Mexico’s Energy Reforms Promise a More Competitive and Efficient Power Industry

by | Feb 12, 2016 | Industry, Power Generation | 0 comments

Emerson's Juan Carlos Bravo

Author: Juan Carlos Bravo

In August 2013, the Mexico government passed a new Energy reform, which one of its main objectives is to strengthen the competitiveness in the generation of power, accelerate the expansion of transmission networks, improve distribution supply quality, and offer the end consumer a wider range of opportunities to meet their consumption needs at more competitive prices.

The intention is that that this reform drives the advantage of natural gas in the generation of electric power through the expansion and reinforcement of the gas pipeline network. It also would contribute to the objectives of non-fossil fuel participation in the energy matrix.

This new paradigm offers the private sector the opportunity to participate in the electricity sector more actively, from investments in generation, transmission and distribution activities, to leveraging the opportunities that a more competitive approach will offer to electric power users.

Most recently, on January 2016, The University of Calgary and the Mexican Ministry of Energy (SENER) signed a collaboration note that opens up a long-term partnership to help Mexico boost its energy sector. As part of this partnership, SENER has allocated $12 million over four years from their hydrocarbon fund for Mexican organizations that want to collaborate with the university on energy research and education.

As stated by Pedro Joaquin Coldwell, Mexico’s Secretary of Energy:

The most profound purpose of our energy reform is to create more and better opportunities for employment and entrepreneurship for young Mexican professionals. The University of Calgary will be a great partner in opening avenues for training and knowledge development for our best people to pursue the opportunities brought along by the implementation of the energy reform. We are excited to begin this venture with an institution that is both prestigious and of high relevance to the global energy industry.

Source: University of Calgary – University of Calgary recently hosted a Mexican delegation led by Pedro Joaquín Coldwell, Secretary of Energy, Mexico Ministry of Energy (SENER).

But a lot of uncertainties lie ahead due the current volatility of the oil prices and some are doubtful that these investments will materialize. That is why I look forward to hearing from CERAWeek 2016 that will take place in Houston Texas on February 22nd. In this conference, the president of Mexico, Enrique Peña Nieto, will deliver the opening address and together with other world energy leaders will try to give and seek some answers to the current volatility and uncertainty of low oil prices.

In my opinion, the oil crisis will slow down the energy reform but it will not stop it, since Mexico needs a more competitive energy prices in order to boost its economy. As reported by CNBC , the Mexican manufacturers are paying between 120% and 130% more in electricity prices than their counterparts in the United States are. That is why the investments will happen, since there is a huge economic incentive for the private sector to become energy independent. But in order for this to happen, the private sector would have to invest in modern technologies that will help create more flexible, reliable and environmentally-compliant power plants.

I also think that the private sector and the government would have to invest a lot more in training since they will need more qualified people in order to support and operate these new power plants. That is why companies, and the government, would have to collaborate with technology companies to develop training and simulation in order to meet the demand. This would be a great opportunity for young professionals in Mexico, that can join educational programs (like the one with the University of Calgary) in order to gain knowledge and expertise that will allow them operate and maintain these plants at the global level.

I hope Mexico can take advantage of this opportunity to develop a high-performance electric industry, providing the best-in-class technologies and creating job opportunities for young professionals that in the long term will lead to a better economy that will benefit.

From Jim: You can connect and interact with other power generation and distribution experts in the Power group in the Emerson Exchange 365 community.

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The opinions expressed here are the personal opinions of the authors. Content published here is not read or approved by Emerson before it is posted and does not necessarily represent the views and opinions of Emerson.

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