Nearshoring and Energy. Addressing Challenges and Opportunities in the Mexican Industrial Sector

During the recent Industrial Asset Management Council (IAMC) event in Mexico City, discussions revolved around the challenges and opportunities within Mexico's industrial sector, focusing on nearshoring. The spotlight was on energy-related aspects, including investments and the imperative need for the country's energy infrastructure enhancements.

The IAMC event occurred on September 21, 2023, in Mexico City. Photo: SiiLA.

By: SiiLA News

10/02/2023

The Industrial Asset Management Council (IAMC) recently hosted an event in Mexico City, where prominent panelists delved into the challenges and opportunities within Mexico's industrial sector, particularly concerning energy generation, transportation, storage, and logistics.

During the event organized by the leading professional association for real estate executives specializing in industrial assets, Denise Dresser, a renowned political scientist from the Autonomous Technological Institute of Mexico (ITAM), explained that in the current political and economic landscape, nearshoring is a source of investment driving development in Mexico. However, she pointed out that, alongside concerns about security and the rule of law, there is an underlying concern regarding investment related to resources, with significant challenges concerning water, transportation, and energy. These challenges are pivotal as they can hinder the national development potential of nearshoring.

The energy issue in Mexico raises significant questions about the country's ability to meet the needs of the growing industry. In this context, the importance of promoting sustainability and energy efficiency policies to ensure a reliable and sustainable supply for companies involved in nearshoring was discussed.

Angie Soto (Nexus Energía México), Francisco Barnés (Cifra2 Consultores), and Nelson Delgado (Asolmex) discussed the increasing need for investment in renewable energies in the country, the sustainable and economic costs of the current electricity production model in Mexico, and the urgent need to modernize the electrical system to foster greater sectorial competition and efficiency. This entails the use of cutting-edge technologies and systems to tackle future challenges.

Mexico's Energy Challenges

Members of the SiiLA team were present at the IAMC event. Top: Erick (left), Óscar (center), Joselyne, and Sammantha. Bottom: Janeth (left). Photo: SiiLA.

Where do we stand, and what are we facing? This was one of the key questions during the "Availability, Quality, and Cost of Electrical Service in Mexico" panel held on September 21, 2023. According to Barnés, Delgado, and Soto, Mexico faces two central energy issues: deficits in clean energy from 2021 onwards and an electrical transmission network that has seen minimal changes for decades. These factors are linked to Mexico's energy policy, which favors the Federal Electricity Commission (CFE) over other institutional investors. Hence, the speakers emphasized that Mexico's challenge is strengthening energy competition by improving transmission networks and energy dispatch and encouraging new investors' participation.

Experts noted that despite Mexico's diversification and increase in renewable energy generation capacity since 2017, reaching nearly nine gigawatts of wind and solar energy by the end of 2022, investment in electrical infrastructure is necessary. This is because the country operates with 30-to-40-year-old machinery and has the same transmission network from a decade ago. If this issue is not addressed and the prioritization of CFE continues, the transition to renewable energies and the sustainability of the electrical supply will increasingly fall short of meeting the growing demands of industries.

SiiLA was present at the IAMC event, which featured renowned sponsors such as CBRE, Colliers, Cushman & Wakefield, JLL, and Prologis. Our team enjoyed engaging and interacting with some of SiiLA's clients, such as Yusef Atieyeh Villareal, VP of Value-Added Investments of Prologis, and Humberto Carza Ramírez, Industrial Investment Advisor of Terra Regia.

For more information on real estate sector trends, we invite you to visit SiiLA REsource or contact us at contacto@siila.com.mx.

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