Enterprise Data Management and the Deregulating Power Markets in Mexico

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With the upcoming deregulation of the Mexican Power Markets, we are about to face yet another massive data challenge for market participants who are already struggling to keep up with the data volumes of every other market that they trade in. This dictates an urgency and need for extremely strong enterprise data management systems. ZEMA is an enterprise data management solution for commodities and energy that collects vast amounts of market data across any number of markets and is well positioned to help clients who need to understand upcoming and historical market trends.

Given the short timeline before the second auctions for the Mexican power market, will it be possible to not only capture the large volume of published data from the new source, but analyze and recognize new opportunities in time? With hourly LMP data published for all 2160 nodes at three separate interchanges, will the increased expenditure of internal IT resources and time-to-market of the ability to automatically gather, centralize and normalize this data be too long, or too expensive, to take advantage of the prospective profit possibilities? Figure one demonstrates the data so far published for a single day at one node at one interchange. This means that there are 155,520 data points per day for LMP alone, which can then be separated into ancillary service changes, transmission changes and power supply charges, along with consumption, demand and other data sets. With a market size of over 37.4 GW, this means that data needs will be exceptionally including LMP data, Transmission, Outages, Auctions and many other potential needs.

Figure 1: LMP for the 24-hour period of the 4th of May, 2016 for node 01AAN-85, Data collected, collated and graphed by ZEMA.
Figure 1: LMP for the 24-hour period of the 4th of May, 2016 for node 01AAN-85, Data collected, collated and graphed by ZEMA.

ZEMA could help, not only by automatically collecting, collating and consolidating this data for exploration and comparison to other markets, but substantially increasing the time-to-market of analytical insights derived from this data. In order to be prepared for new markets, clients will need to send this data to their trade and risk systems, settlements systems and analytical platforms. This means getting traders ready and in a position to create, validate and leverage their internal and external forward curves. All key features that ZEMA helps its clients with.

The final step to the deregulation of the Mexican power market is nearly completed. Considering the size of this market (typical actual demand of 37.4 GW as posted by Centro Nacional de Control de Energía (CENACE) for Wednesday, May 4th 2016, the impacts to North American power generation could be substantial. With laws and regulations in place setting up a Transmission Operator called CENACE, along with the regulatory body Comisson Reguladora de Energía (CRE), the possibility that, what started back in 1992 with amendments to Mexican law surrounding the Public Electricity Act, a public power market in Mexico may well be established. The opening of this market may provide some opportunities. With the establishment of a transmission operator, large volatilities in the short term may be present. There may exist possible arbitrage opportunities, or possibility of profit from market speculation. On top of this, consumers may see a decrease in price, as increased competition on both sides of the border leads to more competitive pricing.

Are you ready? If not, you need to be. To find out more about ZEMA, call ZE today or visit our website www.ze.com to find out how we can help you to be prepared for the data and system challenges coming your way.

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