According to the CCE, the electricity generated by private companies is 26% cheaper than that produced by the CFE.
For years, companies in Mexico have undertaken a strategy of migrating to fossil fuels as an energy source, towards cleaner alternatives in their operations, with the aim of reducing the carbon footprint of their operations, but also reducing the cost to pay with electricity, reaching levels of more than 80%.
According to the Business Coordinating Council (CCE), the electricity generated by the private sector is 26% cheaper than that produced by the plants of the Federal Electricity Commission (CFE), a percentage that represents around 60,000 million pesos annually.
“The implicit cost of this 26% more expensive, which will translate, as shown in all the studies we present, in an addition of 60,000 million pesos per year, which will have to be financed in some way. Either it is financed because electricity to economic agents will be more expensive, or it will be financed because the Ministry of Finance will have to subsidize these 60,000 million pesos annually, “he said last March at the” Electricity for the future of Mexico “forum, his president, Carlos Salazar Lomelín.
For example, América Móvil (AMX), one of the main companies in the Mexican Stock Exchange (BMV) and owned by Carlos Slim, had a plan for 2020 that 50% of the energy would come from clean sources, a goal that was close to achieving in 2019, registering progress of 94%, according to the sustainability report of that year.
“In order to achieve our goal of operating in a more eco-efficient way, one of our most important initiatives is to use renewable energy sources, mainly wind and solar,” highlights the cell phone operator.
In fact, during 2019, AMX’s energy consumption in the operations of the different countries where it has a presence was 6.2 million megawatts/hour (MWh), of which 2.3 million were from Mexico.
The history of Walmart in Mexico and Central America is similar, currently, 63% of total energy consumption comes from sustainable sources, however, it has the goal of reaching 100% by 2035, as indicated in its “Financial Report and ASG 2020, A year of stories ”.
In the document, the self-service store chain highlights that, as part of its strategy, last year 13 million tons of CO2 were avoided, due to the participation of 188 suppliers through the Gigatón Project in Mexico.
In addition, it highlights that the transition to operations with 100% renewable energy by 2035 is an ambitious goal, but one that they consider essential to mitigate climate change. Therefore, in addition to 6 wind power parks and 2 hydroelectric plants supplying energy to their operations in the region, they also have on-site photovoltaic power generation for 15 units.
“Energy efficiency has been key in these achievements, so we have invested 449 million pesos in Mexico and 100 million pesos in Central America to continue our transition towards LED lighting and photovoltaic cells”
The Mexican Fomento Economico (FEMSA), owner of Oxxo, in 2019 expanded the use of clean energy in its manufacturing plants in Mexico, reaching its original goal for 2020 of 85%, according to a report from the firm.
In fact, it stands out that more than 15,500 work centers in the Mexican Republic are supplied with renewable energy and more than 77.6% of the necessary electricity is supplied with clean sources, avoiding the emission of 721,995 tons of CO2.
In addition, it recently announced that 70.1% of Oxxo stores in Mexico are supplied by renewable sources, since through contracts with 5 wind farms in the country “we satisfy 69.4% of our electricity needs.”
Grupo México, owned by German Larrea, has also embarked on a path towards renewable energy in its operations since the consumption of electricity from these alternatives in 2019 was 1,413 GWh, representing 18.6% of total consumption.
This energy came mostly from hydroelectric plants that supply the mining operations in Peru, and in that year it made it possible to avoid the emission of 305,270 tons of CO2, as well as the El Retiro wind farm with 74 MW capacity, developed and operated by the Infrastructure Division in southern Mexico.
“To reduce the environmental impact of its high consumption of electricity, Grupo México will continue to increase the use of renewable electricity in its operating processes. Thus, a goal was set to increase the use of renewable electricity to 25% by 2022 ”, he assures.
Banks have not been left behind in this task, for example, Banorte, another of the most important issuers on the BMV, in 2020 followed up on the contract agreed with Thermion to supply 70% of the energy they consume from renewable sources, specifically the Delaro wind farm.
Therefore, until the end of this year, Delaro had already obtained various permits and in 2021 it will try to start operations, so if it meets the established objective, they estimate to reduce the group’s greenhouse gas emissions by about 50%.
The businessman Ricardo Salinas Pliego has also taken a step in this direction, such is the case of Grupo Elektra, whose consumption of renewable energy in the company represented 23% of the total in 2019, but claims to have the objective of increasing this proportion.
“The goal for 2020 is to maintain the current energy demand in branches and a similar or higher consumption of renewable energy per company – around 35% for Tiendas Elektra and Banco Azteca – which would translate into an 8% increase in renewable energy for Banco Azteca and 14% for Elektra Stores from 2019 to 2020 “
While Bimbo is another of the companies that have undertaken a strategy of migrating from fossil fuels to cleaner alternatives, in fact, 80% of the energy consumed by the bakery worldwide is renewable.
Only in its operations in the Mexican Republic, 80% of the electricity used by Bimbo is renewable; where the Piedra Larga Wind Farm, in Oaxaca, supplies 70%, avoiding the emission of 180,000 tons of CO2 per year, in addition to having solar roofs in some of its distribution centers, including in its corporate offices.
Last February, the president of the bakery, Daniel Servitje, highlighted in a conference with analysts that last year they increased their global use of renewable electricity, going from 49% to 80%, meeting our 2020 objective and advancing in their commitment to achieving a 95% by 2023.
In fact, in 2021 Grupo Bimbo foresees investments in capital goods (Capex) this year around 1,000 million dollars in plants, technology, electric vehicles and renewable energies, including some purchase of another company,
“ We hope to increase our investments in electric vehicles. And in some cases we also invest in renewable energy on our rooftops and in some other areas, but most of the investments go basically to the plant, the bakeries and the increase in development capacity ”, Servitje said.
AMLO goes against renewable energies
Mexico’s government cited the coronavirus pandemic to justify the imposition of new rules to reduce the role of renewable energies, such as solar and wind power.
The decree issued over the weekend has sparked outrage among local and foreign investors. They had been allowed to sell their energy to the government-operated grid.
The measure would affect 28 solar and wind projects already ready to go into operation, and another 16 under construction, with a total investment of $6.4 billion, mostly from foreign companies.
“This represents a frontal attack on the legal certainty of investments in Mexico, causing serious consequences for the country as the loss of jobs, confidence of investors.” Said the Business Coordinating Council in a statement issued Sunday.
Investments of more than USD 30 billion would be affected. “Not only does it discriminate against renewable energies, it also empowers the authorities to artificially increase the cost of electricity generation in the country and arbitrarily displace any private sector generation project”. Says the Business Coordinating Council
This is not the first confrontation of this type between President Andrés Manuel López Obrador, promoter of the parastatal oil industry, and opponents of renewable energy projects and the private sector. Since taking office in December 2018, he has canceled a planned bid for private oil exploration and forced private companies to renegotiate pipeline contracts.
The new rules, released Friday night, appear to meet each of their objectives: guaranteeing income for the government’s electricity provider; boosting consumption of the government’s fuel reserves; reducing the role of private power generators, and avoiding supply disruptions in the state’s old and inadequate energy transmission system.
One surprising point is that the government referred to the coronavirus pandemic – and the accompanying economic closures – to justify the measure.
The government defended the restrictions, noting that they allow it to “ensure the reliability of the National Electrical System in the face of the decrease in demand for electrical energy due to the pandemic. Because intermittent renewable power plants produce oscillation in the SEN and cause interruptions, it requires that the injection of energy from these sources be delayed during the pandemic”.
Many of the companies involved in the sector – Spanish, Canadian, and American – plan to file appeals with their embassies, courts, or arbitration panels.
Mexico’s expensive electricity rates have long been a burden on the industry. Some companies believed they had found a solution in the early 2000s. They could generate sustainable energy from their renewable projects, or those of specialized companies, and have cheaper and greener energy.
Mexico has been slow to build the transmission infrastructure that could bring more power from coastal or desert areas – where solar and wind projects are located. The country has also been slow to build supplementary plants when solar or wind power is naturally produced.