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Top Mexican energy official: Electrons won't stop at the border

President Donald Trump's intention to build a wall along the U.S.-Mexico border will not stop electrons from flowing ever more freely between the two countries, Mexico's top energy regulator said at an industry conference on April 5 in San Francisco.

"We are going to be talking about a single market very soon," Guillermo Zuñiga, commissioner of Mexico's Comisión Reguladora de Energía, or CRE, said in an interview at the Energy Times' "Renewables Rush" conference. "We plan to expand each of our connections to the United States." Mexico's electric grid links to the U.S. transmission system in half-a-dozen border locations in California, New Mexico and Texas.

Currently, Mexico is a relatively small net power exporter to the United States, shipping 7.3 TWh north in 2015, according to the U.S. Energy Information Administration, compared to 68.5 TWh transmitted from Canada. But Zuñiga sees an opportunity to integrate Mexico's grid more tightly with its northern neighbor, especially California. In a panel discussion, he pointed to California's current challenges with electricity oversupply and negative prices, pleading, "Please send some of that oversupply to Mexico."

Toward that end, the country's grid operator is considering participation in the California ISO's real-time energy imbalance market via the Baja California Norte grid, which connects with two 230-kV lines operated by Sempra Energy subsidiary San Diego Gas & Electric Co. The so-called Path 45 line can move 800 MW from Mexico to California and 408 MW from California to Mexico.

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Mexico plans to expand its grid connections with the United States.

"It is not only a physical connection. It is a philosophical connection that has to do with policy, vision and goals," Zuñiga said. While the Baja California Norte grid currently is not tied to mainland Mexico, the country plans to complete an interconnection in 2019, while also boosting its capacity to receive power from California, according to the energy commissioner. "This is going to change everything," he said.

As part of energy reforms introduced by Mexican President Enrique Peña Nieto to create competition in the sector and attract foreign investment, Mexico has targets of supplying 35% of its electric demand from renewable energy sources by 2024 and 50% by 2050. "But I think those targets are already outdated," said Zuñiga, noting that the country currently is seeing major investments into renewable energy projects, including distributed solar, thanks to net metering regulations introduced last month.

"I do believe there is going to be a boom in distributed generation, and the same can be said for all other kinds of renewable energy projects," he said. "We are witnessing now, with an open market framework, wind projects, solar projects, geothermal projects are being introduced in a very rapid pace."

Mexico expects its electric generating capacity to increase 3.7% per year over the next 15 years, creating the need for roughly $131 billion in investment, with about 80% of that "in generation, transmission and distribution," the energy regulator said.