REGULUS increases its operations and increases PPAs

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Even with the polarization of Mexico's energy regulatory framework, investments in clean projects do not stop in the country; the specific goal is to work better and with fewer environmental resources, so that the planet is a priority and not just the source.

According to the latest report from the Energy Regulatory Commission (CRE), in 2022 the distributed generation Mexico recorded maximum levels of 2,629.78 MW in 334,984 contracts, a figure that represents a investment of 3,522.39 million dollars.

To respond to the growing demand for renewable energy, Regulus, an energy marketer in the Wholesale Electricity Market, is redoubling its efforts to provide competitive financial instruments.

In conversations with Strategic Energy, the CEO of the firm, Jorge Hernández González, explains how the industry is doing and what are the major challenges ahead.

What are the expectations for 2023?

“This year will be a very good season for Mexico. We have more and more demanding customers in the country, so expectations for energy sales are rising.

We are currently comfortable with our market share, this year alone we had an orderly and contractual growth of almost 100% in our operations. However, we want to continue working on consolidating our Market Share.

Regulators, private operators and the government must work together to continue developing an infrastructure that allows us to continue growing, and that is not just for five years, but for the next 25.”

What are the challenges of merging the energy business with the financial market in a country like Mexico?

“Currently, banks are already beginning to understand this operation and how their participants' transactions are processed. The electricity market is a new industry, where risks are somewhat uncertain; it is dynamic, aggressive and difficult to understand.

For this reason, every year there is greater understanding of banking for the sector and, through its evolution and exposure, it is possible to obtain more and more extensive knowledge, which makes it possible to apply mechanisms to mitigate these risks.

It has been difficult, but private participation has increased more and more. The permanence of the market over the past six years is a very important factor.

The challenge has been to make banks understand that we do not carry out meaningless transactions, but rather through an extensive risk analysis, the study of Big Data and of learning programs. This has been the biggest challenge we have faced in the market since its creation.”

And among the financial instruments they provide, how is the pace of Power Purchase Agreements (PPAs) in Mexico?

“We have an orderly growth of our PPAs annually. Today, we have already covered the next four years, but due to a specific risk issue, we are being very careful with the choice of our clients.

The pace of growth is exponential and as marketers, we have more and more suppliers who have already established private customers.”

What's new for this year?

“We are currently developing and integrating information and data analysis technologies in Mexico, and we are also working towards the future on the integration of batteries that have the capacity to store energy in the long term.

We see with great appetite the opportunities that are being generated in markets in real time, and we seek to comply with international agreements for the inclusion of renewable energies in electrical systems.

Batteries charged by technologies, whether wind or solar, will be able to provide renewable capacity or power to the system, which we are getting closer to integrating.”

What changes should be made to the regulatory framework?

“The regulatory framework must be constantly updated. We currently have very strong challenges, such as electric cars or battery-powered watches: humans are using more and more electricity in their own tools.

Faced with so many changes, the regulatory framework must be at the forefront and include new technologies such as green hydrogen, but also have a very specific basis for how electrical power systems work.

More thought must be given to modern and future technologies, in order to design a strategy that understands the beginning of a transition to renewables.

Today, with the arrival of large investors in Mexico, we must prepare ourselves in terms of regulation to provide greater certainty to these capitals.

This year is the time to collaborate in the development of transmission infrastructure to have an orderly transition to renewables. To do this, all private individuals must work together with the Federal Electricity Commission (CFE); otherwise, tomorrow we will be left with a very limited market, with no capacity to sell that energy.

We have agreements in the world such as Carbon Border Adjustment Mechanism (CBAM), which are pushing companies to comply with the inclusion of renewable energy. If in Mexico we want to be a major manufacturer and export goods to the European Union, we have to meet challenges that are already more global than national. If they do not achieve them, all these factories will be sanctioned with a tax for working with fossil fuels and will obviously be less competitive.

The great challenge for the government and the private sector is to organize for a global goal in the next five years. It is very important that regulation is at the forefront of technology, in order to be able to meet these coming increases in demand again. The future is just around the corner, we must act now.”

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