Mexico Energy Forum 2021 Echo - Impact Report by Mexico Business Publishing

IMPACT REPORT

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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.

C o nfe r ence I m p act

170

companies

488

conference participants

How would you rate the quality of the conference program and speakers?

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

speakers

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.

261

participants

198

1,503

1:1 meetings conducted

matchmaking communications

2,342 Trading

Matchmaking intentions

Total

4,248

358 Recruitment 1,002 Investment 546 Networking

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

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

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

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

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

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.

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

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

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.

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

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

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

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

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

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.”

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

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.

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

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

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

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.”

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

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

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

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

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.

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

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

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

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

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.

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.”