Mexico’s Green Energy -Potential, Promise, Problems

By Randy Jackson

POTENTIAL

Few countries on earth have such an abundance of green energy potential as Mexico. The geography and geology of Mexico provides three substantial sources of green energy: solar, wind and geothermal.

Solar: Potential energy from solar projects seems obvious, with much of the country bathed in sunlight for a good portion of the year. Also, the lower the latitude, i.e., the lower the distance from the Equator, the higher the energy concentration of the sun. The northwest area of Mexico has the highest average number of days of sunlight in the country. The sunniest spot on earth is just north of Mexico, in Yuma, Arizona, and the surrounding areas stretching well into Mexico have a very high average number of days of sunshine. Days of sunshine, concentrated by lower latitudes, end up in a measurement called “insolation.” Insolation is a measurement of kilowatt hour per square meter, essentially a measurement of sunpower at a given location. All this leads to the calculation (using existing solar panel efficiency) that just 25 square kilometers of solar panels, were they located in the Sonoran Desert or the state of Chihuahua, would be sufficient to provide 100% of Mexico’s electricity demand.

Wind: Many of us who are familiar with Huatulco and the surrounding area know of the substantial wind energy facilities in the narrower part of the Isthmus of Tehuantepec. The Eurus Wind Farm in Juchitán de Zaragoza is the largest wind farm in Latin America. In Mexico overall, the states of Oaxaca, Yucatán and Tamaulipas all have locations with average wind speeds greater than 28 km/hour – 15 Km/hour is the minimum average speed normally required for a wind farm. Average wind speed is one determining factor for wind farms; the other is air density. Sea level locations, as at the Eurus Wind Farm, have higher air density when compared to higher elevations. This means the air has more mass, essentially giving the wind more power to turn a wind turbine. REVE, the Spanish wind energy magazine, reports that Mexico has wind energy potential of about 70,000 MWH (megawatt hours), about the total current electrical generating capacity in all of Mexico.

Geothermal: Mexico has 48 active volcanoes, a testament to the high degree of tectonic activity below the earth’s surface in Mexico (has anyone not experienced an earthquake in Huatulco?). Geothermal resources are most often found along tectonic plates where the earth’s magma is closer to the surface. This superheats rock that can be easily drilled into from the surface; water is then injected and the resulting steam drives turbines to create electricity. The world’s second largest geothermal power station is located in the state of Baja California, near the city of Mexicali. This location, known as Cerro Prieto, sits atop of a unique geological fault usually only found under the oceans. The Mexican ministry of energy envisions 1,670 MWH of electricity from geothermal plants by 2030.

PROMISE

Before hosting the 2010 United Nations Climate Change Conference in Cancún, Mexican President Felipe Calderón set out goals for Mexico to reach one-third of its energy from renewables by 2024. Some reforms and laws were initiated in Calderón’s term of office to move towards these renewable energy goals. In Mexico, energy is state owned and controlled.

Energy resource ownership, particularly oil but also electricity generation, is a sensitive national concern for Mexico. However, in 2013, President Enrique Peña Nieto was able to pass a reform that allowed private companies to participate in the energy sector, with the control, transmission and distribution of energy remaining exclusively within the control of the state. This initiative, followed up with specific regulations, allowed private investments in renewable energy projects to recover their investments over time, by selling electricity to the state owned CFE (Comisión Federal de Electricidad) under negotiated contracts.

These reforms and Mexico’s abundant green energy potential allowed many Mexican and international companies to step forward to propose and develop green energy projects. To facilitate these projects under state control, Mexico held three auctions to purchase renewable electricity under long term contracts; 41 projects were selected under the auction process. Solar energy projects accounted for 4,867 MW, wind energy 2,122 MW and geothermal 25 MW. In 2017 private investment in renewable energy in Mexico was $6.2 billion USD. Mexico seemed to be off to a good start towards its green energy goals.

PROBLEMS

In 2018, President Andrés Manuel López Obrador (often referred to as AMLO) was elected. Shortly after taking office, AMLO cancelled any future auctions to purchase green electricity by CFE. Then, in early 2020, under the guise of COVID-19 measures, Mexico changed the rules of how wind and solar projects could access the electrical grid. The new policy imposes a new requirement on developers of wind and solar projects to obtain a generation permit. These permits are subject to further regulations that prioritize CFE electrical generation from oil and gas electricity plants. These changes have raised international concerns regarding regulations that effectively cancel existing legal contracts. The European Union sent a letter to Mexico’s Energy Minister, Rocío Nahle García, saying the new rules would negatively impact 44 renewable energy projects and jeopardize $6.4 billion (USD) in renewable energy projects from EU companies. Bloomberg News reported March 16 of this year that the Canadian government expressed concern to the Mexican Economy Secretary, Tatiana Clouthier Carrillo, about stranding a potential $4.1 billion (USD) in renewable projects by Canadian companies. These concerns have also been expressed by the US and other countries using diplomatic channels.

The arguments made by the current Mexican administration in defending their change to regulation regarding private investments in the electrical energy grid are numerous. AMLO has suggested that corruption was involved in awarding some of the contracts to purchase electricity. He has also argued that the sporadic nature of renewable energy destabilizes the electricity grid. He also said there is just too much bureaucracy overseeing the energy sector in Mexico, and more central control is needed.

Some of these regulatory changes are currently being challenged in Mexican courts, so the final outcome is yet to be determined. However, the substantial green energy potential of Mexico is out there, available, awaiting the right political conditions for it to be harvested.

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