The “Energy Markets in Transition” panel, held by the Tecnológico de Monterrey EGADE Business School yesterday in the Club Piso 51, covered progress from the energy reform, and the challenges energy markets in Mexico face this year. First-class leaders from the energy sector took part—Guillermo Zúñiga, the commissioner of the Energy Regulating Commission, Narcís de Carreras, the Mexico country manager at Fenosa Natural Gas, and Johann Schmid, the CEO of Energy Strategy at Accenture México. Luis Hernández Arámburo, the director of the EGADE Business School Energy Management Specialty, and Santiago Barcón, the general manager of the magazine Energía Hoy, were the moderators.
Guillermo Zúñiga, the commissioner of the Energy Regulating Commission, Narcís de Carreras, the Mexico country manager at Fenosa Natural Gas, and Johann Schmid, the CEO of Energy Strategy at Accenture México, discussed the first results of the energy reform, the new energy market, and how to navigate the ongoing changes in the sector on the panel “Energy Markets in Transition.”
The panel was held as part of the Tecnológico de Monterrey EGADE Business School strategic energy agenda, through its Energy Management programs, which promote the innovation, productivity, and competitiveness required by the sector with the energy reforms and the new international environment.
In front of a full auditorium of more than 200 specialists from the sector, students, and alumni, José Antonio Quesada, the director of EGADE Business School, Mexico City campus, thanked the strategic allies for their participation and noted that the EGADE Business School Energy Management programs help to change the way business is done in Mexico, by training leaders with the knowledge, the vision, and the skills required to be up to date on the transformation of the sector and to have a positive impact on the country’s social and economic development.
First results of the energy reform and investment challenges
Guillermo Zúñiga, the commissioner of the Energy Regulating Commission, opened the panel talking about the “Copernican turn,” with the CFE and Pemex giving up their centralized control over the sector for the good of the market, free competition, and consumers. “At this point in the energy reform, we are starting to see real problems in business and projects, because we are in the new market model,” he said, giving examples about how the regulatory market has started to work, such as permission granted to electricity operators, cities that are bidding to offer electricity, and the distributed generation regime, by which users will have access to a solar panel in their homes to store or sell excess energy.
Regarding gasoline, Zúñiga noted that, “We are finding out what the real cost is of the country’s gasoline systems.” He added that an artificial price does not allow for trust or transparency for investments. “Now, with the real costs of gasoline, we can encourage the necessary investment to develop the systems,” he said, referring to building ducts, which are 14 times more economical than pipes.
Narcís de Carreras, the Mexico country manager at Fenosa Natural Gas, affirmed that, “The energy reform is a very strong investment and growth catalyst […] It’s an example of clear ideas and quick, concrete execution, an added incentive to keep growing in this country.” De Carreras noted that, “Mexico has a very solid, trustworthy regulatory judicial framework,” and mentioned the success of the oil rounds for exploration fields and generation auctions.
Investment and Participation Challenges
Johann Schmid, the CEO of Energy Strategy at Accenture México, noted that the shift in model from peak oil supply to peak oil demand is an investment challenge in infrastructure for Mexico. “Global oil demand will stall around 2060. We have four times more resources than we will have to exploit. This leads the global market to compete; with current oil prices, there is a risk that 50% of resources in Mexico will not be tapped into under current conditions.”
To foster participation in the energy market, Guillermo Zúñiga stated that markets should not have government intervention and should run freely, unless it is necessary because there are market failures, such as unbalanced information. “The CRE has very specific mandates so that there is information on the market, more so when we come from a media monopoly as well,” he said.
“We are going to stop using oil, not because we will run out, but because the demand for oil will get smaller all the time. But the energy reform allows us to introduce innovation and to use technology to generate electricity. Renewables are already competing with the most-efficient fossil fuels, like natural gas,” he added.
He also spoke about the need to push for a change in culture. “Mexico is now an open market, where there are many opportunities, where you won’t have to be friends with someone […], as long as you have the information, the ties, the appetite, and the resources to invest, with permission from the CRE you can do a lot of things.”
Disruptive Factors in the Energy Sector
“We are living in a world of spectacular change, which will be difficult for energy companies to assimilate because we used to live on a regulated island and didn’t go abroad much,” commented the country manager of Fenosa Natural Gas. According to Narcís de Carreras, the “revolution” of the last 8–10 years has been marked by several aspects: shale gas, the extraordinary development of renewable energy; distributed generation and energy storage in batteries; the consumer paradigm shift; the COP21 and the need to reduce global emissions; the emergence of new competitors like Google, Tesla, and Apple; and, finally, the shift in energy demand toward emerging markets in Latin America, Asia, and Africa, with 70% of total demand.
Meanwhile, Schmid described the impact of the digital transformation on the energy sector, which will mean more-efficient services at a lower cost and more-focused on consumer profiles, consumers who use less energy and water and who pollute less. “The disruption affects three main points: big data and analytics, the Internet of things, and the mobility of the apps we have today, which is where universities should create potential in new graduates,” he said.
EGADE Business School, Tecnológico de Monterrey has designed specialization options and a transversal teaching approach in the strategic areas that will redefine energy-sector business in Mexico and the world. The Specialization in Energy Management and the Seminar on Energy Management executive program, among others, train specialists to lead the energy-sector transformation, leaders who can identify and create business opportunities by designing innovative, sustainable business models; running and managing energy organizations in global arenas; and assessing the financial, social, and environmental dimensions of energy projects, as well as managing the risks.
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