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© 2019 by The British Chamber of Commerce in Mexico.

Generated Distribution

June 8, 2017

On 30th May, 2017, the Chamber’s Green Power Group hosted a breakfast-conference on distributed generation. As Group Chairman Marco Nieto explained when introducing the panel, the aim of the event was to offer greater clarity on the proposed administration of this type of generation as well as the costs involved and the business opportunity.

 

 

 

The panel offered various perspectives, with Martin Llerena Engesser from the Energy Regulation Commission (CRE for its acronym in Spanish) offering the government view, Frédéric Bathy of Engie sharing his experience of installing capacity in the private sector and Carlos Tornel of the Iniciativa Climática México organisation offering his views on the next steps the government needs to take.

 

The panel was moderated by Engie’s Asunción Borras who also leads the Women in Renewable Energy in Mexico group.

 

Both Carlos and Martin agreed that the main market for on-site generation in Mexico comes from the industrial sector whose higher consumption commits them to higher tariffs that can be significantly reduced by installing capacity from renewable sources. Such companies need to comply to on site generator conditions that are different and more complex than those of distributed generation. In Mexico, distributed generation applies to consumers of under 500kWh. According to Carlos, industrial consumer tariffs in Mexico are well in line with other OECD countries. However, basic consumers in Mexico pay disproportionately low rates due to heavy government subsidies. These subsidies make the installation of on-site capacity – particularly in his example of solar panels – uncompetitive, given the costs of installation versus the economical price of domestic electricity. Martin responded to these concerns explaining that the CRE does understand that there is a definite overall benefit to distributed generation and that the commission is working hard to smooth over the process to make it more attractive to consumers – such as taking more of the process online to save time spent on visiting physical offices to register. Since early this year, there is also clearer regulation on interconnection to the grid and defined compensation schemes for such users looking to sell their excess electricity or purchase the difference from the main grid.

 

For slightly larger consumers such as businesses, Frédéric raised concerns that these companies’ core business is not power generation and that the current criteria dependent on “satisfaction of own needs” is too open to interpretation.

Given the benefits of greater decentralisation – such as moving to cleaner energy and improving efficiencies by moving generation closer to situ, the challenges will be to best facilitate interconnection and make distributed generation more appealing. Also, the recent power auctions in Mexico have shown how economical the MWh can be.  As Carlos observed, there would also be significant long-term savings available to the Mexican government by reducing the subsidy on the residential group of consumers who represent 26% of demand by replacing the power supply with renewable, decentralised sources of energy.

 

 

The debate was followed by a questions and answers session that covered accredited metering units (previously could only be validated by the Federal Electricity Commission) and the prices of net metering (local average marginal price at the time of generation) and clean energy certificates (still in transition but will be available to all clean energy producers).

 

Marco Nieto then closed the panel summarising the challenges ahead, outlining the real business opportunity and the need to think of the positive social benefit when defining the next steps for distributed generation.

The Chamber would like to thank all speakers for sharing their insights and making this event a success. We hope you enjoyed the event and wish to see you at future ones!

 

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