Mexico is jumping into smart meters, the smart grid and energy market liberalization all at once

by / Tuesday, 21 October 2014 / Published in Smartgrid-CI Blog

Comisión Federal de Electricidad better known as CFE just launched a tender offer for smart maters, right after a very important energy law was passed by the parliament.

By PATRICK LEVY

We learned from metering.com that Comisión Federal de Electricidad (CFE) just published a tender for the equipment of smart electric meters. CFE is not just any utility. It is the dominant power utility in Mexico with almost 27 million customers.

CFE expects up to 40% savings from the implementation of smart meters. For now, the state-owned utility is looking for bids for a second phase of the smart meter rollout in the North-Central area of Mexico called Bajio. But the potential for vendors is enormous. A study by Zpryme in 2013 on Mexico’s smart grid market outlook projects that this market will grow at a projected compound annual growth rate (CAGR) of 25% from US$1.23 billion in 2012 to US$7.42 billion in 2020 – of which a major share will be AMI.

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This tender offer can be seen as a consequence of the recent energy law that was passed in August and that includes opening the electricity market to independent providers. The new law includes the creation of a wholesale electricity market and the creation of an independent grid operator called CENACE. The power generators, retailers and qualified consumers who participate in the wholesale market will be able to enter into electricity purchase and sale transactions, as well as transactions regarding electricity’s related services, electric power, import/export of the aforesaid products, financial transmission rights and clean energies certificates.

For now the market is open to “qualified customer” only which means mainly corporate customers and its opening to households is not expected in the near future.

For CFE the implementation of the law will mean more competitive pressure and the obligation to cut its operating cost. No surprise is cost cutting is what the utility expects in priority from this AMI project. Mexico is one of last big economies to be going through its energy market liberalization. Interestingly enough, this transition is taking place at a time when the smart grid is maturing. It will be very interesting to follow up on the interaction of both and the impact of implementing them at the same time will have on the Mexican grid and the Mexican energy market.

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