After Mexico’s energy reform implemented in 2013 and by which private companies can now have a stake in Mexico’s energy industry, opportunities became ripe for investors and a state that showed incredible potential was none other than Chihuahua.
Chihuahua has a prime geographical location for its closeness to Texas and New Mexico, who are both providers of natural gas, as well as its stellar solar insolation. Chihuahua’s opportunities in the energy sector are then located into these two areas: solar power and natural gas.
The state went from having no solar plants to, as of September of 2019, having seven operational projects of this kind. Together they produce 356 megawatts and meant an investment of US$515 million. Not only that, but there’s also projects under construction and projects awaiting construction, which once completed would mean the generation of 1,770 megawatts and an investment of US$1,995 million.
Manuel Alderete of Alderete and Asociados, a consulting firm operating out of Chihuahua, expects that although the current administration has placed projects of this kind on-hold, it doesn’t mean they won’t be carried out. He also expects for more investments of this kind to arrive to both the country and the state. This because Mexico forms part of the Paris Agreement, by which the country committed to reduce the emissions from the industrial sector by generating 35% of the energy from clean sources by 2024 and by 43% by 2030.
While these types of projects speak of investment, they’re also a great opportunity for companies to generate their own electricity through solar farms of their own; another option available through these type of undertakings is to sell the energy you generate to the Federal Electricity Commission (CFE) as long as it’s under 0.5 megawatts. Such an example of a company with their own solar farm in the state is that of Cummins in Ciudad Juarez.
However, if a company doesn’t want to take the plunge and invest in their own solar farm, this type of generation allows for cheaper energy prices. Mexico’s industrial sector is one of the biggest energy consumers in the country and with a widespread availability of clean energy, companies in diverse sectors can choose to either buy cheaper energy from solar farms or resort to traditional energy generators for their energy.
Starting with the energy reform, the state of Chihuahua has seen itself benefited from the construction of several gas pipelines sponsored by the CFE, with the objective of supplying the country’s north and south with natural gas from Waha, Texas. This natural gas is intended to supply current and future electricity generating plants all throughout the country.
While natural gas’ main purpose is to generate electricity it also has many uses for diverse industries like the petrochemical industry where natural gas is used in the making of ammoniac, urea and methanol; the food industry in processes such as dairy and fruit dehydration and food processing; the ceramic and cement industry; the automotive industry in die casting processes and the steel industry in the smelting and steel making processes.
Chihuahua is lucky in that a lot of these gas pipeline projects have been installed in the state, in part due to the state’s closeness to the main provider of cheap natural gas that is Waha.
This is especially formidable if we consider that Chihuahua used to import only 360 MMft3d (millions of cubic feet per day) with two working pipelines and now has an import capacity of 3,800 MMft3d, that is to say 10.5 times more capacity working now with five pipelines. This amount is impressive, even when pipelines are not importing at their full capacity.
Chihuahua is currently working in development and expansion projects using natural gas such as de development of the hub in El Encino and the development of compressed natural gas in Ciudad Juarez, Cuauhtémoc and Nuevo Casas Grandes; the development of vehicular natural gas in Ciudad Juarez and the new electricity generating plants Norte III and Emerging Americas.
There are segments within the natural gas industry that have great areas of opportunity such as the development and expansion of distribution networks in cities as well as new compressors; the development of vehicular natural gas by which vehicles would be powered using natural gas instead of gasoline. There’s also a wide opportunity for the development of the previously mentioned industries that make use of natural gas in some of their processes.
Furthermore, natural gas offers a higher added value, the attraction of industrial investments, the reduction in energy costs and bigger competitiveness. It is also vital in the correct functioning of Mexico’s energy network and as such, its industry, homes and economy.
It would be then in both the country’s and the state of Chihuahua’s benefit to keep promoting and supporting the investment and creation of both solar farming plants and natural gas pipelines so that the diverse industries that live within the country may continue to flourish.