Don’t miss out the opportunity to get the energy leaders’ insights on the main trends, developments, and investment opportunities regarding the Mexican energy and sustainability markets.

The restructuring of the electricity industry that Mexico is currently undergoing is designed to meet the increase in demand that CFE will be unable to cover alone. In 2014, the total energy generation in the country amounted to 258.25 million MWh, while the effective installed capacity amounted to 64,278 MW. In that year, 25% of the effective installed capacity came from renewable sources. In the next ten years, it is expected that demand will increase by more than 3.5%, which calls for the incorporation of an additional 38 GW by 2024. With the boost that the Law of the Energy Transition and the opening of the wholesale market are giving to sustainable energy sources, it is expected that a high share of the new energy infrastructure will belong to renewables. At this time, hydro is the renewable source holding the highest share of electricity production in the country. However, Mexico also offers important resources for other sustainable sources such as geothermal, wind, and solar.

Mexico's Energy Mix 2014

Mexico’s energy mix in 2014 (Source: MESR 2015/16)

Wind energy to become a leader in the renewable sector

The Mexican wind sector drew its first breath when a group of developers from Oaxaca noted that the legal and regulatory framework was not ready for renewable energies. From this stemmed a process of lobbying the federal government to truly consider Mexico’s wind energy potential and make the necessary changes. “Those changes in the legal and regulatory framework, coupled with increasing competitiveness of wind technology gave rise to the first large-scale wind projects, starting with CFE’s La Venta II in 2006,” says Leopoldo Rodríguez Olivé, Renewable Energy Manager for Peñoles and the former President of the Mexican Wind Energy Association (AMDEE).  The development of wind projects in Oaxaca also benefited from the Open Season Scheme, which helped to address the serious constraints that the wind sector was facing concerning transmission infrastructure.

Currently, Oaxaca remains the mecca for wind farm developments, but the presence of the sector is already expanding to other states. The regions with the most potential are numerous and include the Isthmus of Tehuantepec in Oaxaca, La Rumorosa in Baja California, the Gulf of Mexico, the Yucatan Peninsula, and numerous areas in the northern part of the country. The potential of those regions is expected to be exploited by CFE and several private companies, such as Gamesa and Iberdrola. According to Adrián Escofet, current President of AMDEE, investments in this sector are expected to reach US$14 billion between 2015 and 2018.

In the coming years, it is forecast that the potential of wind energy will continue to grow in the country. Mexico aims to reach 35% of power generation from clean energies by 2024, and it is estimated that 50% of this goal will be achieved thanks to wind energy. This is no surprise considering the maturity of wind-based technology, which makes it one of the most cost-effective renewable sources, as well as the wide availability of wind resources in the country and the strong position that the industry holds in the national market, including a vast presence of manufacturers and project developers.

Wind installed capacity development and outlook (Source: MESR 2015/16)

Wind installed capacity development and outlook (Source: MESR 2015/16)

The untapped potential of solar

Solar is one of the most popular renewable energy sources in the world and already holds an important position in different countries, such as Germany. However, in Mexico, solar energy has not yet managed to take off completely despite the high solar irradiation levels that the country receives. In the last five years, the Mexican PV sector has been growing primarily in the residential sector. Nevertheless, the completion of Aura Solar I and the advancements of Tai Durango indicate a promising development of large-scale solar energy projects in the future. Moreover, the decreasing cost of PV technology is incentivizing the use of solar energy not only in residential segments but also in industrial and commercial sectors.

This year, Mexico has made important advancements in promoting the development of renewable energy, like the issuing of CELs, which are expected to boost the renewable market including the solar energy sector. However, the country has also taken a step back by approving a tax of 15% for imported solar panels, placing solar energy in a disadvantageous position. Still, the country’s classification as one of the five most attractive countries to invest in solar energy, and the fact that it remains the primary producer of solar panels in Latin America, provides hope to the sector. The Ministry of Energy has forecast that the participation of solar energy in Mexico’s energy mix will account for only 1% to 2% by 2026. Nevertheless, the significant potential of solar energy in the country and the lowering costs of the technology may result in a higher participation for the future.

Map showing the large-scale solar PV projects planned in the country, with capacities higher than 1MW (Source: Latin America PV Playbook)

Map showing the large-scale solar PV projects planned in the country, with capacities higher than 1MW (Source: Latin America PV Playbook)

Sources: Forbes Mexico, El Universal, MESR 2015/16, MESR 2014

#MEF16 will focus on a wide range of topics, including the development of the wholesale electricity market, the future of the energy matrix, project development and financing, the regulations regarding clean energy certificates, opportunities and trends in the natural gas transportation and power generation segments, and the development of talent for the electricity industry.

If you wish to be part of Mexico Energy Forum 2016, please contact Ana Cristina Garantón at ac@mexicobusinessevents.com or visit the Mexico Energy Forum website to register.

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