The historic end of Mexico’s state monopoly on energy could spark more integration with U.S. power utilities than the much hyped opening of the country’s oil industry, U.S. Energy Secretary Ernest Moniz said.
The focus of Mexico’s energy overhaul “is typically on the hydrocarbons but in fact the most consequential part for further energy integration may very well be electricity,” Moniz said in an interview during the Clean Energy Ministerial conference in Merida, Mexico, on Wednesday. “American companies will clearly be coming in, and we will also see Mexican companies in the U.S.”
Mexico ended the monopolies to allow foreign energy companies to operate in the country for the first time in more than seven decades. The move will enable further integration with U.S. utilities and natural gas pipelines across the border, much like links between the U.S. and Canadian gas and electricity markets, Moniz said.
“Presumably we will be sending more natural gas in pipes across the border and there will be infrastructure projects going on there for pipes,” Moniz said. “Electricity is in some ways a more fundamental shift.”
The exchange has already begun. BlackRock Inc., the world’s biggest money manager, and First Reserve Corp. last month bought a stake in two gas pipelines owned by state oil company Petroleos Mexicanos. Blackstone Group LP won permission to export all of the electricity from a power plant it owns in Texas to Mexico.
The entrance of foreign companies is forecast to generate $62.5 billion in the oil, electricity and renewable energy industries by 2018, according to Mexico’s Energy Ministry. The U.S.’s southern neighbor plans to expand its gas pipelines by 75 percent in that time frame and generate 35 percent of its energy through renewable sources by 2024.
Mexico is debating the expansion of its Laguna Verde atomic plant in eastern Veracruz state, Enrique Ochoa, chief executive officer of the Comision Federal de Electricidad, said in an interview this month. The plant is an example of clean and safe nuclear energy production, and the option to add two nuclear units is “a topic that needs further analysis and discussion,” he said.
If Mexico would pursue further nuclear power generation, the U.S. would “certainly be willing to assist,” said Moniz, a nuclear physicist. Both nuclear and renewables are efficient long-term options for clean energy generation, he said.
“We shouldn’t be burning oil for electricity generation,” he said.