Smart Grid

An Expert's View about Energy in Mexico

Posted on: 30 Jun 2012

Efforts to modernize Mexico’s electrical grid began in earnest with the 2010 publication of the country’s National Energy Strategy (NES).

Smart Grid A Top Export Prospect for Mexico June 2012 Overview Efforts to modernize Mexico’s electrical grid began in earnest with the 2010 publication of the country’s National Energy Strategy (NES), which laid the foundation and objectives to carry out the country’s overall energy reform based on energy security, efficiency, and sustainability guidelines. Mexico’s Ministry of Energy and its state-owned utility (CFE) envision the smart grid as an enabler of some of NES’s key lines of action, which include reducing the percentage of electrical power loss from 2010 levels of 17.5% to internationally accepted standards of 8% and generating 35% of the country’s electricity from clean sources by the year 2024. Thus far, actions have been focused on the development of a plan and vision for the Mexican smart grid. Significant progress has been made through initiatives such as CFE’s application of the U.S Software Engineering Institute’s Smart Grid Maturity Model and the Energy Regulatory Commission’s membership in the Smart Grid Interoperability Panel founded by the U.S. National Institute of Standards and Technology (NIST). These are two examples of collaborations with international organizations that have been crucial to developing Mexico’s smart grid vision and strategy. Mexico’s smart grid activities to date have included the implementation of strategic pilot programs used to evaluate new technologies for their technical, operating and cost-benefit soundness. The ultimate goal of these pilot project and other research and international collaboration efforts is to shape a Smart Grid Roadmap ―currently being developed― that will set a single, integrated global timeline for CFE’s smart grid deployment. Market Challenges One of the most important challenges to the development of the smart grid market in Mexico is the absence of a specific legal framework and smart grid mandate, which has contributed to a prevalence of isolated efforts and a lack of coordination. It should be noted, however, that in spite of this lack of legal backing, the Mexican Ministry of Energy, the Energy Regulatory Commission and CFE have had the institutional conviction to move forward with grid modernization and projects are now conceived and carried out in a more coordinated and strategic manner. Top US rospects 2: 2 Export P in Mexico 201 Smart Grid A second challenge lies in CFE’s budgetary constraints. The company has a specific mandate to procure at the lowest possible cost, which creates difficulties in integrating new technologies into its congressionally approved annual budget. CFE must convince the Ministries of Finance (which regulates power fees) and Energy that new technologies will eventually be more cost effective and improve the quality of service to consumers. At this stage, CFE also needs to overcome organizational issues that hinder the consolidation of a coordinated, benchmark evaluation process. Market Opportunities Development of the Mexican smart grid market is mostly driven by the country’s energy efficiency and renewable energy goals, which include increase grid reliability and efficiency and integration of clean energy. Taking this into account along with the fact that modernization is at an early stage, opportunities lie in the promotion of technologies suitable for CFE pilot programs. The prevention of power loss is a first priority and SMI metering projects are currently being implemented in different cities, with a major installation of 26,000 smart meters in Mexico City currently in the pipeline. Integration of clean energy is seen as a midterm objective. Although most of Mexico’s clean generation is hydroelectric, the country is building up its wind energy capacity with an investment of US$2.5 billion and 600 Megawatts to be tendered this year. These initiatives have been complemented by legislative changes that have tempered CFE’s lowest cost procurement mandate with provisions for the consideration of environmental externalities and cap removals on the integration of renewable energies into the national grid. Although CFE has a complete monopoly on transmission and distribution, the firm is only responsible for 60% of Mexico’s power generation. Since 1992, the market for generation has been open to heavily regulated but growing private sector participation. It is expected that deployment of smart grid technologies will substantially increase private power producers, thus bringing more secondary buyers into the market. In addition, Mexico’s proximity to and common border with the U.S. incites collaboration on policy, standards, interoperability, and security thus creating advantages for U.S. firms. Best Products/Services Immediate opportunities lie in distribution, with efficiency and reliability as the primary concerns. Best products include metering hardware and communications software for data management. Opportunities for energy storage and other technologies to integrate power from fluctuating or weather-dependent sources into the grid will increase in the mid-term (approximately 6 years), although isolated pilot projects may be put in place in the short term. Top rt 3 US Expo Prospects in Mexico 2012: Smart Grid Market Entry Strategy CFE’s procurement process can be either by invitation or by open international tender. The company is open to new technologies and welcomes commercial presentations, which may lead to tender invitations or specific technology recommendations. U.S. companies can work with the U.S. Commercial Service to make initial contact with CFE. The U.S. Commercial Service can also provide assistance in identifying and reaching out to local potential joint-venture partners for U.S. firms. Foreign companies often form consortiums with Mexican vendors to compete in CFE tenders, benefitting from their partners’ local expertise. For More Information Please contact Commercial Officer Everett Wakai at, Commercial Specialist Jesús González at or Commercial Assistant Teresa Verthein at at the U.S. Commercial Service in Mexico. You can also visit our website at The U.S. Commercial Service — Your Global Business Partner With its network of offices across the United States and in more than 70 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting Disclaimer: The information provided in this report is intended to be of assistance to U.S. exporters. While we make every effort to ensure its accuracy, neither the United States government nor any of its employees make any representation as to the accuracy or completeness of information in this or any other United States government document. Readers are advised to independently verify any information prior to reliance thereon. The information provided in this report does not constitute legal advice. The Commercial Service reference to or inclusion of material by a non-U.S. Government entity in this document is for informational purposes only and does not constitute an endorsement by the Commercial Service of the entity, its materials, or its products or services International copyright, U.S. Department of Commerce, 2012. All rights reserved outside of the United States.
Posted: 30 June 2012

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