Meet the new President of the Council's Mexican member committee

Posted on 4 September 2017

Ahead of the World Energy Leaders’ Summit this month in Mexico City, we talk to the new President of the Council’s Mexican member committee, Dr Jaime Hernandez, about his three main immediate priorities; how discussions at the summit will shape the energy agenda in Mexico and beyond; as well as the country’s major energy transformation currently underway.

As the new President of the Mexican member committee, what are your main three priorities going forward?

As President of the World Energy Council, Mexico Chapter (WEC MEX), my priorities are threefold: first, to increase the number of members in Mexico and to raise public awareness regarding the relevance of our member committee for the Mexican energy sector. Second, to encourage debate, to disseminate information and to foster knowledge related to the energy sector.  Thirdly, to influence decision making by providing innovative ideas and constructive advice to key leaders and institutions of the Mexican energy sector.

The Council’s Mexico Chapter is committed to generating innovative ideas that contribute to a more affordable, stable and environmentally sensitive energy sector in Mexico.

How do you see the activity of the Mexican member committee contributing to integration within the wider Latin American region?

The deep transformation that the Mexican energy sector is undergoing creates an opportunity to strengthen links with other Latin American countries. The Mexican committee is determined to take advantage of this opportunity by increasing the activities and presence of the Council in Mexico as well as in the Latin American region.

In this regard, the member committee will have a parallel event embedded in the activities of the World Energy Leaders’ Summit that will be held in Mexico City on 13 September. The summit will bring together first-class leaders, giving the Mexican member committee the opportunity to strengthen its network and collaboration with important stakeholders in the global energy sector. In particular, within the Latin American energy sector.

The World Leaders’ Summit is being held in Mexico City This month… how will the discussions help shape the energy sector in the country as well as globally?

The World Leaders’ Summit in Mexico is certainly a great opportunity to discuss the impact of the energy transformation in our country and get first-hand knowledge of innovations that are driving the future of the sector worldwide.

The discussions will help shape the energy sector by generating awareness on the prevailing risks to energy systems, the resilience of the industry towards changes and innovations and the opportunities that lie ahead.

Mexico is undergoing a major energy transformation, how do you see this impacting the sector not only within the country, but internationally?

The Energy Reform, enacted in 2013 by President Enrique Peña Nieto, mandated a deep and radical transformation of both Comision Federal de Electricidad (CFE) and the Mexican energy sector. As a result, a wholesale electricity market was established where private international and national enterprises compete to generate and commercialise electricity. This market operates under a clear guiding principle: the most affordable electric energy is dispatched first. Therefore, CFE and all competitors have a great incentive to reduce their operation costs, for their electricity to be dispatched.

To successfully compete in this new electricity market, CFE has undergone a transformation that includes a new corporate structure with 13 new subsidiaries and affiliates:
-6 Generation Subsidiaries
-1 Transmission Subsidiary
-1 Distribution Subsidiary, with 16 business units
– 1 Basic Service Supply Subsidiary
And 4 affiliates: CFEnergía, CFE International, Qualified Users Supply Affiliate, and Legacy Contract Affiliate.

This division will allow each new enterprise to specialise and create added value within each stage of the electric energy generation and supply processes.

The Energy Reform and the transformation of CFE will result in a competitive environment, allowing more private investment in the electric sector. Ultimately, this transformation will allow Mexicans to have access to high quality electricity service that is cleaner and less costly.

Internationally, companies of several countries have placed their interest and investments in Mexico. American, Canadian, Asian and European companies, among others, have opened new offices in our country, bringing not only investment, but also alliances in technology, training and talent. Mexico is having a win-win stance with these exchanges.

Globally, the Paris Accord limits the increase in temperature below 2° C targeting the use of sustainable and competitive energy sources. Energy generated through renewable sources and low carbon technology is needed to carry out the international commitment. The Mexican Energy Reform is a step ahead on this commitment, aiming at more secure, efficient and competitive energy supply of renewables.

What impact will Mexico’s energy reform have on the future development of renewable power?

Mexico has abundant renewable energy resources. One of the main objectives of the Energy Reform, promoted by President Enrique Peña Nieto, is to push towards a clean electric sector. The Reform sets a national goal of generating at least 35% of electricity from clean energies by 2024. The Constitutional Reform provides tools to increase electricity produced from renewable sources to keep pace with the growing energy needs of the country.

To achieve this, the Reform established Long-Term Power Auctions and Clean Energy Certificates (CECs). The auctions for energy, capacity and CECs provide a cost-effective way to bring low-carbon generation in the country.

The first two auctions demonstrated strong private readiness to invest in new solar PV and wind generation, validating the innovative choice of market design. An investment of 6.6 billion dollars has been compromised in 52 new clean energy power plants, located in 15 states in Mexico. They represent an installed capacity of more than 5,000 Megawatts and will begin operating between 2018 and 2019. These projects will increase Mexico’s installed capacity to generate through renewable sources by 27%.

The third auction is on course and the results will be announced in November of this year.

In addition, the Geothermal Energy Act was issued, as part of the Reform, to establish clear and transparent rules on this issue. This is a paradigm shift in the use of the country’s natural resources. The aim is to implement a new regulatory framework to facilitate the exploitation of Mexico’s high geothermal potential and encourage long-term investment by domestic and foreign enterprises.