Mexico Expands Clean Energy Sector

Mexico Expands Clean Energy Sector

Warning: foreach() argument must be of type array|object, bool given in /home/mexiconow/public_html/sites/mexiconow/wp-content/themes/mexiconowwpnew/single.php on line 253
Bruno Ferrari, ProMexico General Director

What is the current situation of the Renewable Energy Industry Investment in Mexico?

Investments in the renewable energy sector in Mexico have increased recently, both in the areas of electric generation, and in the development and manufacturing of the technologies used for it.

Regarding generation projects, the main investments were made in wind and solar energy projects.

In wind energy, the total estimated investment amount (considering all the projects) exceeded the US$60 billion, and by 2012, it is expected that up to 4% of the electricity demand in the country will be generated using wind energy. The pursuing of this goal will represent the generation of over 10,000 direct and indirect jobs during construction and a demand of 374 jobs for its operation.

In the solar area, investments have been focused in water heaters based on solar energy. To encourage the use of this technology, the Federal Government launched the project PROCALSOL, through which more than 1.2 million m² of solar heaters were installed in the country.

Regarding production projects, several international companies that produce and commercialize renewable energy equipment have chosen Mexico as their production platform, this with the objective of supplying the U.S.

market, and in a minor quantity the local market.

Among the companies that have invested in the country we find Vientek (strategic alliance of TPI Composites and Mitsubishi), Kyocera, BP, Sanyo, Sunpower, among others.

Why is there so much potential for Renewable Energy Industry in Mexico?

In the generation area, the geographical and climatic characteristics of Mexico make us an ideal place for the development of generation projects based on renewable sources.

For the wind energy sector, regions as the Isthmus of Tehuantepec, in the state of Oaxaca, La Rumorosa in the state of Baja California and the states of Zacatecas, Hidalgo, Veracruz, Sinaloa, and the Yucatan Peninsula, have been identified as potential regions for the development electric generation projects. The potential generation capacity is estimated in more than 30,000 MW.

In the solar energy sector, Mexico's geographic location on the world map allows the country to outstand as one of the areas with higher average solar radiation, with rates ranging from 4.4 kWh/m² per day in the centre of the country, to 6.3 kWh/m² per day in the north. If we assume an efficiency of 15% of the PV systems, it would only be necessary an square of 25m per side in the desert of Sonora or Chihuahua to generate all the electricity required by the country today.

Mexico also has great opportunities in energy development projects based on minihydros, geothermal plants and biomass.

In minihydros, the national estimated potential is around 3,250 MW; in the case of geothermal energy the estimation is over 20,000 MW; and the biomass energy potential is estimated between 2,635 and 3,771 Petajoules per year.

Regarding the manufacturing area, Mexico has acquired a vast experience in the automotive, aerospace and electric-electronic industries, which is guarantee for success in manufacturing renewable energy equipment Moreover, according to a study of the consulting firm Alix Partners, Mexico presents the lowest manufacturing costs for exporting to the USA, compared with countries as India, China, Russia and Vietnam among others.

What is the forescast demand for Renewable Energies Industry in Mexico's Market for 2024?
What does that represent in investment opportunities?

The Mexican Government has established that for 2024, 35% of the total installed capacity for electric generation should be from renewable sources.

At the end of 2009, renewable energies in Mexico represented 24.4% of the total installed capacity of generation, amount that represents 12,492 MW of the 51,105 MW established in the country. To be able to reach the goal, our country must have to increase its renewable capacity in 14,951 MW.

How is Mexico developing the required manufacturing skills and labor force for the Renewable Energy Industry?

Mexico is a country of young people, it is estimated that in the next three decades, the number of individuals in working age in Mexico will reach 101 million, and the economically active population will reach the 62 millions.

Our country is willing to take advantage of this demographic situation; training and education are key issue for this objective.

The Mexican Higher Education System is made up of 2,539 institutions which offer educational services, including international exchange opportunities.

Close to 90,000 new engineering and technical students graduate each year from Mexican universities, important contribution that represents a highly attractive issue for companies in the sector.

Additionally, there are more that 900 postgraduate programs related to engineering and technology in Mexican universities.

What are the barriers that Mexico faces to produce carbon credits?

Given the fact that is during this administration that the Federal Government has promoted the use of clean energy sources and energy efficiency, and before that, non relevant actions to encourage the use of these sources had been done in the legislative, strategic, and program implementation areas, rather than facing barriers to the production of carbon credits, Mexico present an excellent opportunity to develop this mechanisms in the coming years.

The current administration had created many programs and made specific actions on the three areas mentioned above to foster the clean energy sector in the country, among them:

  • Law for the Use of Renewable Energy and Energy Transition Financing
  • Law for the Sustainable Use of Energy
  • Law for the promotion and development of bioenergy
  • National Strategy for Energy Transition and Sustainable Use of Energy
  • Special Program for the Development of Renewable Energy
  • Special Climate Change Program
  • Zero tariff to equipment that prevent pollution and promote research and technological development.
  • Accelerated depreciation for infrastructure projects that use renewable sources of energy: up to 100% in one year, 30% tax credit for research, and technological development (CONACYT).
These actions fosters the use of clean technologies and energy efficiency in the country, the opportunity to generate carbon credits in this sector represents a niche that must be exploited as new generation projects are developed in the country.

Until today, 118 CDM projects have been approved, being these mainly of greenhouse gases mitigation projects from waste management in swine farms and stables, as well as landfills projects.

What Renewable Energy Projects are beeing developed during 2010-2013 in Mexico?

Regarding the renewable energy projects development, these can be divide into two types, the self-supply and export projects, which are those mainly proposed by private companies and municipalities, and projects of independent power producer, that involves the Federal Power Commission - CFE.

In the wind energy sector, since 2009, 21 generation projects have been approved by the Energy Regulatory Commission, and will start their operations between 2010 and 2012.

From those, La Venta III, Oaxaca I, II, III and IV are part of the wind program of the Federal Power Commission, with a total generation capacity estimated around the 500 MW.

The remaining are self-sufficiency and export projects, mainly located in the Isthmus of Tehuantepec, in La Rumorosa, Baja California, Nuevo Leon and Tamaulipas.

It is worth to mention the Eurus project, from the cement company CEMEX, which will have a generation capacity of 279 MW, being the largest wind farm in Mexico and Latin America.

In the solar energy sector, important government projects for promoting the use this technology are actually in operation, as the Promotion of Alternative Energy Sources in the Agribusiness, and the Renewable Energy Program, from the Trust Fund for Shared Risk (FIRCO), that aims to benefit remote rural communities from the states of Chiapas, Guerrero, Oaxaca and Veracruz, with quality energy services.

In the solar thermal sector, the main project is the PROCALSOL, which aims at harnessing solar energy for water heating.

The goal is to achieve the installation of more than 600,000 m² of solar water heaters in order to have 1 million 800 thousand m² of solar water heaters installed by 2012.

Another solar project that is expected to begin operations in 2012 is the combined cycle "171 CC Agua Prieta II", promoted by the Federal Power Commission in the state of Sonora. This project consists of a combined cycle with an integrated solar system using solar parabolic technologies. The gross generation capacity is estimated in 477 MW, of which 10 MW are expected to be generated by the solar field in the summer.

Other important action that is promoted by the Federal Government is the "Integrated Energy Services" project, which seeks to provide electricity to isolated rural communities by developing renewable energy projects.

Depending on the availability of the renewable resource, the technology to use could be wind generators or photovoltaic panels.