Mexico 'well on the way' to self-supply, distributed generation for C&I sector

Thanks to the energy reform and the energy transition law, Mexico is now moving toward a self-supply market and distributed generation (DG) for the commercial and industrial (C&I) sector, panelists at a conference in Mexico City agreed on Thursday.

Self-supply and DG will experience rapid growth in Mexico as companies seek to source energy from players apart from state utility CFE and more renewable energy projects come online as a result of the power auctions. The first two auctions were held in March and September of last year. A third was launched in April and authorities are scheduled to announce the winners in November.

Mexico is "well on its way" to establishing self-supply for the C&I sector, and the groundwork is well established for such a market to grow, according to Clay Butler, CEO of 7X Energy.

However, there are still hurdles to overcome so that private generators can participate in the market, according to Francisco Granados Rojas, deputy general manager at the energy regulatory commission (CRE).

"The reform brings an interesting role to users, as the regulation designed by CRE for DG is for basic users that have a residential or commercial tariff rate, and the reform stipulates that DG has open access to all users and is not discriminatory," Granados Rojas said. "Distributors need to know the capacity of the DG network in order to know how much energy they can inject, and for which the CRE is making more information available on where distribution needs to take place."

"We need to carry out studies into the market so that it functions correctly, as in 15 years' time net metering may not be possible and we will have to change the way it works," he added.

"DG is the future of Mexico's power market and new rules have to be designed, and we have to look at the opportunities for end users. The growth of DG will make the market even more attractive to investors and will cause a revolution in the sense of the deployment of renewable energy."

Local authorities will also play a key role in the development of DG regionally, attendees heard.

"The role of state and municipal governments will also become key in the development of DG, and public policies need to be devised at a local level so that DG can flourish, as location remains very important," Carlos Reyes Abreu, Tabasco state government's deputy secretary of energy and climate change, said.

"The role of local governments in promoting DG and the use of renewable energy will also aid the procurement of financing for projects," he said