Interview: Tania Ortiz
How do you assess the scope for renewable energy in Mexico, and what role can development banks play in developing this segment?
TANIA ORTIZ: Mexico possesses a large amount of renewable resources, such as wind and solar energy, giving the country a competitive advantage. Renewables are important in Mexico because they are clean, efficient and can compete with conventional forms of energy on a cost basis. The latter is particularly important as we are a manufacturing and exporting country and need to have competitive energy costs in order to keep up with the rest of the world.
Both national and international development banks are increasingly interested in renewables. They see energy infrastructure as the backbone of the country, with efficient energy provision an essential part of developing social infrastructure, bolstering economic growth and improving the wider standard of living. In addition, demand for energy supply is set to increase and, despite global challenges, the economy will continue to grow. Development banks therefore view renewable energies as an opportunity for long-term investment and development.
What challenges and opportunities will Mexico face in developing its energy infrastructure?
ORTIZ: The biggest challenge will be building a comprehensive transmission network. When Mexico’s energy reforms began, electricity transmission remained in the hands of the state. Therefore, the state should develop public policies and make investment decisions to strengthen this network. The second pending issue is the need for an interconnected relationship with the US, based on the understanding that we are integrated markets. The US map of energy pipelines is very dense, while Mexico still falls behind in the provision of energy to its key industrial centres.
The relationship between energy provision – in the form of pipelines – and development is extremely strong. Where there are pipelines, there will be economic growth. The northern part of the country has enough supply and has already built its basic energy infrastructure. The area most in need of pipelines is the south of the country, in states such as Oaxaca, Guerrero and Chiapas. As the country seeks to generate economic growth in the years ahead there will be opportunities to invest in solar- and wind-energy production plans, gas storage terminals and pipeline construction in these areas.
In what ways can the authorities develop domestic resources and improve energy security?
ORTIZ: The main goal is to have an efficient and safe supply of energy. We need to produce and export in order to boost economic growth, create high-quality jobs and encourage workers to remain in Mexico rather than seek opportunities for employment elsewhere, particularly in the US.
In order to achieve this, Mexico needs reliable and affordable sources of energy. The country has a promising supply of renewable energies such as solar and wind, as well as the capacity to produce and refine oil. We can also benefit from trading with our neighbours. In particular, the US has the lowest gas prices in the world as well as an over-saturated market for gas. Mexico is a convenient location for US gas exports, and we must take advantage of this to reduce electricity prices and bring competitive consumption to our industries.
Meanwhile, Mexico has the ability to develop its own gas resources, but the country would need to compete with the US in terms of prices. However, Mexico should not be looking to achieve complete energy self-sufficiency, as isolation can be more damaging than beneficial to an economy. Therefore, we must strive to achieve energy security, whether this comes in the form of production or imports of affordable products to supply a growing demand.
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