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Irina Slav
What I Cover Irina Slav has been writing about global energy markets since 2007, covering the oil and gas industry, energy security, commodities, and the…
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Mexico’s state power utility is today set to greenlight as many as 60 alternative energy projects, most of them solar, that should add 8.2 GW in new generation capacity to the country’s total, according to an unnamed source that spoke to Bloomberg. The total investment in these projects could reach $12.5 billion.
The projects set to be approved by the Federal Electricity Commission today may end up being fewer than 60, another source told Bloomberg, also wishing to remain unnamed. However many do get approved, they will go towards reaching a target of around 32 GW in new power generation capacity by 2030, according to plans laid out earlier by President Claudia Scheinbaum. Of those 32 GW, some 70% were seen coming from alternative energy systems such as solar and wind. According to the Bloomberg report, however, the share of alternative energy in the total new capacity has consequently fallen to around 30%.
“Mexico not only has oil: it has sun and wind, clean energies that allow for fewer environmental impacts,” the Mexican president said earlier this year, in February. “We are working on the energy transition: moving toward greater participation of renewable energy sources in the electricity we consume. And that is the most important objective between now and 2030.”
Judging by events in Europe, where electricity prices tend to be the highest in countries with the greatest wind and/or solar generation capacity, the energy transition’s effects may not be as clear-cut and straightforward as many believe, but it is a fact that Mexico has plenty of weather resources, so to speak, and has underutilized them so far.
The government is working to change that already. Earlier this month, the energy ministry reported there were 42 solar power projects with a combined capacity of 6.86 GW in the pipeline, along with 13 wind power projects with a combined capacity of a little over 4 GW. The Federal Electricity Commission has participation in around 70% of that pipeline, PV magazine reported. Another 4.44 GW of solar projects are awaiting allocation, as are2.16 GW of wind capacity, the report also said.
Wind and solar are a priority area for President Scheinbaum’s energy policies, which feature a bigger role for private companies in Mexico’s energy sector. Indeed, the current administration has stipulated that the state utility should generate at least 54% of the country’s total electricity, but the other 46% is available to private generators. As a result of these reforms, energy minister Luz Elena Gonzalez said private companies were ready to invest $4.75 billion in building 3.32 GW of alternative generation capacity in 20 separate projects.
There are hopes that the addition of more wind and solar capacity would strengthen the grid, which has been vulnerable to blackouts for years. However, those blackouts tend to be related to weather phenomena, such as thunderstorms, which bear no relation to the type of generation capacity in the area. Moreover, the final price tag of the new capacity may end up being higher due to the need to also add transmission lines to carry the electricity from wind and solar installations to demand centers.
The alternative energy push, however, is not coming at the expense of Pemex and Mexico’s oil and gas resources. In fact, President Scheinbaum appears to be pursuing an all-of-the-above approach to energy security, with growth in oil production also among her government’s priorities, to 1.8 million barrels daily by 2030. The focus on electricity generation growth appears to be greater: the government targets a 140% increase in solar capacity, 90% growth in geothermal capacity, and a 70% increase in wind capacity over the next four years.
By Irina Slav for Oilprice.com
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