Fernando Zendejas
Former Deputy Minister of Electricity
Ministry of Energy
View from the Top

Mexico Will Keep the Switch on

Mon, 02/25/2019 - 12:17

Q: How does the Deputy Ministry of Electricity expect the energy mix to evolve in the coming years?
A: Regarding installed capacity, this administration will conclude with 31 percent of clean energy generation. Taking into account intermittency in effective generation, the total is around 21 percent. Nevertheless, with the installation of new plants, the country evolved from 62,000MW in 2012 to 78,000MW in 2018. Half of the additional 16,000MW comes from clean energy sources. If this growth continues, in the next 15 years conventional thermoelectric plants will decrease their participation in the energy mix. Regarding natural gas, this fuel represents half the country’s electricity generation and as long as it remains abundant, has a small carbon footprint and is governed by competitive prices, it makes sense to keep it in the mix. Additionally, there are other technologies that are reliable and consistent, such as nuclear energy. Laguna Verde’s two reactors supply close to 5 percent of the national electricity demand and the PRODESEN aims to duplicate this capacity in the coming years. This will represent a huge investment for CFE as particulars cannot participate in this segment due to national security and constitutional restrictions.
Q: What were the three main contributions of your office to the national electricity industry during this administration?
A: Primarily, we opened an opportunity for the industry to participate directly in transmission and distribution infrastructure projects. At the moment, there are two important tenders on the agenda regarding the construction of transmission line projects. The first will be in association with CFE for the Ixtepec-Yautepec Transmission Line project that will interconnect Oaxaca and Morelos. The second is a private project involving the interconnection between the National Interconnected System and Baja California. The latter will be the first project in the country’s history to install DC lines for electricity transport.
The second contribution was the introduction of the new plant construction model that stands out from the four modalities established in the 1992 Electricity Legislation. These were self-supply, independent power producers, small producers and cogeneration. With the current model, any company that aims to generate electricity and complies with the requirements stated by CRE and CENACE can do so. Finally, the third contribution is the creation of the qualified supplier figure, which is considered a milestone because it provides certainty for long-term investments and a more dynamic and competitive market.
Q: What three main topics should the next administration prioritize in the electricity industry agenda?
A: First, it should prioritize preventing possible congestions that might take place in the transmission lines, mainly in nodes that are seeing increasing demand, such as the Yucatan Peninsula or Monterrey’s metropolitan zone. Second, it should follow the market rules as established, executing a long-term electricity auction per year. Third, rural electrification is a pressing issue.
Q: Looking at the electricity system as a whole, what energy policies are required to meet the country’s needs?
A: The best thing any future administration can do is to respect the symbiosis between state planning, executed by the Ministry of Energy, administrated by CENACE, regulated by CRE and developed by CFE as the country’s productive enterprise. Complementing this with private investment, long-term planning and the best technology available is mandatory. Despite the political landscape, the country will keep flipping the switch on, and current and future electricity demand will need transmission and distribution infrastructure to supply energy at the required pace.
Regarding CFE, if the government decides it will have fewer than six subsidiaries, that will not pose a problem. The Constitution provides the guidelines for a competitive industry. Having a CFE that is efficient and more competitive every day does not close the doors to other participants. I hope the next administration agrees with this as well.