INTERVIEW: Administration wants diverse energy mix

• Administration stance on renewables misrepresented – CFE board member
• Reorganisation of sector complies with existing legislation
• Power generation going forward to be diverse

MEXICO CITY AND HOUSTON (ICIS)–Mexico’s federal authorities are not looking to limit renewables, but rather to develop an energy mix that balances energy transition commitments and using the country’s available resources efficiently, according to Maria del Rosio Vargas, an independent board member at state-run utility CFE.

These attempts are guided by the administration’s goals of achieving energy security and sovereignty objectives that other governments also recognise as strategic, said Vargas in an interview. She also researches international geopolitical energy trends in her capacity as an academic.

Vargas said there were years after the energy reform in which permits for renewables projects were issued indiscriminately without taking into account the limitations of the transmission network or power demand, something industry sources have previously noted as a complicated issue since the prior administration.

“It was a chaotic sector only driven by profit, where CFE’s long-term planning strategy was completely ignored,” Vargas said.

The CFE board member said the current administration decided to reorganise the sector while complying with existing legislation and respecting all contracts awarded.

Clean energy
The academic said the administration’s stance on clean energy has been misrepresented. She said one misconception was that the government was seeking to replace renewables with generation from residual fuel oil from state-owned producer Pemex’s refineries. She said the SENER and CENACE resolutions from May and April, which are both suspended and pending further legal review in Mexican courts, were driven by a genuine concern for grid stability.

Federal authorities are looking to prioritise the use of lower carbon-emitting sources of electricity, as well as to further diversify the energy mix, according to Vargas. The diversification includes the use of stable energy sources such as natural gas, hydro and geothermal power, she said.

Vargas’ remarks echo comments CFE director Manuel Bartlett publicly made last month, when he called the fuel oil argument “a lie” and said he favours cleaner-burning natural gas for power generation. Vargas and Bartlett co-authored a 2016 book entitled “Energy reform: the hard power and consensus used to impose it.”

A review of CFE’s tendered and proposed generation projects shows plans to include a mix of most of the energy sources Vargas listed.

CENACE’s April resolution is another measure Vargas said critics have politicised. She said the agreement was the result of technical considerations at CENACE as it was facing an extraordinary situation where power supply exceeded demand due to coronavirus-related restrictions.

“Carrying out pre-operative testing for renewable energy projects can cause severe instability problems for the network. You cannot afford the risk of a blackout in a context where you need that hospitals and everything else is up and running, ” she said.

CENACE’s measure was also originally meant to be temporary and implemented as long as the low-demand situation persisted, which is something Vargas says critics have failed to take into account. “No one has ever said those plants will not be able to enter operations in the future,” she said.

Vargas said Mexico is not the only country that has implemented emergency measures to deal with problems associated with renewables. She said Belgium’s power market operator Elia constantly put its wind generation out of operation throughout April to halt overproduction. As nuclear power makes up most of Belgium’s generation capacity, the country does not have flexibility to carry out quick adjustments needed for renewables, Vargas said.

An Elia spokeswoman told ICIS some wind farms in Belgium had gone offline during the weekends in that month as a result of negative power prices. She said, however, that Elia’s role is to make sure the grid is balanced, and the decision to switch off the wind farms if they are not profitable is up to the owners.

Other markets, such as Germany and the US state of California, have long had to deal with the challenge that renewables present, Vargas said. She noted these two places have had to export power at negative prices to prevent their respective networks from collapsing when generation from renewables exceeded demand.

Vargas said it is important to recognise the problems related with renewables to better understand the government’s recent measures. Vargas, as the newest member of CFE’s board, said she believes the government is committed to achieving its carbon-reduction goals, just not at the expense of the country’s energy security.  Angeles Rodriguez and Claudia Espinosa