Renewable Energies Improve Mexico’s Energy Model

THE WIND AND NATURAL GAS

he different levels of Government in Mexico have developed diverse incentive schemes for investors in the wind energy production market. The result has been spectacular in the short term development of a new globalized industry for wind energy components. During 2007, global sales were recorded above US$40 billion and since then growth has been at a constant 30%.

It is worth examining the particular situation of Mexico in this context. According to the Electric Sector Investment Program (POISE 2008-2017) the total installed capacity for the year 2017 will be 78.5GW with an expected generation of 417.5 Terawatts per hour (TWh). From this total, 91.86 will be designated for the public sector and only 8.14 for auto supply.

According to these predictions 68.9% of the total energy will be generated with fossil fuels; 7.9% with hydro electric; 1.94% with geothermal; 3.1% nuclear energy and the remaining 9.5% is still to be defined either in natural gas, vacuum residue, carbon, nuclear or another to be imported. The generation of wind energy is estimated at 0.53% for the public sector and 1.3% for auto supply.

Important Projects in Mexico

The wind energy capacity projected for the year 2017 is 2,577 MW. From this total, 591 MW will be installed by the Federal Electric Commission (CFE) for the public sector and the Commission has already announced plans for 1,983 MW for auto supply, mostly in the "Isthmus of Tehuantepec" Zone.

The new private investment projects have been encouraged by the development of measures adopted by the Energy Regulatory Commission (CRE) allowing for compensation of the energy deficit with the surplus. Another important factor is the recognition of the power supply in the interconnection contract with the CFE.

Also, diverse measures for private investors along with the CFE have been implemented in terms intended to develop the capacity required for evacuation. This is because at this time the transmission infrastructure is not prepared for the final operation.

Despite the incentives it is not clear yet what initiatives will finally be carried out because the auto supply market has not yet been fully developed. Many of the projects don’t include the indispensable commitments for their financing plans, such as equipment supply and the sale of energy over the long term. Another uncertainty is that in case all the wind energy projects get finalized, their total participation won’t exceed 2% even in the best scenario. This insight comes from Luis Farias, Senior VP of Energy at CEMEX.

This can be considered a very low expectation considering the future availability of fossil fuel sources from which we traditionally have between 69% and 78% dependence, respectively.

Facing a scenario of medium growth, the demand for natural gas from the public service will be around 107 MWm/day by the year 2017, as predicted by Luis Farias. From this volume we will need to import 50% and this is a very worrisome situation.

Prices will obviously grow in the next few years.

Potential for Development

Luis Farias made a projection based on the same wind energy production made in Spain earlier. He considers that by the year 2017 Mexico will be able to install around 15GW in wind energy. This comes with the guess that a reliable factor of utilization for capacity goes up to around 30% on average. This estimate was made given the geography and demographics of Mexico, compared with those in Spain. Besides this, there is the fact that the Mexican territory comes with Oaxaca, one of the regions with the highest number of wind hours in the world. Under these projected hypothetical conditions, it is estimated that Mexico will be able to produce 40TWh/yearly.

The Displacement of Natural Gas

This energy will displace about 25MMm3/daily of natural gas, energy that will no longer be needed. This represents almost 50% of the imports provided for this year. This measure will also avoid the emission of carbon dioxide. But the most important result of the development of wind energy production will be the creation of an entire domestic industry needed to supply the components and equipment for projects nationwide, as well as exports to the U.S. and Canada. Both countries have limited their wind energy growth because of the lack of any capacity to fabricate necessary components.

In summary, the development of wind energy in Mexico will produce four special benefits:

• The use of a renewable energy
• The displacement of natural gas
• Avoid the emission of CO2 into the atmosphere
• Create a new industry with excellent export potential

BIO ENERGY AS A CATALYST FOR RURAL DEVELOPMENT

Bio Energy is the energy obtained from biomass and represents a variety of diverse forms. The biomass used for energetic purposes is a very clean renewable source of energy that is now fully established with well-proven technologies.

As a source of energy, many advantages are found with Bio Energy. This energy gives the opportunity to create synergy between the agro-forestall sectors (where the creation of fuel is found), as well as the energetic, industrial (particularly Agro-Industrial), environmental and social sectors.

In other ways, because of the decentralized supply of biomasses fuels this approach allows the creation of jobs and investment in the rural sector. In fact, Bio Energy produces between 2 to 4 times the jobs that fossil fuel employs.

Bio Energy in Mexico

The use of Bio Energy represents 8% of total energy consumption in Mexico. The raw materials most used are firewood and sugar cane. Mexico can count on important developments in the fields of gasification and the production of biogas in its landfills.

There is also a pilot production program for biodiesel.

Mexico requires strategic action and the support of a wide range of policies and public resources to achieve a national initiative for Bio Energy development. There are four fundamentals:

• Start from an integrated approach; make certain it is oriented to environmental, economic and social uses of Bio Energy
• Promote research and technological development
• Stimulate market development
• Strengthen institutions

All of these activities require a state policy that reflects its purpose in the application of public resources in terms of subsidies, incentives and support from public institutions.

The Challenges and Impacts of Bio Energy

Bio Energy is an abundant resource that warranties its own sustainability. It is also a resource that helps to reduce poverty in the rural sector. It does this by helping in the distribution of national income by redirecting important reserves to the field.

The production of Bio Energy requires a lot of human effort in diverse phases of production. The land used for the production of Bio Energy, for instance, can be on degraded areas and it is flexible enough to be able to adapt to local conditions.

Also, bioenergy facilitates the reduction of environmental damage by reducing the production of undesirable pollutants.

Present Problems with Bio Energy

At this time there is a great potential for Bio Energy to be inadvertently wasted, especially when it could come as a sub product of other productive activities.

Also, Bio Energy faces a lack of awareness about the potential of the Agro Industry as a producer of Bio Energy.

Another issue that Bio Energy is facing at this time is perhaps based in inefficient technologies. Another thing, Mexico is a country that does not offer attractive incentives for financing programs. The lack of research groups with unlimited resources is another related problem area.

Applications in the Industrial Sector

Regarding liquid fuels, like biodiesel and bioethanol, there are many industrial applications.

Bioethanol is an alcohol obtained from natural gas and other hydro-carburets passing through selected chemical processes. It is also produced from the fermentation of carbohydrates such as sugar cane, rice and other forestall, agricultural and/or organic garbage wastes.

Bioethanol has three main applications for industrial purposes:

• As a solvent and raw material for the synthesis of other products
• In the preparation of drinking beverages
• As a fuel or additive in gasoline

In other industrialized countries, like the European Union, Japan or the United States, these liquid fuels have played an important role in the different transport systems. Mexico has a lot of potential. The Mexican production of sugar cane comes out at around 45 million liters of ethanol, but consumption registers at about 164 million liters. This results in the necessity to import ethanol from other countries.

In regard to gas fuels, ethanol has been very helpful when obtaining biogas by using bio-digesters in the animal waste compost processing system in the livestock industry.

Mexico produces over 80,000 tons of garbage, mostly from organic waste. The generation of electric energy from biogas can be a solution for the problem of pollution in the Country. The economic benefits can be counted on in terms of the reduction in garbage disposal and the more efficient utilization of combustible waste.

SOLAR ENERGY: FUNCTION AND APPLICATIONS

A photovoltaic system is a dispositive having the function of transforming solar energy directly into electric energy. The system of using solar meets all the needed requirements to qualify as an optimal environmental application.

Solar energy usually features these four elements:

• Generation: Panels or solar modules
• Control: Voltage regulators and other controllers
• Storage: Batteries and accumulators
• Distribution: Cables and connectors
• Consumption: Lamps, water pumps

Solar energy can be used for domestic purposes, telecommunications, public illumination, water pumps and myriad other applications.

The National Association for Solar Energy (ANES) presented an important proposal on the potential of solar energy to create electric power. The result was explained this way--that if we were able to convert only 1% of the solar energy that falls on national territory into electric energy, we would be able to produce--in just one day--the total electric energy consumed in the year 1996.

Barriers to the Development of Solar Energy

There are identifiable barriers that have obstructed the development of solar energy in Mexico:

• Ignorance
• Legislatures
• Lack of investors
• Insufficient technologies
• Availability of the wind resource
• Electric tariffs

Conclusion

The perspective on the future of renewable energies, especially in the solar field, is to strengthen the attraction of private investment. In addition to this, the creation of specialized labor is needed and strong emphasis has to be placed on the care of the environment by auto suppliers vis a vis use of solar energy.

NAFTA includes a commitment among its three members for a solid application of municipal rights and this is certainly applicable for its correct application to natural resources.

We have to start looking at renewable energies as a profitable action.