"They were building a Ferrari for every launch when a Honda Accord could get the job done."
— Elon Musk

On May 30, the first private space mission was launched by Elon Musk’s company SpaceX, whose founder is also known for creating Tesla. The mission carried two NASA astronauts to the International Space Station. The launch represented the first crewed spaceflight departing from the United States in nearly a decade and what some have called the beginning of the private space race. Can this teach us any lessons for CFE?

It would be difficult to imagine an area more strategic for a government than its space program, particularly when that program is closely tied to an arms race and ideological competition under the perceived threats of the Cold War. As such, it received substantial public funding to sustain its operations.

However, in the more than sixty years since its creation, the world has changed dramatically in political, economic, and social terms. The welfare state model gradually became strained, largely because of the growing resources required to sustain government structures, and with it came a reduction in the amounts governments could devote to strategic sectors.

For example, NASA’s budget declined from USD 43.554 billion to USD 22.559 billion between 1966 and 2020 (in constant 2014 dollars). As a result, the agency was forced to retire some of its most emblematic programs, including the crewed Space Shuttle Program, which operated for thirty years from 1981 to 2011. In total, the program completed 135 missions, each with a launch cost ranging from USD 450 million to USD 1.5 billion.

The most important lesson from the launch of SpaceX’s Dragon spacecraft is that it cost approximately USD 50 million, only about 10 percent of the cost of the least expensive NASA Space Shuttle launch. As a result, NASA has decided to become one of the company’s principal customers for transporting astronauts into space.

In other words, NASA continues to carry out strategic activities in the space sector while concentrating its resources and efforts where they can generate the greatest value for the country and the world, such as the remote exploration of Mars, Jupiter, and Saturn, as well as deep-space exploration through its satellites. At the same time, it leaves launch services to private companies that can perform them more efficiently and at lower cost.

Viewed in this way, CFE could learn a great deal from NASA by focusing on the strategic areas that generate the highest value per unit of investment, such as transmission, distribution, telemetry, natural gas transportation, and natural gas marketing, among others. At the same time, it could move away from volumetric electricity generation targets that require the continued operation of expensive, inefficient, and highly polluting plants fueled by fuel oil and coal. Such generation could instead be replaced by low-cost clean and renewable energy, such as that procured through the Long-Term Electricity Auctions, benefiting both public health and consumers’ wallets.

Who knows? Instead of continuing to repair the legendary Volkswagen Beetle with a Ferrari-sized budget, perhaps CFE could accomplish far more for all Mexicans, just as NASA has done.

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This article was originally published by Business Insider México.
Date: June 3, 2020
Original Link: https://businessinsider.mx/lo-que-la-nasa-puede-ensenarle-a-cfe-opinion-paul-alejandro-sanchez-energia-circular/ [offline]
Archived Link: https://web.archive.org/web/20210117004053/https://businessinsider.mx/lo-que-la-nasa-puede-ensenarle-a-cfe-opinion-paul-alejandro-sanchez-energia-circular/ [Archived]

"1.21 Gigawatts!
How am I supposed to generate that much power? It's impossible!"
— Dr. Emmett Brown

Many of you will remember the 1985 film classic Back to the Future. In the movie, Marty McFly convinces Dr. Brown (“Doc”) that he traveled to the past using a time machine that Doc himself built in the future, and that it has run out of power. Eventually, Doc agrees to help Marty, but he faces a major challenge: generating 1.21 gigawatts (GW) to power the DeLorean.

In the mid-1980s, nuclear energy seemed extremely promising. It was considered the future and the only way to move beyond fossil fuels. Many things changed after the Chernobyl accident the following year, but that is another story.

Returning to the future: it is now 2020, pharmacies still do not sell plutonium, and many things have changed over the past 35 years. The future of energy is no longer centered on nuclear power, but rather on next-generation renewables, particularly solar and wind energy, combined with energy storage and hydrogen. That may well be the winning combination of the future.

Next-generation renewable energy technologies have become a defining feature of our present. Their expansion is no longer part of some distant future barely visible on the horizon, nor are their costs as prohibitive as they once were. Today, they can be found in homes, businesses, and industries alike. We can even see large portions of agricultural land beginning to use their available space to harvest sunlight.

If Doc from Back to the Future had to generate 1.21 GW to power the DeLorean using today’s technology, could renewable energy in Mexico help him? Let’s find out.

According to figures from Mexico’s Ministry of Energy, installed electricity generation capacity reached 79.60 GW by the end of 2019. This includes plants powered by fossil fuels, such as combined-cycle plants fueled by natural gas, conventional thermal plants, and internal combustion facilities that require diesel and fuel oil, as well as coal-fired power plants that, as their name suggests, use coal.

There is also hydroelectric power, which relies on dams and other water resources, and nuclear energy generated by the Federal Electricity Commission (CFE) at the Laguna Verde Nuclear Power Plant in Veracruz. And, of course, there are solar photovoltaic, wind, and geothermal energy sources.

Solar photovoltaic capacity represented 4.37 percent of Mexico’s total installed capacity in 2019, equivalent to 3.4 GW. This means that if all of the country’s solar installations operated simultaneously for a few minutes, we could send Marty into the future nearly three times. If we add wind power, we could send him back to the future eight times.

Mexico’s renewable energy potential is so significant that on April 19 at midday, solar, wind, hydroelectric, and geothermal energy sources together supplied 33 percent of the electricity being consumed at that moment. Solar power alone contributed an average of 1.76 gigawatts every hour throughout the month, and I am confident that this is only the beginning.

At a time when renewable energy has become the subject of public debate, it is important to return to the future and leave the past behind. We can all help design strategies that enable the country to achieve a genuine energy transition, integrate more renewable energy, strengthen electrical grids, decentralize energy systems, and digitize consumption.

So, Doc, in the future pharmacies do not sell plutonium, but solar panels are very inexpensive and easy to find.

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This article was originally published by Business Insider México.
Date: Mayo 27, 2020
Original Link: https://businessinsider.mx/volver-al-futuro-energias-renovables-mexico-opinion-paul-alejandro-sanchez-energia-circular [offline]
Archived Link: https://web.archive.org/web/20240227201720/https://businessinsider.mx/volver-al-futuro-energias-renovables-mexico-opinion-paul-alejandro-sanchez-energia-circular/[Archived]

The first year of a new administration is always characterized by a slowdown in activity. The country’s economic direction changes, government strategies for generating economic development and well-being are reoriented, and the objectives and priorities that will define the public agenda are reconsidered.

For this reason, a necessary pause is required to evaluate what has been done and what has been achieved. This 2019 has been a year of learning for the new administration and of analysis aimed at determining the foundations upon which the desired energy future can be built. The current administration’s vision for the energy sector represents a departure from the framework established by the previous administration, and within this break a series of actions have been undertaken that have profoundly transformed the industry.

1. Pause in Competitive Processes. The new administration has placed the energy sector’s competitive processes on an indefinite hold, particularly oil bidding rounds, farm-outs, and electricity auctions. Following three oil bidding rounds and an equal number of electricity auctions that committed significant investments for the country, the administration decided to review the contracts and the progress made on those commitments. It has repeatedly stated that if private sector commitments in these areas are fulfilled in full, additional competitive processes will be reactivated. Therefore, it will be important to monitor the progress of these projects during 2020.

2. Strengthening PEMEX and CFE. One of the current administration’s promises was to rescue and strengthen the state-owned productive enterprises by improving their financial position, restructuring their liabilities, and restoring their leading role within their respective industries. This year we have witnessed that process unfold. PEMEX is seeking to revive its role in oil exploration and production through service contracts, while CFE aims to install additional generation capacity through the PIDIREGAS model. Both approaches could begin to materialize in 2020.

3. Energy Self-Sufficiency. A fundamental objective of the current administration is to produce domestically everything the country consumes, from electricity to gasoline. This objective explains the proposed construction of the Dos Bocas refinery and efforts to increase crude oil processing through the National Refining System. The challenge is significant. Greater domestic processing implies lower imports and, consequently, lower revenues derived from the country’s export platform.

4. A Different Institutional Design. It can be argued that the current administration proposes a new institutional design based more on informal relationships and cooperation than on hierarchies and controls. Under this approach, the Ministry of Energy is responsible for energy policy and overseeing the construction of Dos Bocas, while the CEO of CFE effectively leads the country’s electricity policy and the CEO of PEMEX leads hydrocarbon production policy. Regulators, for their part, now maintain a closer relationship with the state-owned productive enterprises and the Ministry.

5. Opportunities Remain. It is important to emphasize that opportunities still exist for companies capable of developing innovative business models. Private energy auctions, distributed generation projects aimed at reducing costs and increasing renewable energy consumption, next-generation service stations, and risk analysis and management services are just a few examples.

If 2019 has been a year of reflection, we are confident that 2020 will be a year of action and implementation, focused on turning the opportunities offered by Mexico’s energy sector into reality. We hope that the five topics discussed here will serve as useful considerations for planning the year ahead.

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This article was originally published by Petróleo y Energía, Volume 17, Issue 112, November–December 2019.
Date: December, 2019
Original: Printed Edition.
Archived Link: https://issuu.com/revistapetroleoenergia/docs/petrus_122-noviembre-diciembre [Archived]