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noviembre 19, 2019
English Rosanety Barrios

Mexico and the Energy Transition: Last Call to Development?

Recent discussions on incentives for renewable generation provide a timely summary of the challenges our country faces on energy transition; these far surpass the achievement of a goal.

In order to understand the scope of what it implies that Mexico is or is not part of the global energy transition, it is important to clarify the structural change in the business model that energy companies are experiencing, based on three elements. First, global efforts to comply with the Paris Accords and prevent the global temperature from rising above 1.5 degrees, which forces us to move towards a world led by clean energy.

On the other hand, the explosive development of digital technology, which puts real-time information, such as prices and consumption, within the reach of a smartphone. Finally, due precisely to this technological development, we must consider the consumers’ personalized needs, who demand differentiated services.

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The change hits the capital investments made under the traditional business model. The risk of being trapped in assets increases and forces other industries, such as the automotive industry —whose twentieth-century model brought great benefits to our country—, to prepare themselves to face the disruption of the electric and autonomous vehicle, which is much closer than it seems.

Looking to the future, we should ask ourselves: are we prepared to change the business model of the energy sector and its impact on that of other industries in which Mexico is a relevant part? What should we do to link energy policy to an industrial policy that allows Mexico to add itself into the development model of the 21st century? We are late, but hopefully, it will be achieved.

By: Rosanety Barrios

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