News Article

Suddenly, An Avalanche of Options

Wed, 02/15/2017 - 11:06

(In order of appearance, left to right)
Panelist: Martín García, Sustainability Manager of Cinépolis
Panelist: Francis Pérez, Shared Value Creation & Sustainability Director of Nestlé
Moderator: Claudio Rodríguez, Partner at Thompson & Knight
Panelist: Victor Fuentes, Director General of Mexico and LA at Mitsubishi Electric Factory Automation
Panelist: Juan Kuri, VP and Country Manager Mesoamerica of Siemens PLM Software

As the Energy Reform continues evolving, qualified users face an avalanche of options to satisfy their energy consumption requirements, each having its own risks and benefits, which companies now have to evaluate and compare to choose the option that best fits their interests, panelists said on Wednesday at the Mexico Energy Forum 2017 in Mexico City.

“Companies have different options to supply their energy and are often concerned with determining which option fits best for them,” said Claudio Rodríguez, Partner at Thompson & Knight and the panel’s moderator during the event at the Hotel Sheraton Maria Isabel. “Some clients might choose a legacy project with energy surplus, some might venture into the MEM, either alone or with a qualified supplier. The range of possibilities has opened for off-takers.”

One result of the Energy Reform is that off-takers can now purchase power from generators or qualified suppliers, with projects under the new or the previous law. During the panel, “The Energy Factor in Mexico's Industrial Competitiveness,” off-takers and technology suppliers shared their views on the main challenges to successfully select the best option for energy supply and the role that technology has in that process.

For Francis Pérez, Shared Value Creation & Sustainability Director of Nestlé, the cheapest energy is the one not consumed by a company. “Nestlé has invested over MX$1.2 billion (about US$59 million) in process optimization to reduce the environmental impact of our products,” Pérez said. This has been accomplished by exploiting different energy products resulting from the company’s operations, such as heat, as well as the implementation of renewable resources into their processes.

According to Martín García, Sustainability Manager of Cinépolis, the movie-theater chain is betting on renewable energy. Since the company’s energy consumption matches peak electricity demand, the company is using solar distributed generation systems at its theaters in Baja California and Baja California Sur. Solar energy allows Cinépolis to take advantage of power consumption patterns instead of it being a burden because of higher tariffs.

Technology is increasingly playing a role for industrial competitiveness, allowing companies to optimize processes and generate value from the resulting savings, agreed Victor Fuentes, Director General of Mexico and LA at Mitsubishi Electric Factory Automation, and Juan Kuri, VP and Country Manager Mesoamerica of Siemens PLM Software.

“Energy production is vulnerable to the variable costs of commodities such as fossil fuels, so to be more competitive, energy efficiency becomes crucial for companies,” Kuri said. The executives agreed that data-driven technology is the key to optimizing processes and making operations efficient. Industry 4.0 allows remote decision-making both for power generation and energy consumption alike, saving valuable resources and assets and reducing costs.

To be industrially competitive in Mexico companies must also make the most of the opportunities presented by the Energy Reform. All the panelists felt strongly about the government’s role in terms of providing support. “The government has implemented the Energy Reform in record time,” said Rodríguez, the panel moderator. For Cinepolis, the fiscal incentives for solar distributed generation were the key element that motivated them to bring the energy source to their facilities.

An issue of concern for the audience, shared by off-taker panelists, was the uncertainty of the back-up system of qualified suppliers when their main energy generator experiences a system failure. Rodríguez eased those concerns by explaining how the warranty system of qualified suppliers works. “CENACE requires qualified suppliers to have a variety of different sources and generators to back up their contracts in case their main provider fails. Because qualified suppliers are responsible they are the ones who must assume merchant risk, without direct impact to the off-taker,” he said.