Grid Code 2.0 is Transforming the Energy Sector: Diram

Q: How are companies advancing in the adoption of Grid Code 2.0 standards?

A: The Grid Code 1.0 was launched in 2016, with a penalizable date starting in 2019. During its revision for the creation of Grid Code 2.0, Diram was the only company participating in the CRE’s Advisory Committee of the Grid Code. This update fixed certain incorrect or inappropriate data from version 1.0. Although the vast majority of multinational companies complied with the code, complications arose as some companies decided to stop complying due to legal issues unrelated to the code's regulations. Authorities did not enforce strict measures to ensure compliance, leading to a problem: many companies comply with the code, but not to the expected extent. To date, many companies only comply with the code when they need a load expansion or when a new company is incorporated, as CENACE demands compliance at those times.

Many companies are waiting to be notified to comply with the code. At the start, it was expected that compliance would be universal, but a percentage of the industrial sector has not fully adopted Grid Code 2.0.

Q: How has your collaboration with the industrial segment grown and where do you see the biggest opportunities now that nearshoring is driving energy demand?

A: The entrance of new companies into Mexico has driven significant growth. Diram stands out as the leading company in the application of power electronics technologies, which is the best way to comply with the Grid Code. We started with the largest and most strategic companies, those with electric arc furnaces, by installing STATCOM equipment. We now have 41 STATCOMs installed in Mexico across various industrial sectors, including automotive, paper, and mining.

Q: How does Diram collaborate with other stakeholders in the energy sector, such as CFE and CENACE, to ensure the effective implementation of Grid Code and other standards?

A: We have an excellent relationship with CENACE. Compliance is managed based on the regulations, which include mechanisms for submitting the necessary documentation to demonstrate that the user is meeting measurement campaigns. CENACE also provides clear information detailing the documentation that must be submitted to confirm that the established parameters are being met.

Q: How will CENACE’s decision to stop providing emergency alerts regarding the National Electricity System impact the reliability of the network?

A: This is concerning as crucial information is being hidden at a time when the sector should promote more transparency. Technological advances make it increasingly easier to monitor reserve levels and better understand what to expect from the system. But the lack of infrastructure has been a persistent problem.

Over the past six years, we have fallen significantly behind in terms of infrastructure, not only in the energy sector but also in communications, water, and sewage, among others. There has been inadequate investment in these areas. In the electrical sector, there are deficiencies at all levels, including generation, transmission, distribution, monitoring, measurement, and system protection. We are significantly lagging in all these aspects.

If CENACE does not publish this information, it is possible that the country is approaching a period of increasingly frequent blackouts. At the beginning of the López Obrador administration, it was announced that the Mexican electrical system could collapse, and nothing was done to prevent it. There was no investment in infrastructure, key personnel from CRE and CENACE were dismissed, private investment was blocked, and energy tenders were canceled. Investment was made in six power plants that are still not completed, and a significant portion of the resources was spent on purchasing Iberdrola’s plants without obtaining a single additional megawatt.

Q: What are your expectations for Mexico’s energy industry? 

A: CFE does not have the resources to make the necessary investments, so it is likely that the private sector will have to step in. In late 2023 and early 2024, CFE launched two tenders in reactive power and power electronics, which it had not done in the past 10 years. It would be best for Mexico if tenders continue.

Q: How is Diram using R&D to strengthen its value proposition?

A: In 2021, we established a Power Applications Research Center (SITUP) to produce what we previously imported from China. At this center, we engage in circuit design, board manufacturing, and active filter assembly. We have a team of about 10 individuals with a master’s or Ph.D. in electrical engineering. Diram was selected to teach power electronics courses at a number of universities, including Tecnológico de Monterrey. 

In 2022, we sold 20% of Diram to Southen States a US-based company and began exporting reactive power equipment to the United States with significant success, multiplying our exports by 15 from 2021 to 2024. By 2024, we will have already exported sixty to seventy proyects to the United States, including electronic boards that we are designing and will manufacture. 

Q: What challenges and opportunities do companies face when trying to comply with Grid Code regulations?

A: Mexico, although it was one of the last countries in the Americas to implement the Grid Code, established one of the strictest codes. Compliance with the Mexican Grid Code requires cutting-edge technologies, which is why we have 41 STATCOMs installed in the industry. This could not have been possible if the Grid Code had not been implemented. This creates a virtuous circle: a strict requirement forces the use of advanced technology, which in turn demands better training and engineering. To meet regulations, larger and better investments are being made, which are then better maintained, generating a positive cycle.

The challenge is to convince companies that they need to comply with these standards and that there are benefits beyond compliance. Investing in cutting-edge technology not only ensures adherence to the Grid Code but also provides long-term advantages. In January 2024, CRE published in the Official Gazette of the Federation (DOF) an increase in the required power factor, from 90% to 95% Some companies use this document to ask for exemption from complying with the Grid Code, but lawyers argue that this strategy might backfire.

Q: What are Diram’s priorities and expectations for 2025?

A: In 2025, we foresee significant growth in the United States. We have also undertaken a couple of projects in Latin America, such as installing a STATCOM in Colombia without the assistance of the technology provider or the equipment manufacturer; it was installed and commissioned exclusively by Mexican engineers. We are about to close other projects in Ecuador and Chile.

Many companies are investing in Mexico. Ternium, for example, is building a massive plant in Pesqueria, Nuevo Leon, and DEACERO is building a large plant in Saltillo, Coahuila. Out of the 10 major steel groups in Mexico, nine plan to set up new plants in the next three years. As leaders in the steel industry, we are focusing on participating in these projects. As long as Mexico has the necessary infrastructure, investment will continue to come, and we will need to keep providing services both for Grid Code compliance and reactive power needs.

Q: Why is Diram the best ally for projects involving the Grid Code?

A: Diram demonstrates its strength through references and experience. We have provided services to 80 of the Top 100 electricity users in Mexico, and eight of the Top 10. All of them are returning clients. We are also engaged with very large international companies seeking solutions for their projects in Mexico. Our engineering team understands the processes, the equipment, and the people involved. This year, we celebrated our 31st anniversary.

Diram designs, manufactures, and implements reactive compensation projects. It also manages power quality optimization and network code compliance for renewable generation plants.