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MEF 18
Mexico Energy Forum 2018

Consolidating the Energy Reform: Goals and Achievements

César Contreras, Advisers’ Coordinator of the Deputy Ministry of Planning and Energy Transition at the Ministry of Energy
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The realization that Mexico would soon need to rely on outside sources to meet its energy needs was the wake-up call the country needed to reform its energy industries, César Contreras, Advisers’ Coordinator of the Deputy Ministry of Planning and Energy Transition at the Ministry of Energy, told the Mexico Energy Forum 2018 in Mexico City on Wednesday, as he presented the ministry’s vision for the consolidation and future of the Energy Reform.

“As the Ministry of Energy performed a prospection of future energy consumption and generation for the future, it was disturbing to see that Mexico would go from being a net exporter to a net importer of energy,” Contreras said. “To combat this trend, the Energy Reform was created.”

Contreras added that “the Energy Reform was ideated to take advantage of Mexico’s privileged geographical position and its plentiful natural resources for energy generation and to allow investment that would ensure future energy security.” He pointed to the Energy Transition Law, published in 2015, as a vehicle to create a more sustainable energy future in Mexico. The law’s objectives include an increase in clean energy production, a decrease in polluting emissions and the better use of generated energy.

Mexico has committed to reaching a 50 percent share of clean energy in its generation mix by 2050. It must also achieve an annual energy intensity consumption reduction of 1.9 percent during the period 2019-2031 and 3.7 percent for 2031-2050.

To reach these goals, Contreras pointed out two main targets the Energy Reform has hit: offer certainty to investors and create a competitive energy market. In this regard, CRE and CENACE have become cornerstones, he said. “CRE now has the instruments and the technical, operational and financial independence to properly regulate the energy sector in Mexico, and CENACE has become the independent operator of the Mexican electricity network with the main objective of increasing the share of clean energies in the country.”

Contreras also highlighted the benefits from the first three long-term electricity auctions, both nationally and internationally. “The long-term electricity auctions are attracting over US$8.6 billion in investment for the construction of 65 new energy plants with a total capacity of 7GW,” he said. “While the average price at the first auction of US$48.78 became an international reference, one year later Mexico achieved an average price of US$20.6, which shows how competitive clean energies are becoming.”

Considering the reduction in energy consumption Mexico must achieve, Contreras pointed out the importance of CONUEE to the country. “The organism has managed to encourage smarter and more efficient energy consumption through 31 NOMs and through close contact with the industry. The signing of the Energy Efficiency Voluntary Agreement in Mexico, with Nestlé, is a clear example of the work being done.”

Before closing his presentation, Contreras reminded the audience that the Energy Reform is just one of the 13 structural reforms that target the country’s economic and social growth. “The Energy Reform seeks the implementation of worldwide best practices to foster sustainability in the whole energy value chain in Mexico,” he said.

Diversifying the Power Producer Base: Auctions, Project Development and Financing

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There are still challenges to overcome before financing institutions can more effectively deal with the risks of a project under the PPA format, Marian Aguirre, Energy Finance Vice President of BANCOMEXT, told the Mexico Energy Forum 2018 in Mexico City on Wednesday. “There is a tendency toward tariff differentiation and we need to better understand how tariffs are composed to improve our understanding of the structure of tariffs and private PPAs.”

On the other hand, although the structuration of tariffs has attracted the participation of companies and constituted a success in terms of energy policy, Jose Aguilar, Principal at ViveEnergía, pointed out that the auction structure must change to underpin the process. “The challenge is making projects bankable,” said Aguirre. “What makes these projects feasible is that they are long term.”

The two business leaders were part of the panel “Diversifying the Power Producer Base: Auctions, Project Development and Financing” at the Hotel Sheraton Maria Isabel. The group, which also included Óscar Silva, Head of Global Strategy Group at KPMG in Mexcio, who acted as moderator, Ernesto García, Project Finance Manager of EDF Énergies Nouvelles Mexico; and Salomón Amkie, Vice President Head of Power and Utilities at Citibanamex, reflected on the perspective of developers and banking institutions regarding the current and future situation resulting from the Energy Reform.

The main topics addressed in the panel were the record low prices achieved in the last energy auction, merchant risks and how financing institutions react to these and the likelihood of the Energy Reform being set back by the next government.

“We see sponsors with an appetite to enter Mexico and that is driving the prices of PPAs down as competition in the sector grows,” says Aguirre. “In the long term, we expect a trend toward price equilibrium.”

All panelists agreed that the energy prices resulting from auctions, which fell from US$30 and US$40 per KW/h in the first round to US$17 and US$20 in the last round, offer new challenges for both developers and financing institutions. “Pricing in the market is creating consumption,” said Aguilar. “The gap between prices will close in the future but we need to come up with a structure to cater to clients’ needs and harness the financial offering that exists in the market.” Aguirre pointed out that it is difficult to predict energy prices in one or two years, so longer terms are impossible.

On the merchant risks that banks would have to absorb to finance some projects, all panelists concurred that there are several challenges for commercial banks to engage in financing energy developments. As Amkie put it, “financing projects with long-term maturation periods will always be complicated for banks and the tendency points to PPAs of between three and seven years.” He expects that PPAs will increasingly become short-term products because project bonds with 16-year merchant tails are difficult. Elaborating on this perspective, Aguirre said the bankability of projects with PPAs is key because if PPAs are not renewed banks would absorb a merchant-like risk. Looking ahead, she expects commercial banks to soon engage in generation projects but underlines that inasmuch as the banking sector does not finance such projects, development banks will be there to open the market. Amkie underlined that before a commercial bank such as Citibanamex could offer a hedge in that area, it would need to see a historic record of some years as well as transparency and liquidity in energy prices.

Given the fact that one of the presidential candidates competing in the 2018 elections has promised to set the Energy Reform back, the likelihood of this process happening is a key topic for the industry. On this, all panelists agree that such an outcome was highly unlikely. “The opening of the market is a trend that cannot be drawn back,” says García. Similarly, Aguilar pointed to the market advantages that the reform has generated. “Auctions have worked,” he says. “Pricing signals are correct, it is a good public policy and it would be too expensive to step back.” According to Aguirre, it is unlikely that there will be changes regardless of the candidate who wins. “There has always been continuity through government changes despite the leanings of the winning party or individual,” she said.

While García said that refining the reform in terms of regulation is the main challenge ahead for the industry, Amkie concluded the panel by stating that the opening of a market the size of Mexico does not happen often, which has attracted developers and investors. “There is a great potential for growth that attracts investment,” he said.

CRE: Regulator and Enabler

Guillermo García, President Commissioner of CRE
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Guillermo García, President Commissioner of CRE, told the Mexico Energy Forum 2018 on Wednesday that the Energy Reform is here to stay, regardless of presidential administrations. “The Energy Reform cannot be reversed, it is a constitutional reform and the Supreme Court backs the reform in every aspect. We, as regulators have different administration cycles, which are separate from political cycles.”

Speaking during the event at the Hotel Sheraton Maria Isabel in Mexico City, García added that one of the most important aspects of the reform is the committed and future investment. “When these investments materialize, everyone will be able to see the results of the reform,” he said. “The resulting investment in the previous electricity auctions totals US$9 billion and 7.6GW of committed installed capacity from new power-generation plants.”

According to recognized international institutions and consultancies, Mexico has climbed from ninth to fourth in terms of the most attractive market for clean energy investment, as quoted by Bloomberg; and from 24th to ninth in terms of ease of doing business related to energy projects, according to EY.

“The energy supply is already and fully liberalized in Mexico. This fact is allowing every player in the market to implement actions to increase competitiveness. Every company should include in its business model variables such as energy consumption, efficiency and probably generation to boost their operations and costs,” García said.

 

García reminded the audience that one of the key goals of the Energy Transition Law, which states that Mexico should have a 35 percent share of clean energies by 2024, could be achieved three years earlier in 2021. This is due to the lower prices achieved at the electricity auctions, prices that are even lower than the results in similar auctions in Brazil or Argentina. “Mexico has topped Brazil by 500 percent in terms of committed investment and installed capacity of clean power generation,” García said.

In terms of specific clean energies, García mentioned that “85 percent of Mexico’s territory has an excellent quality of isolation, which averages 5.5kWh/m2, double that of Germany. In terms of wind, if we could build a wind farm the size of 1 percent of Sonora’s territory, we would be able to supply the entire nation’s energy demand.”

Concluding his presentation, García also mentioned critical factors that are enabling Mexico’s energy market to become even more competitive. These include CFE and the Ministry of Energy’s public tenders to build two critical transmission lines – one connecting Oaxaca with the central region, and the other connecting Sonora with Baja California – the launching of an important trading and financial tool like Fibra E; Mexico’s first battery bank with the capacity to store 2.3GW in the coming 10 years; the effort to increase Mexico’s distributed generation, which is already skyrocketing – just in Mexico City, distributed generation’s installed capacity increased from 9.4MW to 13.4MW between 2016 and 2017, and Mexico has over 60,000 PV panels installed in the residential sector. He also highlighted the importance of the mechanism adjustments to the consumption tariffs, particularly for the industrial and commercial sectors in Mexico.

The Chicken and the Egg of Financing and Viability

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The panelists at the Mexico Energy Forum 2018 on Wednesday in Mexico City agreed that there cannot be a healthy energy trading market without access to financing. According to Hans-Joachim Kohlsdorf, Managing Partner at Energy to Market, this is the single greatest problem he has encountered in Mexico. “The regulators and institutions have done a good job implementing this reform, but there have been teething problems,” he said. “The main problem is out of the hands of the regulators: access to private financing. The development banks are trying to bridge the gap but it is still difficult to obtain a loan in this sector.”

Natalia García, Director General of eVOLT Energy Trading agreed and expressed her frustration at what she called the chicken-and-egg situation. “The market cannot mature without financing, yet financing is not available because the market is still incipient and risks cannot accurately be identified,” she said during the event at the Hotel Sheraton Maria Isabel.

Nevertheless, Enrique Giménez, Director General of Fisterra Energy México, said that, although these challenges do exist in the market, he views these kinds of obstacles positively. “I see Mexico as a country with enormous growth and huge demand,” he said. “The electricity auctions are a fantastic motor for the market.”

Likewise, Alejandro Ledesma, Director of Institutional Relations at SUMEX, applauded the efforts of the authorities to establish a balanced regulatory system during the transition. “A regulated, but not over-regulated, market is a must to allow for an energy transition,” he said. “This is a challenge coming from a monopolistic market, but has been properly managed by authorities.”

But García reminded the panel that, despite regulatory success, the market as it exists today is still in its infancy and requires extensive evolution to be truly efficient. “The regulator and the operator have a strong challenge ahead. There is a lot to do and financial support is needed,” she said. She explained that eVOLT seeks to facilitate transactions between the final client and financial institutions. “The reform is designed to put the generation in places where prices are high,” she continued. “When the wholesale market consolidates, the end customer will benefit from stable prices but we cannot expect residential rates to go down soon.”

Giménez agreed that an alternative to CFE’s basic supply tariff is needed to increase competitivity. “Consumers have not understood that the basic supply rate is not the exception but the market,” he said. “Forty million consumers in Mexico are exposed to the market and everyone will need a new solution.” Nevertheless, he warned that it will take time for end users to see a real drop in energy prices. “They will fall when the Energy Reform consolidates but that will take time,” he said. “Lowering them in the short term would mean artificially adjusting prices, which is not the objective of a competitive market.”

Kohlsdorf said that educating the market was necessary to diffuse knowledge of the different options available for consumers. “We have to introduce the concept of a market with language that all users understand, starting with the qualified users,” he said. Moderator Eduardo Reyes, Leading Partner Power and Utilities at Strategy& at PwC, agreed. “There are many opportunities to educate end customers,” he said.

Can Distributed Generation Change Mexico’s Electricity Landscape?

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Distributed Generation (DG) has a solid future in Mexico because the regulations are not only focused on the present but also on the future, said José Zambrano, Co-Founder and CEO of Galt Energy, at the Mexico Energy Forum 2018 in Mexico City on Wednesday. “In Mexico, the regulation does not only plan for the future integration of DG but has clear milestones for review. The first will come when 5 percent of the country’s generation is performed via DG. After that, a new revision and plan for the future will be conducted.”

Zambrano was speaking during a panel presentation titled, “Can Distributed Generation Change Mexico’s Electricity Landscape?” at the Hotel Sheraton Maria Isabel. Other panelists included moderator Jorge Sandoval, Senior Associate at Goodrich, Riquelme y Asociados; Mikael Kaivola, Managing Director of CITRUS; Juan Ávila, Director General of Top Energy; and Andre Von Frantzius, Commercial Director of Grupo DESMEX.

The first issue addressed was the capacity of the already existing transmission and distribution (T&D) infrastructure to include distributed generation (DG). According to Zambrano, in Mexico there is nothing to worry about given the planning that is underway.

DG companies must face final consumers directly, which makes the sales process more challenging, but Ávila suggested that users have become more aware of the benefits of DG. “End users have evolved,” he said. “While they used to ask whether the technology worked, and even whether CFE allowed the use of DG, now they ask about prices, quality, guaranties and even the possibility of getting into interconnection schemes.” According to Kaivola, the benefits of DG in the residential sector are clear: “In 2017, the Ministry of Energy published a study of 680,000 households regarding the impact of DG in Mexico. The results showed that the use of DG could save the government MX$1.5 billion annually, avoid 1.3 million tons of CO2 emissions and decrease energy consumption per household by 75 percent.”

Von Frantzius added that for residential users the installation of DG is a no-brainer due to the decreasing costs of DG and the increase in tariffs, but there is still much to do to properly tackle the industrial segment. “Having a proper framework of T&D costs, including nodal prices, is a must to offer industrial consumers security on their DG investments.” Zambrano supported Von Frantzius, stating that most companies that include DG in their facilities are international conglomerates and that they are not doing so entirely because of financial viability but due to their sustainability commitments as global companies.

Regarding the different roles renewable technologies may have in DG, Ávila suggested the country has the perfect mix to place the crown on solar as the preferred technology. “While in other countries consumption patterns for house heating make it hard for solar to serve peaks, in Mexico we have peaks during summer when the sun shines. Considering solar technologies’ low CAPEX and ease of installation their position as a vital DG enabler is easy to see.”

Storage technologies are among the main missing links hindering the presence of DG. These technologies could create a safer and more resilient network, not only in the Mexican energy mix but on a global level, explained Zambrano. “In Australia and Hawaii, we have already witnessed how batteries are providing tremendous benefits. The importance of storage is not only reflected in the fact that it allows for an energy purchase-sale scheme, but it also provides auxiliary services such as power peak-consumption reductions that destabilize the grid.” When it comes to disruptive technologies, Von Frantzius mentioned the importance that electric vehicles will have on DG as energy storage enablers.

The panel concluded by stating the great potential Mexico has not only as an implementer of DG, but as a manufacturer of the equipment needed. “Mexico has over 44 free-trade agreements, and it should take advantage of that not only to boost the manufacturing industry but also to further decrease the costs of DG.”

 

Disruption and the New Role of Utilities in the Energy Sector

Dafna Siegert, Partner Power and Utilities Leader LATAM North at EY
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Power consumers are changing and so must suppliers of these services in order to meet the new demand, Dafna Siegert, Partner Power and Utilities Leader LATAM North at EY, said during Mexico Energy Forum 2018 on Wednesday at the Hotel Sheraton María Isabel in Mexico City.

Technologies such as EVs, distributed energy, microgrids and blockchain are also changing the habits of consumers as is social media. “We are increasingly social, have more digital tools and access to information everywhere,” she said. “We are “prosumers” involved in the creation of content that is massified by social networks.” Siegert underlined that new P&U consumers want to have real-time monitoring of their consumption and to communicate with the energy sector.

This presents a challenge to companies in the energy industry, Siegert suggested, because they tend to only have conventional communication channels. On the other hand, she points out that energy companies need to incorporate the concept of energy efficiency in the everyday language of consumers.

“EY believes users need an experience when they are receiving P&U services,” said Siegert. She underlined that companies in the energy sector must offer digital support and meet the “smart” requirements of users to effectively deliver that experience.

Siegert presented a model that shows how utilities could look in the future once companies implement technologies such as liquid applications, robotics, artificial intelligence, augmented reality and new dimensions, IoT and blockchain solutions.

“Clients will sell the surplus energy their houses produce when distributed generation reaches them,” she concluded. “They will also have a smart house equipped with IoT that meets clients’ energy consumption goals.”

Making Mexico’s Energy Transition Smart

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Mexico needs to create a smart grid that can integrate every kind of power generation source, panelists at Mexico Energy Forum 2018 said on Wednesday at the Hotel Sheraton Maria Isabel in Mexico City. “Smart grids should assimilate the best telecoms available to integrate and train every player involved in the purpose of a smart grid, which is flexibility,” said Ana Bojorquez, Corporate Lawyer at ACCIONA Energía México.

The country is already on its way to that goal, added César Hernández, Head of Planning, Institutional Relations and International Affairs Unit at the Federal Commission of Economic Competition (COFECE). “For the first time in its history, Mexico has a program to consolidate a smart grid, which was created by the Ministry of Energy, CRE and CENACE and was open for consultation to the private sector. This program has designed a competitive and efficient path for the Mexican energy industry, and all was possible thanks to the enactment of the Energy Transition Law.”

According to Hernández, who is also the Former Deputy Ministry of Electricity at the Ministry of Energy, the Mexican energy industry now has several market mechanisms that generate competitiveness and better opportunities to not only consolidate the market but to make it stronger and better. “We now have many mechanisms to measure and control the smart grids developed in the country, including IoT and R&D,” he said.

Understanding why smart grids are needed will be a key element for their successful implementation, said Alejandro Preinfalk, Executive Vice President of Energy Management, Building Technologies and Mobility at Siemens Mexico, Central America and the Caribbean. “We need to craft a good plan and understand every trend in the market to understand why the smart grids are needed.” He continued: “Automation and digitalization should focus on creating an ever more efficient process for the whole value chain of the energy industry. After this is done, we can have a better understanding of the challenges ahead and how to solve them.”

Another factor that will help make the country’s energy transition “smart” is the availability of skilled labor, according to Michel Yehuda, Industrial Business Unit Director of Fluke Dominion Mexico, and moderator of the panel. Kevin Gutiérrez, Sales Vice President of the Solar Division at HUAWEI Mexico, is among those concerned about the lack of skilled labor, especially with around 80 clean energy projects on the horizon. “Companies and final users urgently require training to know exactly how to create more efficient solutions and to be able to actually take advantage of them. Every player on the board needs to get involved and contribute to make supply and demand more competitive.” Gutiérrez said.

A generation gap also exists in the industry, colored by the fact that Mexico is not graduating enough engineers, said Ernesto López, Vice President of Partner Projects and Ecobuilding at Schneider Electric Mexico and Central America. “Mexico does not generate enough engineers to perform the needed tasks anymore,” he said. “There is a generational gap between the engineers who created the reality we are living today and those who will actually implement and improve that reality.” Hernández added that, “several states in Mexico have created sectoral funds to develop human capital in the areas of the country or the regions that need it the most. We now have incorporated international best practices in several sectors, and the clean energy industry is not an exception. R&D is a critical factor to keep developing useful tools such as smart grids, but that is not enough; we need the right human capital to implement and perfect the capabilities not only of these smart grids, but of the entire value chain.”

Understanding the nature of the market will go a long way to making smart grids a firmer reality, said Preinfalk. “Automation and digitalization should be a sustainable change and every player in the market should understand what makes the market stronger so companies like ours can help to create a reliable and secure smart grid.”

Communication, Engagement the Best Routes to Success

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When it comes to social impact, money does not always talk. Sometimes the most overlooked step is to listen, Alfonso Caso, Director General of ANAF Energy, told the audience at Mexico Energy Forum 2018 on Wednesday in Mexico City. “We need to build relationships not buy consent,” he cautioned.

In response to moderator and Principal at Fondo de Fondos Carlos Michel’s question, Caso detailed his own experience with social impact and shared what, in reality, it involves. “When a company reaches a community, there are positive and negative impacts on the social fabric of that community,” he explained. “Sometimes there are issues that are not economic and it is necessary to start listening first of all to take care of the social fabric.” These issues can include deep-rooted religious or cultural beliefs, he added.

Gabriela Valle, Deputy Director General of Social Impact Assessments and Previous Consultations at the Ministry of Energy, added that the ministry is taking steps to bridge the communication gap that can exist between private companies and the communities. “The way that the secondary legislation incorporated social responsibility creates a win-win situation for all parties,” she said. “On one hand, we ensure that companies are responsible for their behavior and respect basic human rights, and on the other we are able to deliver certainty and viability to the company involved.”

Several companies can facilitate this process, including Conecta Cultura and Vera & Asociados. The latter consultancy’s Founding Partner Luis Vega explained the services it offers. “We propose the possible scenarios and present each of the parallel routes,” he said, “We also do data mining to make certain decisions about social issues. But without a strong framework, nothing can be done.”

Conecta Cultura, explained the company’s Founder and Director General Victoria Contreras, offers statistical methodologies based on geology, history and the politics of an area. “We offer solid data that gives these players the tools to make decisions,” she said. “Social feasibility studies are useful for the client to have a social picture of the place where it plans to develop projects, providing solid indicators.”

She echoed Caso’s sentiment that, beyond knowing what the local representative thinks about a project, approaching the affected persons is a must in any infrastructure project, highlighting the importance of field work in this area. Nevertheless, she said Mexico is still a step behind in terms of generating certainty in the face of political groups and rights of way issues. “More than 50 projects have been stopped because social impact was not given enough importance,” she said.

But according to Valle, the industry seems to be doing things right. In 2017, she said, the Ministry of Energy received 3,000 requests for social impact evaluations. But she warned that a variety of issues must be taken into account for each individual project, such as the price, the client and the locality in which the project will be located. “Success in social issues does not come overnight; all of the country’s stakeholders, from public to private, have to work on creating a proper governance framework,” she said.

Caso agreed that, while methodologies like that of the IFC can help build a strategy, in such a culturally diverse country as Mexico, there are many other factors that need to be taken into account. Both he and Valle stressed the importance of making the reform a success in all aspects. “All these projects have an impact, not only socially and environmentally, but they also impact communities economically,” concluded Valle.

The CFE of the Future

Jaime Hernández , Director General of CFE
Jaime Hernández

Jaime Hernández, Director General of CFE, outlined the commission’s coming targets at the Mexico Energy Forum 2018 in Mexico City on Wednesday, telling the Hotel Sheraton Maria Isabel audience that CFE has a three-prong strategy going forward: improve operational performance, consolidate finances and invest in the development and implementation of new technologies. “We need to continue improving our operational performance and the quality of CFE’s services,” he said.

To reach the company’s goal of achieving sustainable equilibrium by 2021, the company will continue its policy of financial discipline. Hernández placed importance on CFE’s renegotiation of the collective bargaining contract to deal with the working liabilities that the company’s pension package entails.

Among the company’s milestones in its 80th year, Hernández lists the development of 25 new gas ducts, the construction or modernization of 31 generation units, the development of 65 new clean generation units and carrying out 448 transmission projects and 13,415 distribution projects. “Between 2012 and 2017, CFE added 7.3 GW to the country’s 55GW,” said Hernández.

On the generation of clean energy, Hernández pointed out that 47 solar parks and 18 wind farms have been built. “CFE will reach its goal of producing 35 percent of all energy in Mexico through clean energies,” he said. “Between 2012-2017, CFE reduced its CO2emissions by 36 percent.” Looking ahead, the company expects to reduce its emissions footprint from electric generation by 90 percent by 2021.

Among the effects that the Energy Reform has had on CFE’s performance, Hernández points to the company’s access to natural gas and the transformation of CENACE into a decentralized public organism. “Gas entails up to 80 percent of the costs of electricity generation in conventional plants,” he said. “And having CENACE as an independent organization offers a level playing field for all players in the electricity market.”

Hernández also laid out some of the plans to increase the country’s installed capacity between 2018 and 2021. “In this period, 11 generation units will become operational and add an installed capacity of 6.75GW to the country’s capacity.”

Meeting the country’s energy needs remains CFE’s raison d’etre. “We work toward integrating new technologies to the benefit of the population,” said Hernández. He underlined that CFE is following the advancements made in energy storage to be able to reach the regions that it currently cannot.

Hernández concluded his presentation by stating that there is space for CFE to continue growing and strengthening and for the participation of private companies to take part in the energy sector. “Being able to access new versatile financing products is useful to support CFE’s long-term plans,” he said.

CFE Transmisión: A Cleaner, Smarter Future

Francisco Estrada , Protections, Communications and Control Coordinator at CFE Tansmisión
Francisco Estrada

Francisco Estrada, Protections, Communications and Control Coordinator at CFE Tansmisión, discussed the future objectives of the company during the Mexico Energy Forum 2018 at Mexico City’s Hotel Sheraton Maria Isabel on Wednesday, saying that creating a level playing field would play a central role.

Worldwide, the objective of transmission companies is to transmit electricity in a safe and trustworthy manner, and the same applies to CFE Transmisión, Estrada said.  “Beyond that goal, CFE Trasmisión must ensure that energy generated by both conventional and renewable sources is transmitted with equal rights.” To achieve these goals, CFE Transmisión has been tasked with the operation, maintenance and measurement of the Mexican electricity network, extending and modernizing it and to provide the transmission tariffs.

As of 2017, CFE Transmisión managed 507 substations, over 107,042km of transmission lines and 85,017MVA of transformation capacity. By 2021, these numbers must increase by six substations, 6,602kms and 39,145MVA to improve the country’s ability to transmit clean energy. To properly manage all those assets, Estrada stressed the importance of having a strong network that can manage the gathering, transmission and processing of information. In this regard, CFE Transmisión manages over 43,803km of fiber optic lines.

Looking to the future, Estrada said CFE Transmisión will develop three cornerstone projects. The first two are HVDC lines connecting Morelos with Oaxaca and the National Interconnected System (SIN) with Baja California Sur, which “are vital to increase the share of clean energy generation in the country.” The third is the creation of a smart electricity grid (REI). “Due to the technical and managerial difficulties of implementing such a project in an already functioning grid, the project will take three years to be completed.”

While heading toward big technological objectives such as integrating clean energies into the national transmission network (RNT) and expanding and modernizing the electricity network, Estrada admitted that CFE Transmisión still has cultural challenges to face. “We must strengthen its organizational structure, increase productivity and efficiency in new processes, and create strategic alliances with third parties,” he said.

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