Filling The Gaps Between Academia and Electricity Industry

As Mexico’s new electric market sets up shop, with new business schemes, new players and new technologies, the reality is that the country must absorb a wide array of disruptive changes, encompassing qualified human capital and drafting regulations to address both the current and future needs of final users, the electric industry and Mexico’s electricity infrastructure.

“For Mexico’s new electricity market to work, fostering free competition is vital, overseen by a regulating organ with capabilities of instrumentalizing market rules under level playing field principles,” says Sergio Arnaud, President of The National Solar Energy Association (ANES), a nonprofit organization designed to promote the development of solar energy in Mexico. The publication of the new Electric Transition Law, as well as the Wholesale Electricity Market and the retail electricity market dispositions launched the market’s rapid growth based on the country’s new renewable energy penetration objectives for the energy mix. This quick-paced transition compelled the 41-year old association to refocus. “ANES’ foundation was based on research and academia for Mexico’s electric sector, as attested by the creation of the National Institute of Electricity and Clean Energies (INEEL) and the Institute of Clean Energy (IER),” says Arnaud. “As the market opens, we face a very different scenario, transitioning from dealing exclusively with CFE to incorporating notions like the cloud, Big Data and electricity startups.”

The country’s long-term electricity auctions were designed under a simple model, Arnaud says, in which Mexico’s generation scheme was opened to the private sector, offering volume, power, renewable technology and CELs. “Mexico’s electric market was launched with great speed, backed by strong investments and large companies participating in the auction process. We have yet to see a spillover effect to smaller players,” he says. Arnaud believes CRE’s role will be vital in that regard. “While competition will be initially limited given the logistics, know-how and knowledge of global stature required to do business in Mexico’s newly opened market, Mexican companies of all sizes must gradually develop effective and efficient market entry strategies to foster competition.”

New notions like the electricity spot market, peak hours and equilibrium price algorithm schemes for the wholesale electricity market are gaining increased prevalence and the industry requires qualified professionals to address them. “Academia and field research are lagging the vertiginous growth the market is showcasing. University students have yet to absorb the new parameters and knowledge on par with the reform’s effects,” says Arnaud. “The new electricity market integrates schemes from other markets around the world and is developing notions such as energy rights and learning to cohabitate with productive enterprises of the state.” CFE is undertaking an ambitious transition from fuel oil to natural gas for its power plants, gas pipeline extensions are underway nationwide and CFE’s intelligence organ is now the autonomous and independent CENACE, posing a fundamentally different scenario from what ANES was accustomed to.

Cost transparency across electricity’s value chain, as demanded by competitive markets, will imply a tariff update for electric energy. “Electric tariff subsidies will consequently be revealed as focused, exposing the electricity system’s disparities in terms of infrastructure availability and final user’s socioeconomic levels,” Arnaud says. Previously in the hands of CFE, the Ministry of Finance will now be the entity in charge of determining subsidy levels. “Parameters under consideration for future subsidy considerations must integrate a new scheme prioritizing sustainability, a long-term perspective and energy quality.”

Workshops and courses in legal and technical certainty, integrating the latest developments in solar technology, energy-efficiency practices and social licenses are a few of ANES’ measures to prepare the country’s professionals to contribute to a prosperous energy market. “The solar sector must couple a large-scale industry transition to renewable energy with financial schemes to permeate across the value chain and be absorbed by smaller players, academia and research, fostered by innovative public policies.”