A New Generation of Consumers




“Many want the government to protect the consumer.

A more urgent problem is to protect the consumer from the government.”

– Milton Friedman

I dare say that in Mexico a consumer culture has not been developed in the energy sector, particularly in the electric sector; at least not at the level of domestic consumers or in small, family businesses and small shops. The citizens who make up the base of the pyramid of electric energy users.

Subsidies to energy prices together with a de facto monopoly in the sale of energy to small consumers, residential and commercial, have distorted the role of the consumer in the Mexican electric sector, which seems more like a captive taxpayer who has to obligatorily maintain the existence of operational and administrative inefficiencies of a market with a single electricity provider.

Small consumers do not have a real idea of their electricity consumption, nor of its real cost, and very few know the levels of energy efficiency of their household appliances and electronic devices.

In these days of confinement, most Mexican households have verified this situation in their electricity bills because by spending more time at home, our consumption has also increased in proportion. A person leaves a series running on TV while being on a video call with the lights on in an unoccupied room and charging a cellphone, laptop and tablet. Does it remind anyone of something?

While this happens in Mexico, in more mature markets such as the United States, Europe, Canada or Australia, a new generation of electricity consumers is being born that takes advantage of technological and social changes to have a more active role and assert its power. The four Ds that drive these changes are: Digitalization, Decentralization, Decarbonization and Democratization of energy. Which I will address in future columns.

This new generation of electricity consumers has indoor meters in their homes that allow them to observe the level of consumption in real time and the price of energy; they have connected smart devices that can regulate electricity consumption, for example in matters of indoor climate control; or schedule tasks, for example washing cycles, at 3:00 a.m. when the price of electricity is cheaper or dim the lights when no one is using them.

Additionally, there are applications for mobile devices that allow them to know consumption and establish limits and alarms, know the energy efficiency of the connected devices and observe their comparative degradation and know market prices. Some of them, more sophisticated, already integrate solar panels on their roofs, with storage systems and charging systems for electric cars, which are also storage systems.

But most importantly, these new-generation consumers have the right and control of choice in their hands. There are numerous electricity providers which offer electricity plans based on the needs of each of the users. There are plans for almost every type of consumer.

Whoever wants to consume 100% renewable energy and obtain their compliance certificate, or whoever wants to reduce their demand during peak hours in exchange for compensation; or whoever only operates on Saturdays and Sundays or at night, or whoever has their solar panels; all of them can obtain different offers from different providers with different prices and different characteristics.

For Mexicans to be able to enjoy an experience like that of mature markets, it is important that electric users become new-generation consumers who take control of choice and demand from rulers changes to move in that direction. We are still far away, but this evolution cannot be stopped.

This article was originally published by Business Insider México.
Date: July 8, 2020
Original Link: https://businessinsider.mx/una-nueva-generacion-de-consumidores-electricidad-opinion-paul-alejandro-sanchez-energia-circular/ [offline]
Archived Link: https://web.archive.org/web/20200805222332/https://businessinsider.mx/una-nueva-generacion-de-consumidores-electricidad-opinion-paul-alejandro-sanchez-energia-circular/ [Archived]

Cryptocurrencies and Energy


In the last two decades we have lived through an accelerated process of digitalization that has radically transformed traditional industries that are intimately linked to physical goods. People have stopped having albums filled with printed photographs to be replaced by thousands of digital photographs stored in the cloud or saved on a social network. We can say the same about tapes, compact discs, books, magazines and media outlets.

Perhaps there are hundreds of cases that can exemplify how some of the most traditional material expressions of past eras have been transformed into chains of digital information that are interpreted by computers, tablets and smartphones, but and, although money has not yet been digitalized, there are fiduciary currencies, which are completely digital and do not have the backing of the state, called cryptocurrencies.

The best known is Bitcoin, but there are hundreds of cryptocurrencies with their own characteristics. These digital currencies carry out virtual mining processes that require large amounts of processing power and, therefore, generate a great demand for energy. It is expected that by 2020, the annual income of the industry will be $3,000 million dollars, while the associated expenses will be 2,994 million dollars. This means that more than 99% of income is used to cover costs, and more than 80% of the cost is the payment of electricity.

Consequently, cryptocurrency mining is an extremely energy-intensive activity in such a way that it has become a source of global concern regarding greenhouse gas emissions and the imbalances they generate in deregulated energy markets where the marginal costs generated by this mining can generate a sensitive loss of welfare for the rest of consumers or require the dispatch of more expensive and polluting sources of energy to cover demand.

According to data from Digiconomist, it is estimated that the electric consumption from Bitcoin mining in 2019 was 64 TWh, this is equivalent to one fifth of Mexico’s electric generation in the same year. To compare, the electric consumption of Bitcoin mining in the world was practically the same as the consumption of all electric cars that circulated in 2019 on the planet.

Due to the above, it is estimated that the emissions of equivalent Carbon Dioxide that were released into the atmosphere due to Bitcoin mining were 28.44 million tons and 9,740 tons of electronic waste were produced in the process, and this without considering other cryptocurrencies such as Ethereum, which in 2019 consumed almost 8 TWh, almost double the electricity consumed by all electric vehicles in the United States in the same year.

Nevertheless, the hope is that this problem is solved as more renewable sources and energy storage systems are integrated to sustain the intensive energy consumption in data mining and, at the same time, reduce the greenhouse gas emissions that today characterize the cryptocurrency industry internationally.

Although this could seem to be a phenomenon isolated to the cryptocurrency industry, perhaps in a not very distant future we could be witnesses to the digitalization of all national currencies, just as at the time paper money replaced commodity money, such as gold and silver coins, this could be replaced by digitally interconnected chains of data which, without a doubt, will require a different energy model.

This article was originally published by Business Insider México.
Date: June 24, 2020
Original Link: https://businessinsider.mx/opinion-paul-sanchez-consumo-energiamineria-criptomonedas-dana-medio-ambiente/ [offline]
Archived Link: https://web.archive.org/web/20200805215859/https://businessinsider.mx/opinion-paul-sanchez-consumo-energiamineria-criptomonedas-dana-medio-ambiente/ [Archived]

What NASA Can Teach CFE


They were building a Ferrari for every launch, when it was possible that a Honda Accord could achieve it.

– Elon Musk

On May 30, the first private space mission was launched by Elon Musk’s company SpaceX, also founder of Tesla, which sent two NASA astronauts to the International Space Station. This launch represents the first trip departing from the United States in almost a decade and represents what some call the beginning of the private space race. Can this teach us some lessons for CFE?

It would be difficult for us to think of an area more strategic for a government than its space program, and even more so when it is intimately linked with an arms and ideological race before the perceived threat in times of the Cold War. And as such, it received large sums of public budget to operate.

However, in the more than 60 years since its creation, the world has changed a lot in political, economic and social aspects. The model of the welfare State was becoming exhausted, mainly because of the amount of resources required to sustain the government structure, and with it the large sums that governments could dedicate to these strategic sectors.

For example, NASA’s budget went from 43,554 million dollars to 22,559 million dollars between 1966 and 2020, in constant 2014 dollars. As a consequence, the agency has had to close some of its most emblematic programs, such as the manned space shuttle program that operated for 30 years from 1981 to 2011. In total, through this program, 135 trips were carried out that had a launch cost of between 450 and 1,500 million dollars.

The most important lesson from the SpaceX Dragon launch is that it cost 50 million dollars, only 10% of the cost of the cheapest launch of NASA’s space shuttles, in such a way that the agency has decided to become one of the company’s main clients to send astronauts into space.

That is, NASA continues developing strategic activities in space matters and dedicates its resources and efforts where it could obtain more value for the country and the world, such as the remote exploration of Mars, Jupiter and Saturn and the exploration of deep space with its space satellites, and leaves to private initiative the launches that can be done more economically for the agency.

Seen in this way, CFE could learn a lot from NASA, concentrating on the strategic areas that generate more value per unit of investment, such as transmission, distribution, telemetry, transportation and commercialization of natural gas, among others, and leaving behind those volumetric goals of electric energy generation that require keeping expensive, inefficient and polluting plants in operation, such as those that operate with fuel oil and coal, replacing that generation with clean and renewable energy at low costs like those obtained in the Long-Term Auctions for the benefit of our health and our pockets.

Who knows? Perhaps instead of trying to continue repairing the mythical Vocho with a Ferrari budget, CFE could achieve more, much more, for all Mexicans, just as NASA did.

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]