Preparing Qualified Users for TomorrowMon, 02/25/2019 - 17:51
Qualified suppliers in Mexico’s WEM are a critical piece of the puzzle when it comes to ensuring the bankability of a utility-scale renewable energy projects as they act as the middleman between power producers and qualified users, says Andrea Lozano, Commercial Director of BID Energy. “Our responsibility as a qualified supplier is to work hand in hand with financial institutions, such as development and commercial banks, to provide the market with the adequate PPA structures to finance renewable energy project developers,” says Lozano. “Accessible financial structuring in terms of debt and merchant risk is vital to create market liquidity and commercialize the energy produced from these projects.”
BID Energy has found itself playing a significant role before industrial councils and the emerging energy teams of several companies. “Our intention is to provide clarity over the way electricity rates are defined and about the product that is acquired when qualified users pay their electricity bill,” Lozano says. “We also need to clarify the difference between energy and power, highlighting the compulsory requirement of CELs. All these elements help clients identify the hours or days during which energy costs severely impact their consumption and how this consumption impacts their operational costs on a monthly basis,” she adds.
To provide efficient solutions to its clients spanning different industries, BID Energy undertakes a fundamental analysis on a case-by-case basis in which the specific elements that compose the demand curve are thoroughly scrutinized. “We match all these variables with the adequate coverage or generation technologies within our portfolio. At the same time, we assess CEL, power and energy requirements. Much depends on the load zone and the matching nodes a specific client operates with,” Lozano continues. “There is also the possibility of relying on the real-time and day-ahead markets, although our stance in that regard is to keep market exposure to a minimum and rely primarily on coverage.”
BID Energy is the energy trading subsidiary of BID Group, a conglomerate offering commercial development consulting services for institutional, technological and financial operations, assisting private companies and governmental entities. It was the fifth qualified supplier to launch operations in the WEM in February 2018 and now represents several load centers. “We are working with CENACE and with CFE Transmisión and CFE Distribución for the efficient management of operational details within the market. We received recognition from CENACE for our work; they subsequently asked us to help improve the efficiency of its market transaction systems,” says Lozano.
Mexico’s WEM is also dependent on transparent electricity rates. “To reflect real market costs, Basic Supply Tariffs must reflect the real operational costs of CFE’s generation plants, which have yet to be disclosed,” Lozano says. Although she admits their methodology is well-defined, she believes the constant changes to reference tariffs and the lack of a tariff methodology prior to November 2017 to serve as a comparison create uncertainty for qualified users that have not been guided through these changes. The productive enterprise of the state’s electricity bills could be a good starting point, as the information showcased does not clearly reflect the users’ consumption in a user-friendly way. “Final user empowerment over their consumption levels is critical for the market to prosper,” Lozano says.
BID Energy is looking to cement its wholesale electricity market foothold in its capacity as a compliance player, protecting its clients’ interests and guaranteeing their benefits. “We are satisfied with our market position and the work done so far, both with public institutions, such as CRE, CENACE, and qualified users,” Lozano says. “We remain focused on increasing our energy supply portfolio, with more of a focus on Mexico’s northern region and Baja California.”