Wind Power Opportunities in Mexico

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With recent developments in the region, the wind is certainly blowing in favour of wind power projects in Mexico. The country’s wind power market has seen remarkable growth; expanding from virtually nothing in 1994, Mexico is poised to cross 1,560 MW next year, which is around 3% of grid capacity. An increasing number of wind power opportunities are coming up on the Mexican horizon, attracting an eclectic group of stakeholders from within and outside the country.

The Mexican city of Oaxaca is one of the three major areas of good wind. In addition to having around 90% of Mexico’s installed capacity, Oaxaca has class 6 and class 7 winds. It will not be outlandish to predict excellent growth opportunities in the country. In 2010 Mexico had an average annual installed capacity of 300 MW. By the end of 2012, the country had a development pipeline of 2,500 MW.

65% of Mexico’s wind turbine market is held by Spanish companies Gamesa and Acciona. The US electricity giant General Electric is also planning to expand its operations in Mexico. GE presently has approximately 1% of the Mexican wind power market.

Mexico’s state-owned utility Comisión Federal de Electricidad (CFE) coordinates wind power projects. Due to national security concerns, the government does not provide a lot of grid information to companies and developers. This makes the initial site selection is a somewhat complicated process, which makes it harder to identify favorable connection points in Mexico as compared to in the US. Nonetheless the CFE, which inherits the substation interconnection points, is very much committed to facilitating project developers.

An alternative funding model known as “self-supply” has also emerged that enables energy developers to enter lucrative agreements with non-state companies, generally via consortiums comprised of independent power producers. These agreements can run anywhere between 15 and 20 years, much like the agreements made in the US.

Interested parties can identify opportunities in Mexico’s wind power market through CFE’s high tariffs running between $97 and $245 per MWh. The self-supply model had also attracted large companies such as Wal-Mart and Cemex which have chosen this funding model for wind power projects.

A wind energy company connected to San Diego has also entered a deal for supplying electricity to two Volkswagen auto plants in Mexico. This deal indicates the encouraging opportunities for renewable energy prospectors in the area. Headquartered in Baja California, Mexico Power Group signed an agreement in September to provide wind-generated electricity to Volkswagen’s assembly and manufacturing facilities in Puebla and Guanajuato state respectively.

The electricity will be generated on a new wind farm located hundreds of miles away in Zacatecas state. Back in 2010, Mexico had introduced generous transmission rates for renewable energy projects. This will hugely help the new wind-energy agreements.

Volkswagen’s utilisation of wind energy is in line with its ongoing efforts to reduce its carbon footprint. Since this is something an increasing number of companies are interested in, Mexico’s wind power opportunities will continue to get more attractive. The global wind energy industry is beginning to recognise Mexico’s potential to become a powerhouse in wind energy development.

Energy reform will be discussed at the House of Representatives during next days. This Reform is mainly focused on oil and gas. However, the liberalisation of the electricity market under this Reform could allow to reach full potential of Mexico in the wind power generation.

Topics:  Energy, Energy Reform, Funding, Green Energy, Mexico, Power Grid, Renewable Energy, Volkswagen, Wal-Mart, Wind Power

Published In: Energy & Utilities Updates, Environmental Updates, Finance & Banking Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Alberto Esenaro, Alberto Esenaro | Attorney Advertising

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