Transmission Challenges & Energy Market Development

Presentation: Manuel Alanís Sieres, Subdirector of CENACE

Manuel Alanís Sieres, Subdirector of CENACE, began his presentation by highlighting part of the objectives in the Energy Reform, focusing on the need to create competition in the generation and commercialization of electricity. This meant reducing barriers and pushing renewable energies. Generators can now recur to a wholesale market, although the nuclear energy segment is still reserved to the government. CFE will still attend basic users, while large users can obtain energy from the wholesale market where companies will compete for clients.

Alanís pointed out that SENER dictates energy policy and CRE issues regulations that ultimately shape the way CENACE works. He detailed CENACE's functions, such as managing the operational control of the national grid in a reliable and efficient manner. The organism will also handle the wholesale electricity market, which includes electricity transactions, associated services, imports and exports, financial transmission rights, penalties, and administering clean energy certificates, among other duties. He noted that the energy market will be determined based on the offer. The planning and expansion of the grid will also fall under CENACE's responsibilities, just like the guarantee of open access to the gird.

From the offer side, generators will have financial rights to transmission and the right to enter bids. As for demand, qualified users can obtain electricity in the market from an array of generators. Initially, qualified users will need to be above the 3MW line, but in subsequent years this number will decrease gradually until it reaches 1MW.

The planning stage will be made up of projects that are already in the pipeline, as well as new projects, interconnection operations, and exports and imports. Market participants will be able to export or import, although CENACE will schedule these activities.

Alanís mentioned some consumption and renewable energy capacity estimates for the 2015-2024 period. “Currently, renewables comprise 20% of the energy matrix only. However, in the medium term the installed capacity of renewables can reach 27,912MW, mainly due to developments in wind energy.” Some of the transmission challenges the country currently faces, according to Alanís, include elimination bottlenecks, operating without restrictions with international wholesale energy markets, minimizing losses, complying with the clean energy objectives, and drafting attractive financing and construction schemes.

Regarding advancements in the restructuring of CENACE, Alanís told that the Administrative Board of Directors was defined in September of last year. Pedro Joaquín Coldwell, Minister of Energy, was appointed president, while César Hernádez Ochoa was appointed as one of the board members.