Saturday, March 25, 2023

Mexico has two key years ahead for the power sector: AME

I think that may change in the next two years. According to the IDB Nearshoring could bring $35,000 million in new investment to Mexico and this would create a need for more response capacity in the power sector, to supply incoming companies”

Abraham Zamora, President of AME

Abraham Zamora, president of the Mexican Energy Association, warned that in order to materialize the vast opportunities offered by nearshoring, it is necessary to do some pending tasks in the electricity sector: “The first thing is to connect to the transmission network assets they have built. But their output cannot be uploaded to the network. Second, it is important that the processes and permits for projects are reactivated by the government. It is important that investments are reactivated where the government determines that projects need. It is also very important to invest in the transmission and distribution network, an activity that is reserved for the CFE… If we want competitive prices, clean energy and a reliable system, We have to increase investment. The government cannot be alone, and neither can the private sector.”

In Mexico and the world, investments in electricity have not been made at the required rate, says Zamora. Of the $32,000 million in foreign direct investment that came in the last quarter of last year, only 7% went to power projects. The Mexican Energy Association brings together the 17 main electricity generation companies in Mexico. Its president is optimistic that “it is closer, but also a better quality dialogue between the government and the private sector, which is reflected in the announcement of the CFE with some companies, among other things. Challenges related to energy transition and security Better understanding: It’s not one over the other. Both are priorities and should go hand in hand.”

Abraham Zamora projects that the next two years will be excellent for the electricity sector in Mexico. “2023 and 2024 will be great,” he says. The Trinational Summit of Presidents raised good hopes for the energy sector. “I think the trend could change in the next two years. Nearshoring could bring $35,000 million in new investment to Mexico according to the IDB and create a need for more response capacity in the power sector to supply incoming companies. Will be

In recent years, investment in the power sector grew at less than 2% per year while demand grew at 2.8% per year. According to the Program for the Development of the National Electric Sector (Prodesen), the required investment in the power sector from now to 2035 exceeds the figure of $102,000 million. These include operations and maintenance expenses as well as significant investments in transmission and generation, activities that were reserved for the CFE in the 2014 reform. “We have to find solutions to the security challenges. 84% of national emergency declarations are due to failures in the national broadcast network. These are set when the system loses its ability to meet demand during critical hours.

Security came to the fore in the energy sector debate in the wake of two events: the war in Ukraine and the Texas crisis in 2021. It is now clear that we need both, the system needs a reliable supply and we must take concrete steps to produce as much clean energy as possible.”

Production in clean energy calculated that the required investment would be $17,000 million. This number should rise, as 17,000 million were calculated with renewables making a commitment to generate 22% of the total. As per COP 28, the commitment is 35 per cent. Instead of adding 30 gigahertz of renewable energy capacity, we need to increase it to 56 gigs, says Zamora. One aspect to consider is that Mexico has enormous potential in renewable energy. A US State Department report states that Mexico has the potential to generate more than 100 times its electricity demand through the sun and wind, but we only use 2% of that potential.

The need for investment is similar to the interest of companies. “Mexico is a great country as an investment destination. It is important to have certainty in regulations,” says the president of AME, “when you start developing a project, three or four years pass in which they start production Huh. The useful life can go up to 15 to 30 years. They are very long term investments. They know that in the United States, in Spain, governments come and go that may think differently, but the legal framework is fundamentally maintained. Around the world, governments set energy policy and ensure that there is consistency in the rules of the game”.

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Nation World News Desk
Nation World News Desk
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