News Article

CRE: Regulator and Enabler

Wed, 02/21/2018 - 10:53

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.