A Flexible Grid for a Cleaner Future

Whether building new lines or revamping old ones, Mexico has little choice but to expand its distribution links if it wants to move away from fossil-fueled plants to cleaner energy technologies. New innovations in storage and other areas are likely to play a key role in helping realize the country’s goals. 

"Energy for the progress of Mexico." That was CFE’s motto for a long time as the company sought to deliver highquality energy to the greatest number of people. This led to an extensive national grid focused solely on covering energy demand, and not on growing in a sustainable way.

It also resulted in a grid that connects stable energy generation points, mostly based on fossil fuels, to high energy consumption points. This can be seen when comparing the extension of the more than 102,000km of transmission lines with the location of the plants owned by each of CFE’s generation subsidiaries as well as considering the fact that Mexico’s total installed capacity of 73.51GW is 71 percent powered by technologies that use fossil fuels.

The grid was not developed considering the potential renewable energies such as wind and solar would have, both in terms of stability and location. As a result, Mexico’s strong, steady but old grid is facing a new reality, one where flexibility and modernity offer the highest added values. According to José Arosa, Director General Mexico of IC Power, this has not yet been properly managed by the state. “The necessity for projects has been outlined but most of these are too conceptual,” he says. “The Energy Reform has not yet properly turned attention to transmission and distribution.”

To meet the new and cleaner challenges of the world, the Mexican grid needs to be expanded and its old transmission lines revamped. “The effort to incorporate renewables must be accompanied by upgrades to transmission lines that are already saturated, as well as building new infrastructure for the Mexican grid to absorb all the renewables production,” says Hugo Galindo, Director General of Grenergy Renovables. Fortunately, these needs are viewed by most as a business opportunity, according to Luis Sánchez, Director General of Ergo Solar. “For about 70 years, the private sector was prohibited from participating in any aspect of Mexico’s electric system. As a result of the reform, the great unknown has transformed into the great opportunity, where private players can participate directly in the industry’s entire value chain, from generation to consumption.” 

EXPANSION A MARKET MUST

The most abundant renewable resources that make for the best business opportunities are focalized in specific areas of Mexico, most of which lack a proper connection — or a connection at all — with the National Interconnected System (SIN). This is reflected in the fact that most of the projects from the first three longterm electricity auctions were assigned to the states of Sonora, Coahuila and Nuevo Leon where the transmission grid does not have the same extensive coverage. This situation also applies to Yucatan, a state where almost 1GW of capacity from the first and second long-term auctions is expected to be installed, but that is also in great need of grid expansion. But nowhere is the issue more prevalent than in the state of Oaxaca. Due to its abundant wind resources, the state has attracted 70.65 percent of the investment directed to the creation of wind farms in Mexico, but the lack of a proper transmission grid connecting it with high-consumption centers has created an energy transmission bottleneck. Fixing the problem will not only create efficiency but save money. “A higher distance between your PV power plant and the electric substation that will distribute the generated energy implies a higher cost, not only from energy loss but also from installing additional transmission lines and substations from scratch,” says Teodoro Krapp, Director General of Intertec Solar Mexico.

To solve Oaxaca’s bottleneck CFE, with the support of the Ministry of Energy, launched a public tender for the construction and operation of a 3MW, 1,200km HVDC transmission line under a PPP scheme. According to an article in El Economista, by June 2017 CFE had liberated, after almost two years of work, 94 percent of the rights of way for the line. But delays on the project again demonstrated that social issues affect the creation of energy transmission projects just as much as they affect energy generation developments.

According to Gabino Fraga, Managing Partner at Grupo GAP, the importance of considering every social aspect from the very beginning of a transmission or distribution development process cannot be stressed enough. “Sometimes, it might be surprising how simple problems lead to very complicated situations, ultimately stopping a project. Confusion over ownership of a property is a case in point. A company looking to develop a project might have talked with the leader of a community or ejido, but that person is the representative of the group, not the owner. The land is owned by a collective entity, meaning that the leader has no true ownership of it. Such a simple mistake in dealing with a situation like this could jeopardize an entire project.”

REVAMPING TO STEP UP TO THE CHALLENGE

Besides creating new infrastructure, older lines can be revamped to ensure that Mexico’s infrastructure is able to cope with the transmission of electricity from the generation to the demand points. PRODESEN highlights this under the objective of meeting the needs of electric energy supply and demand, and for that it states that increasing the transmission capacity between the Puebla, Temascal, Coatzacoalcos, Grijalva and Tabasco regions is a necessary project to be installed before 2020. This project alone requires an investment of MX$21.9 million for the substitution of all the required electric equipment with newer higher capacity equipment.

PRODESEN also highlights the importance of starting to, first, integrate new measurement equipment in the Mexican grid and, second, upgrade it into a smart system. Both objectives will allow the grid to cope with the requirements of the Mexican wholesale electricity market, after fulfilling the first objective, and to ensure that the infrastructure remains trustworthy and secure to provide an economically viable, efficient and sustainable energy supply, after fulfilling the second directive. The first objective requires an investment of MX$2.76 billion for the period 2017-2019, and the second will entail an investment of MX$4.89 billion for the period 2018-2021.

Although meeting these objectives will be costly, José Delgado, Project Development Director for SUNCO, points out the importance of making this investment to ensure that electricity prices remain low in the future. “Transmission and distribution are key pieces in the puzzle of Mexico’s competitiveness. Although we have achieved cheap generation prices, they only make up 40 percent of the final energy price for consumers, highlighting the importance of improving transmission and distribution.” 

Other players in the industry are looking even further ahead by considering electricity storage systems as a way to help the Mexican grid cope with the intermittency generated by the integration of an ever-increasing number of renewable energy systems.

STORAGE TECH, THE ULTIMATE ENABLER

Alessandro Orpelli, Solar Sales Director of Fimer, says energy storage technologies implemented in the Mexican grid would help decrease the country’s dependency on energy generation plants powered by fossil fuels. “The main advantage fossil fuels have over renewables is that they provide energy 24 hours a day. Once we can store energy, we can deliver it 24 hours a day too.”

Some, such as David Torres, Director General of TORDEC, emphasize upcoming technologies, such as storage, to guarantee a stable renewable energy future. “The only missing link between the present and a future where 80 percent of Mexico’s electric power is produced by renewables, is the development of reliable and costeffective energy-storage systems,” he says. “Losing up to 80 percent of energy production at a 30MW solar plant because of a cloud is extremely risky in a system that can only tolerate 10MW variations. That is the case in Baja California where the system’s eight nodes are isolated from the other 45 that are part of the SIN. If batteries are not installed in a small grid like this, then the grid will not be able to handle variations that are inherent in renewable energy production.”