Anticipating Regulatory Changes for Renewed CompetitivenessWed, 02/21/2018 - 17:48
Q: What is the unique factor in Mitsui’s proposal for Mexico’s renewable energy sector?
A: Mitsui is not only involved in natural gas power generation. We have a 3GW-strong portfolio of combined-cycle power plants, making us the second-largest private power generator in the country. But we also jointly participate with EDF Énergies Nouvelles México through a 50 percent ownership in the operation of two wind farms in Oaxaca. We are analyzing the possibility of expanding our portfolio in wind power and integrating PV power projects. Mitsui has an undeniable comparative advantage in mastering combined cycle and natural gas technologies.
Q: How is Mitsui’s business contributing to the expansion of Mexico’s natural gas and electric infrastructure?
A: Traditionally, combined-cycle plants entail increasing the intake capacity of the available pipeline. In the past, we participated in pipeline infrastructure expansion projects. We remain open to that. Grid insufficiency is also an issue. Despite Mexico’s relatively low penetration of intermittent generation, the country urgently needs to deploy or facilitate electricity demand-response mechanisms. Combined cycle helps to increase intermittent generation penetration to a degree that few other generation technologies allow. Usually, power supply adapts to power demand but efficient and innovative power generation requires inverting the equation. Mexico’s energy authorities and regulators need to strengthen the regulatory framework to ensure economically viable energy-storage initiatives. Mexico’s electric power scheme is well assembled, with adequate power and energy-payment mechanisms. If you want to inject a higher portion of renewable energy into the country’s energy mix, with almost zero variable cost, combined cycle is the perfect supplement due to the system stability it provides. Another problem brought about by an open energy market is the risk inherent to price signals emitted by the electric node market. These short-term signals impact the design of PRODESEN’s long-term infrastructure projects, which need to be evenly distributed nationwide, as uneven infrastructure projects can impact renewable energy penetration across the country.
Q: Within your diversification strategy, what are the key requirements that ensure Mitsui’s involvement in a project?
A: Mitsui is interested in projects that are sustainable over the mid to long term, with a solid ROI. We also take social impact seriously. If we are to be involved in a project, it must generate added value for the people around it. This factor is key because any and every project is vulnerable to regulatory changes and political transitions, but social acceptance ensures the longevity of the project against these factors.
Q: How is Mitsui facing the challenge of limited specialized human capital in Mexico?
A: Electric generation outside of CFE, undertaken by private investors, started back in 1999-2000 but that is a relatively short period of time to develop a highly trained technical workforce, especially considering the technological dynamism of the sector. The professionals involved in power generation since that time are concentrated among the few private players that tackled the combined cycle niche: Mitsui, Iberdrola, Gas Natural Fenosa and Intergen, to name a few. Renewable energy in Mexico is close to a blank slate when it comes to trained professionals. Mitsui’s human resource scheme consists of hiring young professionals and focusing on their growth through quality training programs. This allows us to maintain our working culture, permeating generations. We keep a close eye on what Mexico’s academia is doing, the new educational programs that are being designed and the technical professionals who are being trained. We would like to contribute to developing a Mexican human capital pool that is highly specialized in the energy sector, eliminating the need to look for them abroad.
Mitsui & Co. Americas is a 100 percent Mexican subsidiary of Mitsui & Co. Its purpose is managing and developing power assets in the Americas. Mitsui & Co. is a global service and investment company with six business areas and 12 business units.