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News Article

Challenges in the Energy Sector Can Be Opportunities

By Paloma Duran | Thu, 03/11/2021 - 14:32

You can watch the video of this presentation here.

Fermín Pérez Casares, Commercial Manager of ForeFront Power, shared the main challenges and opportunities present within the Mexican energy sector and the importance of having true cooperation between the private sector and the government to boost the development of the country. This, during the panel of Mexico Energy Forum 2021 on Thursday, Mar. 11, titled “Challenges and Opportunities in Small Utility Solar Projects.”

Before going into details regarding industry challenges, Pérez explained the differences between generation projects. Distributed generation projects are installed to generate clean electricity for inhouse consumption but also to sell it to other off-takers. Isolated supply is the generation or importation of electrical energy to satisfy a company’s own needs, while local generation is the production or importation of electrical energy to satisfy the consumption of one or more end users that belong to the same group. Pérez also highlighted the types of interconnection available depending on the type of generation: net metering can be found in 99.8 percent of the PV projects in Mexico, net billing is energy injected into the grid that is taken as a balance in favor for energy-consuming companies, while total sale is all the energy generated by a PV project sold at market prices.

The sector’s main concerns include possible conflicts over some energy policies that are not aligned with international agreements like USMCA, which could lead to reduced investments, compromising the growth and development of the country, and a negative environmental impact, driving Mexico away from international targets. “The changes made to the electricity bill will likely increase energy costs. This will create more demand for on-site energy generation, especially if it does not need permitting because it remains behind the meter,” said Pérez.

The main challenges that exist today are in transmission and distribution of energy, as well as in the political uncertainty brought by changing the rules of the sector. “The private initiative only wants to help Mexico to boost its energy development. If the government provides clear and reliable rules, companies will adapt to this new reality.”

Pablo Rivero, Country Manager of ForeFront Power, shared Pérez’s point of view and explained during an interview with MBN that Mexico is dealing with an economic situation that has never been seen before. He emphasized that the country will need to experience greater economic stability before companies feel confident to move ahead with projects regarding their energy use and supply.

Pérez stressed that efforts should be made to inform about the importance and benefits of renewable energy, since there are many misconceptions that have resulted in an increased rejection of green energy. “In the last 10 years, the costs of solar energy have fallen dramatically, making the technology increasingly viable. The storage capacity and flexibility of batteries further increase the potential of solar energy,” said Pérez.

With challenges also come opportunities. Among them is the migration of consumers in the self-supply scheme to a new market dynamic, the elimination of tariffs that could reduce costs by 15 percent, the improvement in energy storage, the increase in demand for energy that will open space to new participants and the increase of renewable energies that reduce the country's carbon footprint, according to Pérez.

He concluded that Mexico must continue on its path toward an energy transformation, which can be achieved through cooperation between the public and private sectors. "The future of the sector depends on the actions and decisions we take today. Cooperation between sectors would increase certainty and boost the growth of the sector."

 

Paloma Duran Paloma Duran Junior Journalist and Industry Analyst