The State of San Luis Potosí welcomes large renewable energy investments

Alongside its focus on regenerating Mexico’s hydrocarbons industry, the administration of Andrés Manuel López Obrador has set the target of deriving 35% of the nation’s energy from renewable sources by 2025. However, Juan Pablo Torres Barrera, president of the state industry group Industriales Potosinos, said at the July 2019 Business Forum on Renewable Energy in San Luis Potosí that this target should be met nationwide by 2021. According to a 2018 report on the first half of the six-year term of the state’s Secretariat of Economic Development (Secretaría de Desarrollo Económico, SEDECO), investment totalling MXN16.8bn ($868.7m) drove renewable energy output to 970 MW across the state, and this had increased to 1070 MW by July 2019. Maricela Valencia, commercial director of the Logistik Industrial Park in the south of the capital, told OBG that energy prices are stable in the state and there is healthy competition among providers.

Solar 

In early 2018 Spanish solar company Iberdrola began the construction of its largest-ever solar power plant on an area of 750 ha in San Luis Potosí’s Villa de Arriaga municipality. Now complete, the plant has total installed capacity of 170 MW – capable of supplying power to 138,000 homes – and currently produces at a rate of 460 GWh per year. An initial investment of around $200m was announced for the plant, forming a part of the company’s global 2018-23 investment plan that will see a portfolio of $2.8bn worth of projects. The final investment totalled more than $250m and approximately 750 workers participated in its construction, the majority of which were local employees.

Wind

Other renewable energy sources have also gained a foothold in the market. The Dominica wind farm in the municipality of Charcas, to the north of the state capital, was commissioned in 2014. Operated by a subsidiary of Enel, an Italian multinational energy company, the facility has an output capacity of 100 MW generated by 50, 2-MW turbines. The firm has purchasing agreements with US manufacturer Delphi Automotive and CitiGroup’s Mexican subsidiary Citibanamex. German appliance manufacturer Bosch, which has a large facility in San Luis Potosí’s industrial zone, derives 80% of all energy needs for its Mexican facilities from the Dominica wind farm. This supports the company’s aim of being carbon neutral worldwide in 2020, a goal announced in May 2019.

Hydrocarbons 

Despite the progress made in renewables, fossil fuel extraction and use continues to grow. In May 2019 the National Hydrocarbons Commission granted permission for extraction at the Ébano oil and natural gas field in the far west of San Luis Potosí, shared by the states of Tamaulipas and Veracruz. The reserve is expected to deliver 644bn barrels of oil and 11bn cu feet of gas for an estimated $3.7bn. That same month US firm Watco announced its intent to build a storage and distribution facility in the World Trade Centre Park in San Luis Potosí. Set to open in the first quarter of 2020, the site will receive gasoline and diesel from the US for distribution throughout Mexico, and allow for the storage of up to 300,000 barrels.

Growth Potential

Renewable sources continue to offer opportunities, as just 10% of businesses in San Luis Potosí used renewable energy as of mid-2019. This share is growing, however, with the state’s BMW plant installing solar panels on 71,000 sq metres of its plot during the first half of 2019. In addition, in November 2018 Fomento Económico Mexicano, a beverage and retail multinational that holds ownership of Oxxo and Coca-Cola in Mexico, announced that it is aiming to have at least 85% of its energy use generated by third-party providers using renewable sources in 2020. The goal is to be reached by purchasing energy from wind farms in San Luis Potosí, Oaxaca, Coahuila and Nuevo León.

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The Report: Mexico 2019

San Luis Potosí chapter from The Report: Mexico 2019

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