By TBY | Mexico | Aug 13, 2015
Mexico's energy reform is one of the most transcendental laws that the country has passed in the last decades as it opens up opportunities for the international private sector to invest in the country.
The country’s geographical location and environmental conditions are ideal for the generation of energy through renewable sources and this is sure to become an attractive sector for foreign investors in the near future.
The Secretariat of Energy (Sener) has the ambitious goal of producing 35% of the energy in the country from clean sources by 2024, while reducing greenhouse emissions by 30% in 2020. Currently, renewables account for 23 % of the energy generated in the country, although a large chunk of that percentage comes from hydropower sources (78.5 % according to ProMexico). Right now only 1-2 % of the energy generated in Mexico comes from the sun, geothermal, and wind sources and the government is eager to promote investment in those areas because of the strong potential that renewables hold.
As for solar energy, Mexico has one of the best geographical locations in the world. Nearly 90 % of its territory is located within the tropical belt in an area known as the Sunbelt, which has high levels of solar radiation. Specifically some Mexican states in the north of the country have a high ratio of hours of sun per year, hence they can be attractive regions for the installation of solar panels.
According to ProMéxico, the country’s installed capacity for solar energy is about 100 Megawatts (MW) but the National Solar Energy Association (ANES) told TBY that Mexico should be generating approximately 8,000 MW in 2024, which will represent a significant leap.
Wind power is the most developed renewable source out of the three aforementioned clean energies. Mexico has a wind power installed capacity of around 2,500 MW—the first project was established in 2007—and ProMéxico forecasts that number will hike up to 40,000MW by 2030.
Currently, the majority of the wind farms in Mexico have been developed by international companies. Nevertheless, the Mexican Association of Solar Energy told TBY that they expect the number of domestic firms in that sector to rise as a result of the energy reform.
As it happens with the solar energy, certain Mexican regions are ideal for wind power generation. A vast number of the wind farms in the country have been built in the state of Oaxaca, where approximately 90 % of the wind energy is generated. That state has the geographical wonder called isthmus of Tehuantepec, a narrow strip of land where winds are particularly strong. Consequently, firms are trying to locate their wind farms there.
Geothermal is another type of clean energy that is expected to have a huge surge. At the beginning of 2014, México had an installed capacity of 958 MW and is the fourth largest producer of geothermal energy in the world. One of the main advantages of geothermic energy is its low cost of technology to generate electric power, which makes it significantly cheaper than solar or wind.
Consequently, some Mexican investors have realized the big opportunities that this sort of clean energy has and have entered the market. In that regard, the Mexican conglomerate Grupo Salinas created the company Grupo Dragón, which focuses in the development of geothermal projects. In an interview with TBY, the CEO of Grupo Dragón, José Pablo Fernández, said that the potential for geothermal projects in Mexico is “good”, although it is difficult to set up a plant because it is “very different from other renewables.”
In order to promote research and technology to boost solar, wind, and geothermal energies in Mexico, the Sener created in 2014 the Mexican Energy Innovation Centers (CEMIEs). The CEMIEs have received cooperation from several international institutions such as the National Renewable Center of Spain (CENER), an institution specialized in R&D to the development of renewable energies.
Its business development manager, Enrique González, said to TBY that these centers are “performing very well” and are a key actor for the advancement of renewables in Mexico. In Gonzalez´s view, renewables cannot only be an important clean source of energy for the country, but can also play an “important role” in the development of Mexico. “Renewable energy sources surely contribute to deploy a balanced energy policy, combining environmental, sustainability, competitiveness, and security of supply,” he added.
