Water and electricity, the challenges of the industry in the country
Solili | June 19, 2022 |

One of the great challenges facing the Mexican industrial sector is the scarcity of land with infrastructure, among which we have included roads and services such as electricity and water supply necessary for a variety of industries to be installed, including the heavy industry where raw materials are extracted and transformed, up to light industry.

The construction of sustainable and efficient industrial parks requires an electrical service and provision of white water and management of sewage, waste and drainage that allows the adequate development of the activity assigned by the current zoning and that may contain activities that are either productive. , storage, manufacturing or distribution.

Basic services depend mainly on public investment that the central government or regional governments make to support productive activity where they focus their interest on GDP growth and employment.

Check here: Industrial demand picks up for manufacturing in the north and west and logistics in the center of the country

Generally, these types of investments are long-term and the accelerated growth of industrial demand during 2021, which exceeded 6.6 million square meters nationwide, 65% more than in 2020, has created strong pressure towards services.

Recently the electricity issue was on the table in mid-April when the electricity reform was not approved and as a result the opening of the sector to private investment was maintained, allowing the independence of energy regulators to be maintained.

The current situation demands that many industrial developers nationwide must include electricity generation in their cost structures where the issue of poles, lines and substations would fall in part on private investment.

But the challenge continues for independent energy producers through the announced revisions to self-supply schemes and independent producer contracts, to which is added the uncertainty of the gas they need to operate and the gaps in transmission investments that will impact to the development of industrial parks.

The issue of white water supply also affects entities such as Monterrey, which is supplied by two dams that have been close to drying up since February and that despite the rains have not reached an adequate level, for which the government implemented campaigns with some measures that should be taken to save water.

Of interest: Industrial rents in the northwest of the country rise due to lack of space

The supply of an entity, whether by surface or underground sources, determines its capacity to face natural phenomena of rains and droughts that are generally cyclical and allow to differentiate those regional governments that anticipate the circumstances.

Both energy and water supply are key in the management of industrial parks since they generate economies of scale and agglomeration that affect the successful settlement of production processes.

The global issue of ESG criteria (environment, sustainability and governance) have been key in the institutional development of the Mexican industrial market, where both developers and tenants are aware of the advantages that compliance with them entails.

Another key element is the articulation of regional efforts where, in addition to government intervention, the promotion of clusters and developers is achieved so that the issue of provision of services and improvement of communication routes becomes a nerve center in the development of the industrial agenda.

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