Pierre Comptdaer
Country Managing Director
View from the Top

Flourishing Industrial Growth Boosts Energy Industry

Wed, 02/24/2016 - 16:51

Q: What contribution will Mexico make to ABB’s growth strategy, and how will its importance evolve over the coming years?

A: The geopolitical scenario that Europe is facing has wounded its industrial growth, while the Asian economies are decelerating. In the case of North America, we have seen that its politics are leading to a sort of reindustrialization. In Mexico we see an enormous potential for growth due to the strategies that the government has implemented. In 2014 we saw the number of large projects and investments recovering, especially in the infrastructure segment. We are now participating in the expansion project of the maritime port of Lázaro Cárdenas, Michoacan, where we are involved in the automation and electrification process. This terminal is based on ABB’s smart port concept and will be the first completely automated terminal in Latin America. We are also participating in another large electrification project for PEMEX.

Q: What obstacles threaten the healthy development of the energy sector in Mexico?

A: Most of the investment that will be poured into energy generation will come from the private sector, since most of it is destined to cogeneration plants, renewables, and IPPs. The government must focus on how it will install the transmission lines that are needed to deploy the electricity faster than the demand growth. On one side, you need to make cheap gas available to the companies looking to enter the country, and on the other, the transmission capacity has to be competitive. For that reason, HVDC transmission technology will provide a robust and efficient infrastructure to alleviate the stress on the grid, and also to provide certainty for medium and longterm generation investments.

Q: What role will ABB play in supporting the parastatal reach its goals in these areas?

A: One of the concerns for CFE is related to energy losses that occur in its distribution lines. CFE managed to reduce losses from 16% in 2012 to 14% in 2014. Ochoa Reza plans to end at 10% by 2018. Addressing technical losses is important, not only to increase profitability for the distributor, but also because it dramatically improves the quality of the energy and the service. ABB has highly advanced distribution transformers that help significantly reduce energy losses. In addition, we can help redesign and automate the grid in order to maintain the quality and reliability of the network. This smart grid is administered by powerful software with a hardware backbone. Once a country has reached enough energy quality, it can upgrade the system through automation. Basically, before creating a smart grid, you need to be sure it is strong enough. We are working on a smart grid pilot project in Cozumel and it will offer insight into its workings.

Q: What will Mexico need in order to meet the target of generating 34% of its electricity from renewable energy by 2024?

A: When we talk about renewables, we need to consider four sectors: wind, solar, geothermal and hydro. In terms of technology there are no major difficulties. Companies are struggling a little with the regulations and the profitability of those projects. In the short term, I believe the biggest potential is held by wind and solar power because this is where the majority of investments are going. The cost of photovoltaic cells has decreased tremendously in the last five years. It is now cost-effective for end users to install their own solar systems to power their consumption needs. A lot of people in Germany, France, and Holland already have solar panels working in their house, which has been driven by government incentives. Unfortunately, there are no incentives in Mexico as there are in Europe.

Q: What are ABB’s ambitions to bring more R&D activities into the country?

A: We have already begun with R&D practices in the country, in fact, we have an R&D team working on low and medium voltage solutions. The idea is that whatever knowledge comes from these investigations will be used to develop products for the Americas. In medium voltage we have a smaller team working on adapting the products to Mexican norms. ABB has seven corporate research centers that are working in different business units (BU). The product development is done at BU level, coordinated on a global basis. Normally, where we have manufacturing sites, we like to concentrate our R&D teams to try to support local suppliers and adapt the products to specific market needs.