agreed that ESG practices have become essential to companies’ business plans and it is no longer feasible to ignore these issues. The panel was moderated by Elizabeth Mosqueda, Senior Manager at Carbon Trust Mexico, and the conversation also included Mónica Samudio, Country Managing Director at Circutor; Enrique González Haas, Area President at Schneider Electric; Montserrat Batta García, Energy Manager at Continental and Verónica Ordóñez Montes, Innovation and Technology Manager at Soriana.
“ESG practices have paved the way to many opportunities; their implementation will not only bring us environmental but also economic and labour benefits,” said Samudio, who added that implementing responsible energy practices promotes business development, worker safety and much-needed energy investments in this day and age. “Energy efficiency also represents a social contribution: electrical accidents cause 25 percent of deaths at industrial sites worldwide,” she said. At a recent interview with MBN, Circuitor said that it expects to be recognized as the top company to help clients to comply with Mexico’s network code requirements. The company said it can help clients improve their production process and become more costeffective. Furthermore, the company aims to be a pioneer when it comes to products that meet regulatory standards.
González said that the Mexican electricity system has a solid infrastructure. However, many resources are being wasted, usually by companies that do not know how to use their resources efficiently. He remarked that this problem can be solved, as today the sector has good technologies. “The ideal would be to design infrastructure from the beginning so that it can be energy efficient. However, companies do not always have this vision and choose cheaper options.” If companies incorporate technologies, they can identify and collect data that can be useful to reduce operating costs and improve their profitability. “This is a big
bet for companies to make. However, we need a culture change so other companies know that a big investment can turn into long-term savings,” he said.
Schneider Electric has developed an integrated offer of technologies and solutions supporting the transition to a more electric, digital, decarbonized and decentralized energy system. Sustainability is at the core of the company’s business plan and this has been reinforced due to the new challenges brought by the COVID-19 pandemic. González explained that within the company’s five pillars, climate is the No. 1. In 2019, the company announced its commitment to carbon neutrality with three new actions: “accelerating its 2030 goal of carbon neutrality by demonstrating carbon neutrality in its extended ecosystem by 2025, achieving net-zero operational emissions by 2030 as part of validated SBT target and engaging with suppliers toward a net-zero supply chain by 2050.”
Ordóñez explained how the company has become a good example when incorporating ESG practices. “We have achieved energy efficiency by analyzing consumption, making a plan and managing it while monitoring energy use.” She agreed that the main challenges to incorporating these practices is that from the outside, they can be seen as an investment that might not generate short-term benefits, something that did not happen at Soriana.
Batta García concluded that to obtain effective results, the key to success is to have teams with specialized people. “You have to train the team to commit to ESG practices, as they will decide how to incorporate these practices into the company’s business plan. We, as a company, have a responsibility to put the best of our talent at the helm,” she said.
Montserrat Batta García, Continental’s Energy Manager, concluded that in order to have effective results, teams with specialized people are the key to success. The team must be trained to become committed to ESG practices, since they will decide how these practices are incorporated in the company’s business plan. “We, as a company, have a responsibility to put the best of our people in charge. “
At Continental, there is a group responsible for sustainability management, which promotes and monitors the implementation of sustainability strategies and their impact. The company is convinced that a sustainable and responsible business approach increases the company’s ability to meet the needs of the future. Its approach includes market analyses, customer discussions and a stakeholder survey. Continental strives 100 percent of carbon neutrality in its entire value chain, emission-free mobility and industries and responsible sourcing and business alliances, reported the company. However, one of the largest components of the energy transition will come from the public sector with the Ten Points Plan for a Green Industrial Revolution, featuring an estimated private investment of US$58.5 billion in energy, buildings, transport, innovation and the natural environment by 2030.
Mónica Samudio
Country Managing Director at Circutor
MEXICO’S FUTURE IS TIED TO THAT OF NATURAL GAS
The gasification of Mexico’s energy value chains will prove essential to the country’s future competitiveness. This was the theme that characterized the opening presentation of Mexico Energy Forum 2021 on Thursday, Mar. 11, titled “The Vision of CNH Regarding Mexico’s Gas Sector Development.” CNH Commissioner Héctor Moreira began his presentation by stating he wished to present a thorough reexamination of the importance of natural gas, while also making it clear that his views would not represent those of CNH.
Moreira presented an overview of the natural gas production process derived from oil and gas exploitation. The reason why he went over this process was to connect that extraction process to the different kinds of natural gas commodities that can reach the market and how they are valued, depending on their relative humidity: the more humid the gas, the more valuable it is due to the larger variety of uses it can find in a larger portfolio of industries. Moreira said the natural gas Mexico imports from the US is dry gas and that by relying too much on US imports, Mexico is also adding lower quality gas to its national inventories. “The US sells us dry gas, which has none of the expensive liquid condensates that are beneficial for various industries associated with natural gas.”
Moreira later explained the gaps that exist between natural gas production and consumption, this with the intention of illustrating Mexico’s overreliance on US natural gas imports. “PEMEX consumes an important part of the gas it produces. As a result, 67 percent of dry gas needs to be imported from the US, around 5.57Bcfd in 2019. This makes us very dependent.”
Moreira also addressed the recent weather events in Texas. “If Texas sneezes, Mexico gets pneumonia; 58 percent of all electricity in Mexico is generated through the constant flow of Texas’ natural gas.” Moreira highlighted this dependence as a unique situation. “Mexico might be the country that depends on another country the most and not because we import too much natural gas. Some countries, like Japan or South Korea, import 100 percent of the natural gas they consume. However, they purchase this gas from different countries and sources.” The presentation continued with a breakdown of the advantages of natural gas, while also pointing out some of its disadvantages. For example, transportation of natural gas is a much more complicated logistical and infrastructural affair when compared to oil, particularly given the need for specialized vessels and port facilities. The investment needed for this type of infrastructure in Mexico is a matter of great concern, said Moreira. However, natural gas is the cheapest fuel in the world and electricity made from natural gas is the cheapest in the world, as well. Moreira highlighted Trump’s administration efforts to restart the US coal industry to illustrate that even this dirt cheap fossil fuel was more expensive than natural gas.
The only thing that made coal marginally cheaper in specific situations was the presence of existing, but very old plants (meaning no new construction or development was necessary) and government support. Moreira also compared natural gas to renewable energy, noting that while renewable energy presented little transportation or production costs, it also had a real storage and backup problem. He also noted that renewable energy was not necessarily cleaner than natural gas. “Renewable energies are not completely free of emissions, either. Producing a solar panel has an environmental impact. Therefore, one needs to make balanced choices.” As a CNH Commissioner, Moreira provided information on Mexico’s abundant natural gas resources. “Mexico is not an oil country; it is a gas country. Our resources are the sixth largest in the world.” Moreira concluded by offering a historical perspective, noting that natural gas is likely to play a role in the 21st century, just like oil played in the 20th and coal played in the 19th century. “Natural gas and renewable energy will keep growing in the coming years, while gasoline will slowly lose relevance.”
Héctor Moreira
Commissioner at the National Comission of Hydrocarbons (CNH)
NATURAL GAS TO BOOST MEXICO’S DEVELOPMENT
Natural gas is a transitional resource that is allowing Mexico to go from fossil fuels to renewable energy. However, this transition does not need go too fast and the country can take advantage of this resource to boost its development. This was one of the conclusions reached during the second panel of Mexico Energy Forum 2021 on Thursday, Mar. 11, titled “From Source to Consumer: Gas Distribution and Infrastructure.” Experts agreed that natural gas is and will be the most important resource for generating energy in the coming years in Mexico and that recent blackouts have demonstrated the importance of improving natural gas infrastructure to increase the country’s energy security.
The panel was moderated by Diana Piñeda, Partner at González Calvillo, who managed the discussion between Areli Covarrubias, Commercial Director at IEnova; José Aparicio, CEO of Siemens Energy Mexico, Aldrich Richter, Managing Director of MAN Energy Solutions Mexico and Alma Monserrat Flores Estrada, Expert in Regulation.
“The blackouts caused by the situation in Texas have demonstrated the vulnerability of the country. These events greatly affected CFE but above all, users and industries,” said Piñeda. She added that Mexico needs to guarantee the supply of natural gas in difficult situations and that it cannot depend on another country (US) for its energy security.
Covarrubias explained that in the last 15 years, Mexico has made an important effort to strengthen its infrastructure. “Ten years ago, we had very restricted systems and natural gas could only be used for specific industries and areas. Today, we have a completely different panorama.” Covarrubias said that to increase Mexico’s energy security, the country has to diversify its energy sources and improve the current natural gas infrastructure to meet national demand. Mexico needs to have natural gas storage in case of an emergency and, according to Covarrubias, it is important to start with these projects, since they take a long time to implement. In addition, there must be operational coordination among permit holders, especially when demand is greater; coordinated planning for the expansion of the country’s infrastructure; infrastructure modifications to reach marginalized areas and the implementation of storage terminals, as they continue to be essential for the operation of the natural gas system.
Aparicio, emphasized that natural gas remains the main resource for energy generation in Mexico. “If we add energy storage to our power plants, based on combined cycle technology, we can help prevent blackouts by ensuring stable energy around the clock,” he said. Aparacio also mentioned there is a tendency to use hydrogen. However, he emphasized that natural gas remains the favorite resource. Natural gas is cheaper, as breaking hydrogen is very expensive. Nevertheless, hydrogen prices could decrease in the coming years and it is becoming a popular option to achieve a net zero emissions target. “This hydrogen trend is very popular in Europe, especially in the automotive industry. Mexico also has extreme potential for it. However, its transition has just begun and the country should take advantage of the many opportunities it has with natural gas.”
In a recent interview, Aparicio told MBN that Mexico is in a process of transition regarding energy, with drivers like climate change and decentralization. In addition, the pandemic has also shaped the industry. Siemens Energy is working with CFE and other players to provide technology, enhance their cybersecurity, develop combined cycle designs and prepare them to meet Mexico’s growing energy demand. “We are here to support projects and promote hybrid systems but we do not only work on energy generation. We are about to commission an important infrastructure project, a large compression station for one of the main operators of natural gas infrastructure in the country.”
Richter highlighted that natural gas is a transition resource from more polluting resources to renewable energy and explained that the
CEO of Siemens Energy Mexico
Mexican transition could last a long time, which is the perfect opportunity for the country. Many countries have joined the natural gas trend, as renewables have the problem of fluctuations. However, these problems can be solved by incorporating a sophisticated operator system that predicts these fluctuations or by having robust storage infrastructure.
Storage systems from MAN Energy Solutions can solve many of the problems renewable energy sources present. These are designed specifically to store renewably produced surplus energy, to make it available when needed and reduce problems associated with energy fluctuations. The stored energy can also be used directly in the form of heat, cold or as fuel for transportation. Energy storage not only ensures a sustainable, reliable and economic power supply, but also integrates energy-consuming sectors with power producers. Richter emphasized that having efficient storage systems will be the link between natural gas and renewable energies.
Ritcher agreed that hydrogen energy is expensive, since breaking its bonds costs a lot of money and energy. However, it is a great bet. “Japan is betting on hydrogen not to generate energy but to use it in transportation. It is a great example and Mexico could join this country in the future.”
Flores Estrada emphasized that natural gas is the most important resource for the development of the Mexican economy. There have been many efforts made by the government to improve the natural gas supply problem. “However, we need to increase them to meet the demand,” she said. Among the government’s efforts is the balance in adjustment that sought to buy liquefied natural gas to mitigate shortages, as well as the strengthening of the transportation system and development of projects to guarantee gas supply and its storage.
SENER’s five-year plan (2020-2024) has a new portfolio of projects that seek to promote natural gas storage. However, we need to strengthen energy policy and infrastructure development to have uninterrupted supply, said Flores Estrada. CENEGAS evaluations have shown there is much infrastructure that can increase supply coverage. Therefore, it is important to carry out joint evaluations for its improvement, in addition to promoting integrated systems. Flores highlighted that virtual pipelines could be a new solution to supply problems, especially in the south where there are hard-to-reach areas. “By ensuring fast delivery, we can help these areas develop faster,” she said.
Managing Director of MAN Energy Solutions Mexico
CRISIS MANAGEMENT CRUCIAL FOR COMPANY SURVIVAL
In a short presentation, Jan Frowijn, Vice President USA, Mexico & Central America of ROSEN, outlined some of the challenges all companies are currently facing and the specific hurdles and opportunities the pipeline sector has dealt with during these uncertain times. Crisis management is crucial in this regard but new technologies also broaden the horizon for the pipeline sector, Frowijn said during Mexico Energy Forum on Thursday, Mar. 11.
ROSEN is a worldwide provider of integrity process chain solutions for various industries, mainly the energy sector. The company develops in-house engineering tools and software. In Mexico, ROSEN focuses mostly on pipeline inspection and integrity management, which includes monitoring and measurements within these pipelines. “We are present in more than 120 countries worldwide but Mexico remains one of our biggest commitments. We have been here for the past 30 years,” said Frowijn.
In Mexico, as in other countries, one obvious challenge dominates the discussion. “COVID-19 has generated both a health and an economic crisis,” Frowijn said. “Nobody expected we would have virtual events one year later,” he added. But this is not the only challenge. Especially for pipeline operators, environmental conditions leading to a freeze in Texas blocking gas supply for multiple days posed another unexpected issue to deal with. The uncertainty and the struggles people have had to confront clearly bring the need for adequate crisis management to the foreground. “Crisis management is about finding the right actions, following up on training and preparation to get the company through tough times,” Frowijn outlined. “Any approach to leadership and crisis management must begin with risk assessment and subsequent preparedness.” Planning and preparedness thus come first, followed by gathering the right information and making important decisions.
“Making critical decisions in times of crisis can be very difficult,” emphasizes Frowijn, adding that during the current crisis, many companies had to make difficult choices regarding the size of their workforce. But dealing with remote work has also been a challenge. The existing company culture proved to be a major factor in the survival of companies. “Under pressure, both the best and worst in an organization will come to surface,” he said. In dealing with a crisis, external factors and stakeholders are equally important.
Good relationships built over time can make all the difference and by being in touch with the market, companies can take on new opportunities. At the end of the day, a crisis is also a chance to work better. “Never waste a good crisis, Churchill once said. This is still true,” notes Frowijn.
These approaches to crisis management are applicable to any company or organization. Nevertheless, Frowijn also took some time to address issues specific to the pipeline sector. Even though having ‘boots on the ground’ was complicated, technologies are a major opportunity for companies looking to monitor flows and assess integrity of infrastructure. Furthermore, Frowijn addressed one of the biggest future opportunities in the area of energy: hydrogen. “Globally, green and blue hydrogen will, almost without a doubt, be part of the future’s clean energy mix,” Frowijn noted. One of the biggest benefits of hydrogen is that it resembles gas, in a way. It can therefore be transported through gas pipelines and used for fuel in certain natural gas power plants. Nevertheless, the infrastructure needs to be adapted and long-term effects of hydrogen instead of gas flowing through structures need to be examined. Due to the high hydrogen content, pipelines could be more susceptible to cracking. Furthermore, inspection tools and components that move through pipelines could also be affected. Much work therefore remains to be done, Frowijn concluded.
DIGITALIZATION IN CONSTRUCTION REMAINS AS URGENT AS EVER
The use of digital tools in construction processes will be of increasing relevance to Mexico’s energy development, given the infrastructure developments that must be finalized to reach the country’s ambitious goals. That much was clear during Mexico Energy Forum 2021’s presentation titled, “Explore the Unexplored With Digital Construction Tools,” imparted by Nathan Shabot, Business Development Director for Latin American at Locusview, on Thursday, Mar. 11.
Shabot began his presentation by asking the audience if they believed that operators and developers in their sector would be interested in technologies that could reduce their paperwork and information processing by up to 70 percent, their costs by 50 percent and their onsite supervision time by 20 percent. Shabot said these are the kinds of advantages that can be provided by digital construction tools. “Mexico faces a digitization challenge but this is the future and we must adapt. Locusview wants to be Mexico’s main ally in this transition.”
These tools will face great demand given the growth rate of construction in different sectors by 2032. The examples Shabot mentioned included the 29 percent expected growth in transmission lines, 60 percent in renewable energy plants, 30 percent in natural gas transportation infrastructure and 100 percent in telecommunications infrastructure. Shabot expects these rates to support construction that will aid smart grids and distributed energy generation, which by then will have a strong digital technology component as part of their construction process. All of these growth targets, in Shabot’s estimation, present three distinct challenges for construction companies, developers and EPCs: operational efficiency must be increased, risk must be reduced and financial efficiency must soar as well. Shabot, however, believes that Locusview digital construction tools can provide solutions for all of these challenges. Originally an Israeli-American company founded in 2014, Locusview now participates in development projects in India, Mexico, Greece, Ireland and the UK. Its objective is to build “the world’s best digital construction management platform.” The company has worked with major energy companies, including Iberdrola and Duke Energy.
One of the issues that led to the founding of Locusview is that over half of all infrastructure in the US was built and installed between the 1950s and 1960s, with no data recollection policies in place. Over time, this led to significant accidents like the San Bruno explosion in 2010. Regulation has been introduced to integrate all distribution networks and grids but that has created a need to manage all of the data that these integrations have generated. The ultimate goal of digital construction platforms like the one provided by Locusview is to solve the myriad of issues
Nathan Shabot
Business Development Director for Latin American at Locusview
