Astute Models of Private Participation in Transmission

Unlike many of its competitors, Isolux Corsán has been betting on the Mexican market for 25 years now. The consortium was born out of the merger of several Spanish companies with Mexico as its first international market, where it has established a close collaboration with CFE. From the perspective of Isolux Corsán, Mexico has moved on from the 1990s when its electricity and energy sectors demanded immediate attention. Roberto López Fernández, Director General of Isolux Corsán, says these sectors are now among the prime drivers of Mexico’s development and modernization. The company accompanied this evolution by building “over 5,000km of transmission lines. Every state has a line built by us,” says López Fernández. He adds that Isolux Corsán views Mexico as its second headquarters.

Isolux Corsán’s other contributions have included maintenance work at the Plutarco Elias thermal plant in Guerrero and developing the Guerrero Negro and Baja California III thermal power plants. The firm has also regularly tabled proposals for other combined-cycle projects with CFE. López Fernández sees the company’s next step in Mexico as investing in renewable energy sources, capitalizing on extensive experience operating solar parks and wind farms around the world. “We are promoting the production of renewable energy sources amongst states and municipalities.”

Isolux Corsán has identified that municipalities are particularly keen on entering the energy sector, either as off-takers or by building their own plants. However, short electoral cycles have hampered Isolux Corsán’s attempts to enter this market and assist municipalities. “We have tried to work with municipalities but the first problem is that governments change every three years, while the planning and execution of power projects takes more time. Some state and municipal governments are already economically developed enough to start projects alone, but the federal government still has the ultimate say. Furthermore, those states that do not have the same economic means need to have the financial backing of the federal government,” claims López Fernández. This has made it slow going for Isolux Corsán to get renewable energy projects started at the municipal level.

Isolux Corsán has been closely watching the recently passed Energy Reform and has its own wish list for it. Above all, López Fernández believes the reform will focus on lowering energy costs in a way that will impact the public. “I think the government wants to adopt systems that have proven to be economically and environmentally viable and efficient in other countries. We want to be around to contribute to these changes,” says López Fernández. The company is keen to discover the opportunities the Energy Reform will extend to the private sector, especially in terms of the transmission lines that will be built. “Isolux Corsán is one of the leading private companies in the world in transmission line investment. We have invested in over 10,000km of high voltage transmission lines, including over 3,000km in Brazil,” says López Fernández. Distributing energy in such a large country required private capital. In Brazil, Isolux Corsán built the power lines but operates them for a monthly fee, with partners found through tenders. López Fernández believes Mexico should consider implementing a similar model alongside the Open Season scheme, as this could offer new solutions to solve the transmission gridlock. For example, Oaxaca is the largest producer of wind energy but is not a major electricity consumption center. López Fernández says a model such as the one he suggests could help resolve such problems, through greater involvement from the private sector

On the same theme of collaboration, he advocates the furthering of public-private partnerships (PPPs). Mexico has experience with PPPs through concession agreements in infrastructure projects, such as highways and airports. López Fernández sees that these agreements have helped to develop the relationship between the government and the private sector, adding that this collaboration could also happen in the energy industry. Again, Brazil provides a good example of Isolux Corsán’s vision. “We invested in the power line infrastructure and we operate it but the government does not lose its ownership or responsibility,” says López Fernández. “I believe PPPs should be at the core of the Energy Reform. PPPs will speed up and facilitate investments, which are important for the development of basic infrastructure needed in the energy sector.”