Private Sector a Key Player in Energy Transition

The role of the private sector in the development of Mexico’s energy market cannot be understated. Private companies will be essential in the country’s road toward implementing clean energy projects, said Claudio Rodríguez, Head of Mexico City Office at Thompson & Knight, during Mexico Energy Forum 2019 held at the Sheraton Maria Isabel hotel in Mexico City.

During the opening presentation of Mexico Energy Forum, Abel Hibert, Economic Adviser to President López Obrador, said collaboration between the public and private sectors was essential for the industry’s development. This was a celebrated announcement among the panelists in the Diversifying Mexico’s Energy Mix discussion, although certainty was also highlighted as a necessity to move forward with projects. “Companies are willing to keep investing but the sector is still waiting for a clearer message from the government on how we will move on,” said Gerardo Pérez, Director General of EDF Renewables Mexico.

According to Rodríguez, CFE has assumed a totalitarian role in the energy industry but there is still opportunity for private companies to collaborate in developing the market, a vision echoed by Leonardo Beltrán, Board Member of Sustainable Energy for All. “CFE knows best the needs and resources available in the country, as well as how to navigate the national economy. By allying with this entity, companies may reduce uncertainty in their investments and gain knowledge on the market,” he said. “At the same time, collaborating with the private sector could give CFE access to new technology and best practices to boost resources exploitation.”

Transmission, in particular, remains an unclear area for the industry. Renovation and development of new transmission lines remains the right and obligation of CFE but Pérez highlighted that opening this sector would be beneficial for evolving the energy matrix. Beltrán agreed by saying “economic development relies on the development of our transmission infrastructure.”

However, for Sampo Suvisaari, Regional Director, Latin America North and the Caribbean at Wärtsilä, this is not enough. He added that a focus on cogeneration projects is necessary to not rely solely on transmission capabilities. Similarly, he highlighted the relevance of power systems to combat intermittency in clean energy generation.

According to Pérez, the country will be in need of 60GW over the next six to seven years, which makes investment in all energy areas fundamental, and all panelists agreed on the part that clean energy projects will play in transforming the sector. “Costs in renewables have decreased beyond anyone’s dreams. Solar panel costs continue decreasing and the potential for this energy is way more than what we need,” said Suvisaari. “Wind energy costs have also lowered, making this the most affordable energy generation method.”

Rodríguez also identified President López Obrador’s social approach as an opportunity for more clean energy projects to develop, showing them as generators of cashflow and employment in areas with no access to other economic activities. “The new government has a defined social agenda, which will have an impact on the development of the energy market,” he said. For Beltrán, though, the private sector’s participation in his projects is fundamental. “Companies have the resources and technology to bring energy to communities,” he said.

Overall, all panelists were confident regarding the future of the industry and the inclusion of clean energy projects in the mix. “Change will come by itself, mostly guided by economic efficiency,” said Suvisaari, supported by Beltrán who highlighted that although there are always political changes, these should not affect economic models. “We must identify the energy model that best addresses Mexico’s needs,” he said.