Interview: Angélica Ruíz Celis
What is the relationship between state-owned organisations and private companies in the wake of reforms across the sector?
ANGELICA RUÍZ CELIS: Since the promulgation of the energy reform in 2013, the Mexican government has opened up the market to new key players and investors. Several companies have already signed memoranda of understanding with the Federal Electricity Commission in order to co-develop wind projects and establish a positive and profitable relationship. In addition, energy firms keep exploring new areas of collaboration and generating different opportunities with the aim of reaching Mexico’s ambition to generate 35% of its electricity through renewables by 2024.
How is the second electricity auction expected to impact investment and production levels?
RUÍZ: Under the new regime, Mexico has been able to create a significantly more efficient and price competitive mechanism for energy capacity allocation. Over the last few years, around $6bn has been invested in renewable energy, a figure that is expected to double in the 2015-18 period. The impact of the sector on Mexico’s economy is becoming highly relevant as it is attracting foreign direct investment. This also helps to modernise the country’s infrastructure, reducing Mexico’s dependency on fossil fuels. Likewise, Mexico has outstanding wind energy potential that could reach approximately 50 GW. Considering that the government would only need 17 GW to meet its clean energy target, it is fair to say that Mexico could reach this goal through increasing its efforts.
To what degree could wind energy contribute to expanding electricity access to remote areas?
RUÍZ: Wind energy has the potential to become an important source of development for the southern states. Tamaulipas is an interesting region for the wind-power segment. Vestas has been the only original equipment manufacturer to build wind power plants in that region, which attracts new types of investment and incentivises the development of necessary infrastructure such as roads.
Currently the company counts 300 MW of installed and under construction capacity in Tamaulipas. The development of wind farms like this will contribute to the creation of new jobs in the regions and their surrounding areas. Recent projects have included the opening of new plants and wind farms in Oaxaca and Chiapas as well.
What are some of the concerns and expectations being expressed regarding the third electricity auction organised for 2017?
RUÍZ: The current political and economic uncertainty caused by the results of the US presidential election might reduce investment levels in Mexico. One of the main concerns among the involved actors is how to assure that the same levels of development could be maintained with the significantly lower purchasing power parity levels of both solar and wind projects. The lack of infrastructure is also a challenge, particularly in those areas where electricity is needed the most but basic infrastructure is lacking.
After the recent increase in electricity costs, to what extent could wind energy help lower electricity tariffs for industry and households?
RUÍZ: It has been largely proven that wind energy is competitive. Auctions are efficient mechanisms that help allocate low-cost electricity. Since developers face strong price competition, costs tends to decrease. The second Mexican auction held in 2016 is a clear reflection of this, as wind prices dropped to record low levels of $32 per MWh. It has been proven that wind energy can be as competitive as solar energy and that it has the potential to become reliable and economical both for industry and end consumers.
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