Navigating the Energy Shift Through Consulting Insight: Enegence

Q: How has your company evolved from its initial consulting focus, and what areas are you involved in today?

A: In addition to the company’s original core of regulatory, strategic, financial, and technical consulting, we now cover all specialties in the electricity industry. We have also added natural gas and sustainability practices and now serve as a one-stop shop for any business need.

We cover every activity in the electricity sector: power flows studies, interconnection, engineering, design, and not just infrastructure, but anything related to generation, supply, commercialization, and more. We also have a very robust systems division in two areas: first, systems for operating in the wholesale electricity market, where we understand most suppliers and generators in Mexico; and second, software for natural gas markets and volumetric controls.

Those are our consulting and software divisions. We also have divisions focused on electrical infrastructure development, mainly interconnection works, substations, and networks. Additionally, we operate a non-supplier trading company to help bring liquidity to the market, and a market operator that handles transactions in industrial parks on behalf of third-party clients and end-users.

Our team now includes around 50 collaborators, and we are expanding. We also have a company supporting pipeline interconnection and operations. We are currently developing two proprietary pipelines that will begin operations shortly. 

Our growth has been very significant. Ultimately, we are working to support an industry that should have progressed in the last six years but now must move forward to become truly liquid.

Q: How has demand for consulting services evolved since the new laws and regulations for the electricity sector were instituted?

A: I believe the consulting landscape has shifted dramatically. When the market began operating in 2016, and between 2017 and 2019, most companies wanted to understand how to operate. There were two main consulting needs: helping market participants like generators and suppliers navigate operations with regulatory gaps, and helping end users understand cheaper supply options, as many were hesitant to switch providers.

That type of consulting still exists, but since 2022–2023, things have changed significantly. The big driver was the lack of energy and connection capacity. Industrial parks and other users wanted to connect but could not. So, demand surged for electrical infrastructure development because when the state did not provide connections or upgrades, companies said: “We will do it ourselves.” These are capital-intensive projects requiring power flow studies, connection assessments, engineering, rights-of-way, and full implementation before energy can be supplied. These projects are complex and take at least two years.

Before 2020, there was major interest in building generation plants in Mexico. We conducted many interconnection studies and pricing forecasts. But from 2019 to 2024, that came to a halt, there was no generation growth, and grid development stopped. Focus shifted from generation to consumption.

Now, I believe the trend is about to shift again. While interconnection capacity is exhausted, many companies are now developing their own connections and are turning to self-supply and generation. So, consulting and systems support will lean more toward generation in the next two to three years. Eventually, supply and demand will balance, and with proper infrastructure, consumers will access competitive energy.

Q: How do you view the current regulatory shift and its impact on self-supply and grid infrastructure?

A: I think the new administration, for the better, chose to end the conflict over sovereignty and the state’s role. They said: “I will keep 54%, you get 46%.” In practice, the state holds a massive, non-competitive share that does not interest the qualified market.

Since the LSE and LIE were issued, the rules have become clearer and largely respect the market’s spirit, especially regarding self-supply and supply. Where do you think all these companies building infrastructure will go? To self-supply, of course. If you have the infrastructure, you build the generation plant.

For the past three years, I have said the industry is headed for democratization. Long term, electricity costs will approach zero because generation devices and technologies are becoming cheaper and more accessible. Eventually, everyone will have access to a generation source. We are accelerating this with trends like self-supply. In time, generation hubs will be so close to consumption centers that we might not even need a grid.

It is phenomenal. Having massive grid infrastructure makes less sense when smaller, geographically autonomous systems can do the job. New regulation is enabling this, for instance, by raising the distributed generation threshold.

Q: What are the biggest infrastructure challenges clients face today, and how is consulting helping them navigate those?

A: I always view problems as challenges, and ultimately, as opportunities to find solutions. That is the job of a consultant.

We face several big challenges: transmission does not exist and will not for a while. Although US$7.5 billion was announced for new lines, I doubt that will materialize. Even if it did, the system actually needs US$30 billion, and even that may not be enough.

Many companies, with our support, are navigating the regulations to implement their own connections. But what happens if there is no nearby energy? Now we are seeing more onsite generation projects that integrate with private connections and need to be properly operated.

That is what consultants must support: implementing and operating a comprehensive model. Any imbalance can have major consequences, so we help clients design infrastructure, build business models, and translate legal frameworks into operational reality.

This is the core challenge today: consultants must be multidisciplinary and capable of guiding clients from strategy to operation.

Q: What risks and responsibilities do consultants face as Mexico’s regulatory framework continues to evolve?

A: We are in the middle of a major regulatory transition. New regulations are coming, and with them, a deeper paradigm shift. For instance, how will economic dispatch for loads be defined? That is important, as it determines the state’s ability to prioritize dispatch and shape how the system works. Also, what does binding planning really mean? Previously, we had indicative planning, where price signals guided investment decisions. Now it is binding, meaning the policy maker dictates what gets built and where, with limited room for private actors to decide.

Another issue is storage. We are far from having proper storage regulation, and it is very delicate, bad design can scare off investors. This is where consultants come in. Those of us with knowledge must help shape solid regulation, not for profit, but to ensure the system works well.

Many do not yet grasp the complexity of the grid ecosystem. We advise clients who will invest hundreds of millions and if you do not understand the coming changes, you risk your client and yourself. Now is not the best time to rush into the market. We must help design regulations wisely, and only once the rules are clear should we advise clients to move forward.

Enegence is a boutique consultancy specialized in Mexico’s Wholesale Electricity Market and the natural gas sector. The firm offers regulatory advice, technical and pricing analysis, as well as trading and brokerage services for its customers, enabling it to deliver comprehensive, tailored solutions for companies navigating the country’s evolving power and natural gas sector.