Katya M. Somohano Silva

What were the main achievements of Deacero Power in 2020?

After much hard work, we managed to achieve a major milestone by migrating one of our biggest loads to the wholesale electricity market. The current requirements for this are significant in terms of investment, regulation, and compliance as well as in the procurement and installation of the necessary infrastructure, especially related with metering and communications. The procurement of this equipment is a major challenge, since it is currently very scarce in Mexico. It was especially challenging to comply with all the migration requirements established by the National Center for Energy Control (CENACE), the Federal Electricity Commission (CFE), and all the authorities and regulators in the middle of a pandemic. As of today, we have almost half of our energy consumption through the wholesale electrical market, which allows us to be more efficient and agile in terms of our energy procurement in Deacero as a whole.

What challenges did you face in closing your first electric power contract with Iberdrola? How many more do you hope to close in 2021?

Deacero became the first and only end user to represent itself as a qualified market participant. This is extremely new for the market, since no other company has done such a feat, which involves managing our own loads directly with CENACE with no middleman such as a qualified supplier in between. This required an enormous amount of effort in terms of building important human capital capacities, as well as systems, technologies, and tools that allow us to have the capacity to seamlessly participate directly in the wholesale market with CENACE. Before signing our agreement as a market participant with CENACE, we needed to demonstrate that we had the experience and knowledge to become a market participant. Having done so, we signed the contract with Iberdrola, the first of its kind in Mexico signed between a generator and a final end user. This contract is a long-term PPA from an efficient natural gas combined cycle power plant, which is in the northern part of the country, very close to our load center, allowing us to be very efficient by avoiding congestion. Moving away from the typical regulatory structure of consuming from CFE and now consuming directly from this power plant has allowed us to work 24/7. We consider this a major achievement, not only specifically for Deacero but for everyone in the steel industry in Mexico. This has shown that the Mexican industry can be extremely competitive.

How were you able to achieve effective communication and participate in the wholesale market with a team working remotely?

It was definitely a big challenge, especially considering that we are a relatively new team. We just had two years working together as a proper team, although we had the opportunity to prepare ourselves to get the skills needed and receive training in terms of managing these complicated and sophisticated systems. In spite of working remotely, we managed to find a great dynamic as a proper team, which allowed us to focus on our day-to-day goals as well as clearly defining our medium-term goals. It was a challenge, especially when trying to communicate with the regulators. It took us some time to establish effective communication with regulators, which is necessary especially when discussing technical requirements. There is still room for improvement in criteria standardization in terms of the equipment needed for different types of loads depending on the specifics and features of each load. We needed to work closely with CENACE specifically to ensure our investments in equipment were the right ones required for loads like ours. That was a great challenge, however we are pleased with the end result. We have nearly 170MW on the market so far.