News Article

Energy Powers Mexico’s Economic Development Ecosystem

By Cinthya Alaniz Salazar | Fri, 09/09/2022 - 12:10

Sustainable electrification plays a critical role in the economic development and competitiveness of countries. As the strategic prominence of Mexico continues to grow, it is fundamental that its government works to augment the country’s energy distribution infrastructure, accelerate its transition toward renewable energy and fortify compliance as well as fail-safe measures to avoid disruptions. Pushing toward these goals should be considered a multilateral objective from the state, private industry and academic institutions, their collaboration elemental to building an electricity generation and distribution system that transmits reliability to industry players and private investors alike.

“All states across Mexico are being affected by both the transmission and the distribution network. This causes problems when trying to attract the desired investment,” said Efraim Castellanos Frayre, Director of Energy, The Ministry of Economic Development of Durango.

“One way to ensure that this required investment arrives is to grant absolute transparency and certainty to investors regarding the regulation they need to comply with. Investors and companies need to be supported because they are the key to a functioning electricity network,” said Sofía Tamayo, Corporate and Regulatory Affairs Director, Zuma Energía.

The technological advancement and increasing sophistication of manufacturing industries have augmented the sector's need for stable power production, a demand that currently far exceeds the capacity of the system. Furthermore, despite the internal development of internal power systems, they increasingly find themselves competing with adjacent and rapidly growing industries. Overall, experts agreed that Mexico's power production and distribution falls profoundly short of what the country’s growing economy needs and will require as it develops to become an important regional business hub.

“Government cooperation is needed to finance the necessary infrastructure so that investments can be made,” says Mauricio Reyes, President, the State Energy Agency of Queretaro.

This realization has mobilized state leaders and private sector executives in the north, where Mexico's manufacturing industries are mainly concentrated, to come together to advance the realization of a reliable energy generation and distribution system. Through collaboration, these regional clusters are working to identify and address regional needs in line with their respective geopolitical and financial constraints. These efforts have led to the development of key infrastructure, but according to the leaders, the overarching objective is to build a unified economic development system.

In practice, this will require a more aggressive adoption of technology and digital solutions, costs that will require compromise on behalf of the public and private sectors. Furthermore, as expressed by the private sector, the public sector must augment its capacity to verify the compliance of energy producers working outside of these constraints being that they pose a significant risk not only to the reliability of energy transmission but to its supporting infrastructure, too. Overall, the development plans of these energy clusters composed of multilateral parties pose a compelling model for domestic and international businesses that are looking for access to reliable energy and supportive business environments.

“Coordination between energy commissions and cluster networks leads to a unified economic development ecosystem,” said Amado Villarreal, Cluster Director, the State Energy Agency of Monterrey.

Cinthya Alaniz Salazar Cinthya Alaniz Salazar Journalist & Industry Analyst