News Article

Consolidating the Energy Reform: Goals and Achievements

Wed, 02/21/2018 - 10:35

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.