Mexico Energy and Sustainability Review 2016 talks to: Eduardo Meraz Ateca, Director General of CENACE (National Center of Energy Control)

Eduardo Meraz-CENACE (1)Q: What are the new roles of CENACE, and how will these affect the regulator’s relationship with the Ministry of Energy, CRE, and CFE?

A: CENACE’s main priority is to ensure the proper functioning of the National Electric System. Secondly, we have to guarantee the quality of the electricity supply by avoiding variations in voltage and electrical frequency. Finally, we must ensure that the grid has enough capacity so that all the generators can deliver their electricity at competitive prices.

We have a positive relationship with CFE at the moment, due to the organization’s understanding of CENACE’s new role. For CENACE, the operative control of the system entails distributing safe and well-planned instructions, which will be followed by CFE’s operative personnel. Not a single component in the system should be operated without CENACE’s instructions. CRE, as the regulator, is in charge of making and amending the rules. CENACE, for its part, will be in charge of overseeing compliance with those rules under equal conditions for all the participants in the market and will play the role of an arbitrator.

All these entities are preparing the materials needed so that CENACE can operate efficiently. Since the early stages of the wholesale market, all the participants will have to comply with the rules of the market, although CRE is aware that the normativity will undergo improvements as the market unfolds.

Q: How will transmission change once the wholesale market takes off?

A: Transmission modalities as we know them will change in the electricity market. There will no longer be a price and reserved transmission rights for wheeling, since all players will have equal access to the grid. This means all players will compete for the right to use the transmission lines, with priority given to the most affordable forms of electricity. Since energy will be dispatched according to the variable cost of generation, renewables will be the first to access transmission lines. Renewables use natural resources like the wind or solar irradiation that have low variable costs, and cost-based dispatch will prioritize energy generation methods that do not integrate fossil fuels. The challenge will be to provide sufficient transmission infrastructure to assure that generators do not have to compete in order to reach consumption points. Congestion will be minimized through plans to expand the grid. If there is enough transmission infrastructure for everyone, then we can avoid regional market powers.

Q: What are CENACE’s main priorities for the rest of 2015 in order to ensure the successful launch of the wholesale electricity market?

A: In 2000, there was a possibility for a reform of the electricity sector. The people heading CFE back then thought it was necessary to carry out several tests and exercises on a virtual market, so CFE, CENACE, and the Institute of Electricity Research (IIE) started developing the model and the required software tools. CENACE started running this virtual market, and the model began evolving from a single-node market to becoming multi-nodal. Using dispatch rules, marginal costs were determined in 1,500 nodes in this virtual market, which CENACE has controlled since 2000.

When the 2013 Energy Reform was approved, CENACE was advanced in this regard, particularly because its virtual market was similar to the spot market the Ministry of Energy now anticipates for Mexico. Establishing market in one year is a difficult task, but if we use this platform as a departure point, making the necessary adjustments and modifications needed to adapt to the Ministry of Energy plans, it will be possible to have a functioning market in a short time. In September 2015, we will begin system trials with CFE and private companies to test the equipment for four months so that the market will be up and running by January 11, 2016. CENACE is also working with CRE and the Ministry of Energy in drafting rules and operation manuals.

This is an exclusive preview of the MexicoEnergy & Sustainability Review 2016®. If you want to get the complete insights of the industry, order your copy here

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