The national financial sector must develop solutions that allow new local and regional players to participate and take on market risks.

Mexico took important steps in the right direction with the reform of the electricity sector and although in the day to day we are discussing very important details that allow a consolidation of the new electric market and especially the participation of new players that guarantee a wide margin of competition in the generation sector, I think it is appropriate to stop today and look forward to seeing where we want to take the sector in the future. Without going into the details, I want to highlight certain specific aspects of the Mexican environment that differentiates us from other countries:

In urban and manufacturing terms, agroindustry, tourism, and logistics, Mexico is a decentralized country with many regional centers with a high concentration of energy consumption.

The reform created the bases to guarantee the “neutrality of the transmission and distribution networks” and must in practice guarantee non-discriminatory access to the network, especially to new independent Generators that guarantee competition in the sector. of generation. We face a very important challenge or opportunity: how to be at the forefront in the incorporation of new technologies and encourage national companies to develop the essential knowledge to be able to compete and expand internationally. The successes of Mexican “multilatins” in sectors such as cement, food, and the petrochemical industry should serve as an example to look for strong national actors that can compete globally with European or even Colombian multinationals such as ISA and Empresas Públicas de Medellín.

In this context, energy policy discussions should integrate the impact of the megatrends that we are experiencing at a global level: 

* Distributed generation. 

* Micro networks and energy efficiency. 

* Sources of renewable energy and energy clean 

* Big Data, secure platforms like blockchain and disintermediation of sector. 

* Electric mobility and storage of electricity. 

* New players like ESCOS, still very incipient in our market. 

* Convergence between sectors, especially gas and finance with the sector electric. 

* Disruptive impact of new models of business. 

* Modern financial structures (and solid) as the master limited partnerships or Fibra E in Mexico. 

Given the profound impact that the electric sector is going to have on future industrial platforms and Mexico’s interest in attracting these investments is essential to create a national market now and not be late to technological innovation. One of the saddest examples of the recent past is the spotlight sector. By not counting Mexico at an early stage with a market for light bulbs and LEDs the investments in these new factories occurred in Europe and Asia. Mexico went from supplying approximately 80% of the focus market in NAFTA to completely losing this industrial platform and converting all of NAFTA into an importing region.

Given this context, I would like to highlight in this article just one area of ​​opportunity for both the electricity sector and the economic development of the country, specifically the opportunities for distributed generation:

Distributed generation opens up opportunities for large investments. The national financial sector and in national currency must develop solutions that allow new local and regional players to participate and assume market risks.

In large urban centers, we find important energy requirements and a great accumulation of garbage. Nobody wants sanitary landfills near your home. Recycling, use of biogas and thermal waste becomes a great opportunity, not through subsidies if not by a progressive environmental regulation

Agro-industry can take advantage of thermal energy, CO2 and methane gas and generate significant surplus electricity.

The growth of the gas pipeline network opens up opportunities for cogeneration for industries with high electrical and thermal components.

Solar generation, in the current context in which critical hours are still diurnal, presents a highly competitive potential with respect to other sources of energy.

How to take advantage of these opportunities:

Our financial and regulatory environment must seek to boost the electricity sector in general and distributed generation in particular.

There are already interesting first steps such as support from the Fideicomiso para el Ahorro de Energía (FIDE) in small facilities, but there is still a need to “give life” to the market itself. The positive impact of the short-term vibrant and active markets component is still too early. Progress has been made in the creation of long-term markets for “utility-scale” electricity generation through long-term auctions, but 18-year coverage requirements such as those established in Resolution 008, 2017 create unnecessary obstacles that only favor to vertically integrated utilities.

In the financial sector, the national bank must transform itself and offer competitive solutions for local actors and regulation must find a healthy balance between guarantees and securities, agility and easy access to markets.

The great growth of the generation distributed represents an operational challenge for the National Center for Energy Control (CENACE) and some distribution networks such as the one in Baja California Sur. In the case of Baja California Sur, we see a great opportunity to lead the implementation of batteries in Mexico, compensating weaknesses in the distribution network with the support of modern batteries.

The non-discriminatory access to the distribution and transmission networks and the neutrality of these networks to be in two potentially independent companies is a great achievement of the Energy Reform. The ownership and use of existing transformers, TCs and TPs and other infrastructure still represents a challenge, more of old customs than of missing regulations. These two companies, CFE Distribución and CFE Transmisión, will be increasingly important in facilitating access to networks of cogeneration plants and other forms of distributed generation. As in other markets, the co-workers of these companies will see their business grow as they facilitate and strengthen access to new independent generators. In addition, these two companies will recognize that the high concentration of generation in local markets will encourage the creation of micro-networks that tomorrow can be independent of transmission and distribution services.

Finally, the Federal Competition Commission (COFECE) must recognize and act with respect to the specific issues of the electricity sector. Our merit dispatch system is the best method, but with a high concentration of generation in the hands of a player in an area of ​​the country, it can also be easily manipulated within the current competition rules.