Mexico Energy Review 2019

Page 102

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MANY ‘FIRSTS’ AS ENERGY REFORM UNFOLDS ENRIQUE ALBA CEO of Iberdrola México and President of the Mexican Energy Association

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Q: What is Iberdrola’s main contribution to Mexico’s energy

A: Mexico has approximately 75,000MW installed capacity,

transition and what are the main challenges ahead?

as of 2017 data. These continue to incorporate generation

A: Iberdrola has been working in Mexico for 20 years and

from diesel, coal and fuel oil. If we look 15 years ahead,

we have a long-term view of our bet in the country, which

it is clear that the energy matrix will need to include

translates to constant operational growth. We are going

other outputs to meet demand growth, which is around 3

through a key turning point in the energy and electricity

percent annually. This requires building new plants and the

sectors. We understand that our best contribution in this

rehabilitation and substitution of old ones to ensure eco-

scenario is to participate in all the initiatives promoted by

friendly and sustainable generation. The goal is to shift to

the Energy Reform. For example, before we could sell to

a more economic and environmentally-competitive energy.

industrial clients under a self-sufficiency scheme but the new

Also, I think that Mexico is the most competitive region in

market opened-up the wholesale electricity market and we

the world for natural gas, given gas availability in the south

were the first private electricity company to sell to a private

of the US and Mexico’s own production. While the latter is

customer in Baja California with Soriana supermarkets. We

not being exploited to its fullest yet, the country has great

also were the first to announce a combined cycle specially

reserves and potential. These conditions lead Iberdrola to

built to operate in a wholesale market, the first facility of

believe that natural gas prices will perform steadily for the

its kind to be built in Mexico. Also, we participated from the

next 15 to 10 years. Gas should gradually substitute other

beginning in the long-term auctions as sellers and when the

sources such as diesel, coal and fuel oil.

possibility to join as a buyer was opened in 2017, we jumped in as the first private company.

Q: What is Iberdrola’s growth strategy in Mexico? A: The previous model of selling to industrial clients under

Mexico has a significant electricity market which is growing.

a self-sufficiency scheme was oriented to big consumers

The sector will require a great investment in transmission,

with a sophisticated structure, including an electrical

generation and distribution infrastructure of approximately

department, and demanding a tailor-made solution.

US$100 billion over a 15-year period. When you combine

The implementation of the reform in 2014 liberalized

a big market with high industrial demand and increasing

procurement to clients of even 1MW of installed capacity.

industrial investment, you need to create a tool to allow

This changed the paradigm under which we operated and

the joint public-private collaboration to face market

hence we needed to adapt and change our strategy to

challenges and meet demand. We must keep working to

cater to smaller clients. For example, within our commercial

fulfill the ambitions of the Energy Reform. For example,

team, we created a special division called MeDem to

some aspects will require process re-engineering to adapt

oversee SMEs. Any energy strategy must be aligned with

to the results from the first four years. Another challenge

the country’s energy policy in the long term. Our strategy

is having more market participants, such as qualified users.

visualizes commercial activity and client portfolio growth

Transmission is another objective to overcome in obtaining

as foundations. Commercial growth must be backed up by

more even prices across the country. While the reform has

generation growth. As the Ministry of Energy’s discourse

been very successful for renewable generation, investment

is that Mexico needs more gas and renewable generation

for baseload energy must be further fostered. In short, there

over the next 15 years, Iberdrola has been focusing on these

is a clear need to cope with the sector’s future demand and

during its 20 years in the country. We have operational

meeting it will only be achieved through close collation of

wind parks and gas generation with combined cycles. This

all the actors involved.

strategy fits the country’s forecasted demand.

Q: What midterm role will natural gas have in energy

Our 2018-2022 Strategic Plan will focus on finishing the

generation in Mexico?

eight projects we currently have under construction, that


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