Heat Waves Lead to Proliferation of Microgrids

Heat waves have created power shortages in the Mexican electricity grid. Industrial companies established throughout the country face problems from the grid’s intermittency, such as voltage changes that force halts in their production processes, as well as micro power outages, and even long power outages or shut downs. These situations have caused industrial users to opt for energy backup systems and local generation that offer reliability, resilience, and ensure continuous operations.

In some areas of Mexico, temperatures higher than 40 degrees Celsius have been recorded this season; mainly in the Bajio region, in the north of the country, in Yucatan, and Quintana Roo. 

Due to these temperature rises, the national electricity grid is facing significant challenges in generation, transmission, and distribution of energy. CFE, the national utility, faces power shortages and alerts have been issued,  especially from the Yucatan peninsula to Nuevo Leon. 

The National Energy Control Center (CENACE) announced that it had reached minimum backup energy reserve (less than 6%) due to the increase in demand for cooling purposes, the increase in industrial activities post-COVID, andlower transformer capacity, which is reduced with extreme temperatures. Energy demand will continue to increase, considering population growth and the nearshoring trend in the country.

Regarding power generation, it is important to mention that extreme temperatures have also affected other types of power generation, including hydroelectric plants, where prolonged droughts have resulted in decreased water levels and, therefore, their total energy production.

Power outages create a social and economic problem; the general population is affected by not having electricity during seasons with extreme temperatures. Sectors like the hotel industry are additionally impacted by the electrical interruptions as they are forced to halt their operations and are affected by voltage fluctuations in the grid, which can damage their equipment and machinery, leading to significant economic losses. The president of COPARMEX, Manuel Liaño, mentions that the outages are due to a lack of investment in the country's infrastructure. Investment in clean generation and the National Electricity Grid is required to support additional generation, especially in congested areas. Manuel also stated that they have insisted with the government that private investment should be encouraged to participate and to foster these investments to obtain the necessary support for the grid.

Due to the current lack of infrastructure investment and anticipated limitations in the future, local renewable energy generation combined with energy storage systems is a solution that many users are turning to. This combination of technologies is known as a microgrid. Microgrids are a group of locally interconnected loads, which can either work in conjunction with the external grid (CFE), known as grid-connected, or independently, in what is called islanding-mode.

These local generation solutions with energy storage are custom projects that involve various technological solutions and components depending on whether they need to be entirely isolated (islanded) or if they will only be grid-connected. It will also depend on the sensitivity of the equipment to voltage changes, so proper initial engineering and detailed consumption information are essential to determine the solution and proper functioning of the system.

Battery Energy Storage Systems (BESS) improve the quality of electricity by controlling voltage and stabilizing frequency, acting as a reserve capacity. Besides being backup systems to provide continuity during CFE's intermittency, they generate additional economic benefits. These economic benefits come from two aspects: first, charging the battery during the most economical consumption hours, known as "base hours," and discharging the stored energy during the more expensive economical hours, known as "peak hours." This effect is known as "arbitrage" or "load shifting." The second economic benefit is achieved by reducing demand peaks; the energy is released to cover these peak energy demands and generates savings by reducing the monthly maximum demand.

The capabilities of energy storage systems, combined with local generation and the interaction with the existing grid and additional backup loads, create microgrids that offer more effective and efficient business models for end consumers. Technological advances in batteries and controllers using artificial intelligence enable effective management of the microgrid, achieving cost reduction objectives and operational continuity during external grid interruptions. These technologies continue to learn and evolve as the market grows globally.

More and more projects of this nature are being seen in the country, and given the current energy landscape, with the increasing demand due to extreme temperatures and lack of investment, these solutions will continue to be adopted and at even larger scales. This landscape is propelling innovation in the microgrid space; solutions are becoming more cost-efficient, service-oriented, and technologically advanced. Therefore, at this point in time, it is advisable to promote the use of local renewable energy sources and energy storage systems capable of meeting the energy needs of the industrial sector, creating reliability and resilience, economic benefits, and ensuring the welfare of the population during extreme temperature seasons.