News Article

Joint Planning Imperative To Enhance Transmission Infrastructure

By Karin Dilge | Thu, 09/08/2022 - 12:04

Mexico’s transmission and distribution infrastructure has long since been identified as a weak point in its clean energy transition strategy. To many industry analysts, this is no surprise, as Mexico’s geographical, technological and financial constraints prove challenging. If Mexico is to improve its grid system, public-private cooperation will be key, argued experts.

According to says Luis Felipe Cantor, Transmission Head, Siemens Energy Mexico, Central America and the Caribbean, Mexico’s market situation is curious because “the need for local power supply is causing different types of loads to be connected to the same network, generating new connections and causing instability.” Therefore, he explained that it will be crucial to establish how different actors in the market should support each other if they are to maintain the stability of the network.

This is a challenging situation, in which the private sector will play a fundamental role because it can assure the sustainability of the energy sector in the future. “There is no precise solution planned that can tackle all these challenges,” said Andrés Cabrera Palacio, Commercial Director, AES Mexico.

Moreover, Ivette Castillo, Managing Director LATAM, GE Grid Solutions, pointed out that successful planning requires that all market actors understand the objective of the grid operators, which is different in every system. The Mexican system is mature and is currently modernizing. “Security, reliability, effectiveness, green power and low costs are the priority right now in the Mexican system. This is imperative to understand where investment and policy should be directed,” added Castillo.

“Over the past four years, there has been little investment in the power transmission network, and we are beginning to feel the effects. The system is reaching a point where it is getting too expensive to be able to connect to the transmission network,” said Eduardo Andrade, General Director, Burns & McDonnell. Andrade added that focusing on getting more money for CFE will be fundamental to enabling other companies to interconnect. Although the state utility has often declined the support of the private sector, it needs help to carry out bigger projects. “It must be the goal to reach a point where collaboration between the private and public sector inside a more monopolistic system,” added Andrade.

In addition, Castillo also mentioned the necessity of the private sector to participate in the discussion regarding grid planning, because this has led to problems in the past. “Power production was planned independently from energy transmission, but they need to be planned together,” mentioned Castillo. 

“Growth in the power grid is not only about production but also about distribution. Getting power to everyone while maintaining stability and reliability of service is critical,” said Cantor. To plan where the possible and the largest users of the network will be in the future will also help to make the grid more reliable and stable. 

“To discuss stability, voltage and frequency must come into the conversation because that is what needs to be controlled and regulated to have a stable network,” said Castillo. According to her, voltage problems arise when there is no balance between these two aspects. When disturbances in weak networks arise, the solution is to invest in technology: the problem is not that there is no technology to address issues, but that there are no policies to spur investment in that technology. 

In Mexico, CFE is the only player involved in the transition in distribution. The state utility maintains a standard of conduct regarding acquisitions and modernization. “The concept of planning in the Mexican market is excellent because it comes from an expansive plan. Nonetheless, firstly the current problems must be identified, and then it should be analyzed how technology can be used to enhance the system,” said Cantor. 

Mexico is a large country and connecting the whole country to the electricity network can be a challenge. What is more, bringing electricity to remote locations is not seen as a viable business by many carriers. “These lags seem to increase growing the unequal access to electricity gap in the country,” said Ignacio Garcia de Presno, Partner, Lead Deal Advisory&Strategy, KPMG. 

“This is a breaking point in the electricity industry, during which many things need to be defined to close that gap. It is a real problem as we are getting left behind in terms of modernization if we do not start planning based on access for all and considering technological disruptions,” Andrade added.

Karin Dilge Karin Dilge Journalist and Industry Analyst