Diversified Energy Distribution Key in Creating Sustainability

Cities are some of the largest consumers of energy in the world and as the effects of climate change continue to raise concerns, metropolitan areas are increasingly under pressure to reduce their carbon emissions. The 2015 Energy Reform has placed Mexican cities ahead of the curve as it opened an array of renewable energy suppliers available in the country’s market, panelists told the Infrastructure & Sustainability Summit 2017 in Mexico City on Tuesday.

“More than two-thirds of global energy consumption derive from cities,” said Marcelino Madrigal, Commissioner at the Energy Regulatory Commission (CRE) at the Hotel Sheraton Maria Isabel. “The fact that the 2015 Energy Reform allows end users of all sizes, from households to large cities, to choose their energy supplier at cheaper rates implies a big advancement in the race to reduce carbon emissions.” He mentioned that in the last six months, the number of solar panel users in the country has increased 20 percent thanks to the transparent system.

Distributed generation has the added benefit of alleviating stress on public funds, an important factor behind its popularity. “Mexico has 2,400 municipalities and of these 400 are considered to be metropolitan areas,” said Santiago Creuheras, Director General of Energy Efficiency and Sustainability at the Ministry of Energy (SENER). “Approximately 80 percent of the population is concentrated in these areas, which implies that nine out of 10 people live in cities. Soon, the rest of Latin America will encompass a similar context in terms of urbanization.”

While the reform has opened new opportunities in the energy market for sustainability in highly populated Mexican cities, Guillermo Bilbao, the moderator of the panel and Director of PA Consulting, worried about country’s ability to achieve the high benchmarks that have been set. The Energy Transition Law, for example, mandates that at least 34 percent of the country’s energy must come from renewable sources by 2024, a short window of time.

Creuheras responded by emphasizing the commitment of the public sector to helping the country advance as planned in its energy transition through norms and committees unique in the world. “The Ministry of Energy is taking action on this matter to make sure that energy transition goals are met,” he said. “For instance, we established a program to substitute inefficient lightbulbs in rural areas. We also offer credit to households in Mexico that have an income higher than five minimum salaries to incorporate renewable energy. These programs are being incorporated in other Latin American countries as best practices.” The ministry also uses programs such as TRACE to compare the energy consumption of Mexican cities to others in the world.

Metropolitan areas also face the challenge of incorporating new technologies and making sure that they comply with the strict norms. “Cities need to make sure that the technologies they are incorporating comply with norms and requirements,” stated Creuheras. “Contrabanded technology can be an issue and we recommend municipalities to make sure that everything from lighting systems to air conditioners in public buildings are aligned to the new laws.” Santiago also mentioned that transportation systems in cities will face the most challenges in the energy transition. “Mobility is expensive and the Ministry of Communication and Transportation does not have the budget to incorporate all the technology that is needed. SENER is collaborating with the ministry to create viable solutions. It is an interesting area of opportunity.”

In the past, cities used to solely rely on CFE and its limited capacity to provide renewable sources of energy, but the Energy Reform is bound to create new benchmarks of efficiency and productivity. “The reform is creating more competition in the market and this is going to push public companies to be more efficient,” said Madrigal. “Companies will continuously seek better prices to compete in this market. Cities will benefit from the new context and will be able to incorporate renewable energies at a faster rate than previously if prices continue to become more competitive.”