Mexico’s Reforms Promote Renewable Energy Production

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The 990-acre solar power installation includes 378,000-solar-panels. Photo by Kathryn Boyd-Batstone

Kathryn Boyd-Batstone / Rivard Report

San Antonio now has 161 megawatts of solar generation capacity within the city limits, compared to 117 megawatts in 2016

The bond between the United States and Mexico “is the most important relationship for the United States,” said Agustín Barrios Gómez, president of the Mexico Image Foundation and master of ceremonies at the Bi-National Green Energy Forum held at the Pearl Stable on Thursday.

Gomez cited that connection as key to development of renewable energies on both sides of the border.

Gomez was one of several speakers at the forum, hosted by the Asociación de Empresarios Mexicanos (AEM) , who focused on emerging business and investment opportunities resulting from energy industry reforms in Mexico, notably the opening of the nation’s energy markets to global investment. Prior to 2013, Mexico’s federal government controlled the generation and distribution of electricity through state monopolies that were ineffcient, corrupt and undercapitalized.

Speakers at Wednesday’s forum said the opening of the markets is crucial to Mexico’s goal of generating 35% of its total energy from clean sources by 2024, up from the current 25%, which will require the addition of 20 gigawatts of clean energy over the next 15 years.

Rolando Pablos, chief executive officer for the BorderPlex Alliance and a former Texas Public Utility Commissioner, participated in one panel discussion that looked at job creation along the border and the growing demand for more energy. His nonprofit consulting group focuses on the border cities El Paso and Ciudad Juárez and southern New Mexico. Pablos said 100,000 jobs have been created in and around Ciudad Juárez area over the last four years, with 10,000 jobs added on the U.S. side. Renewable energy, he said, can help meet the growing demand.

“You can imagine all that (growth) creates a strain on the grid,” he said.

Texas Tribune energy reporter Jim Malewitz (second from right) leads a panel about Texas and Mexico's mutual interests in renewable energies at the Bi-National Green Energy Forum at the Pearl Stable on Thursday, June 2, 2016. Photo by Edmond Ortiz.

Texas Tribune energy reporter Jim Malewitz (second from right) leads a panel about Texas and Mexico’s mutual interests in renewable energies at the Bi-National Green Energy Forum at the Pearl Stable on Thursday, June 2, 2016. Photo by Edmond Ortiz.

Pablos and his fellow panelists agreed that Texas, having applied solar and wind energy to the state’s electrical grid, which is not linked to a national grid, is a case study for growing green energy and partnership opportunities with Mexico.

Rudy Garza, vice president of government and regulatory affairs and public policy at CPS Energy, said San Antonio’s municipal utility is the single biggest buyer of solar produced power in Texas. CPS Energy currently has 300 megawatts (MW) capacity of solar power online, and plans to reach 450 MW by the end of 2016. By then, the utility will deliver nearly 500 MW of solar energy to customers and to the state grid.

“We’ve created a solar economy in San Antonio,” Garza said. While CPS Energy still provides mostly fossil fuel-based energy, “it made sense to diversify as environmental regulation comes down,” he said, adding the utility wants to reduce end-user costs in the long run.

Fellow panelist Kenan Ogelman, commercial operations vice president at the Electric Reliability Council of Texas (ERCOT), said that “there’s been a lot of change in the way people produce and provide electricity.”

Texas produces nearly 16,000 MW of installed wind capacity, the most of any state in the country. ERCOT has tried to stay atop of the growth of green energies — “intermittent renewable resources” in the words of Ogelman — by having a department dedicated to addressing related issues.

“It’s important we recognize the industry’s varying needs and technologies,” he added.

In opening its energy markets, Garza said, Mexico is not only opening itself up to more investments and business opportunities, but to innovation in producing and distributing renewable energy.

Pablos agreed. Leaders in Texas, as well as Washington D.C. and Mexico City are sending the right policy and regulatory signals to energy providers, producers and investors, he said. Those signals, Pablos said, include promoting sustainability, and infrastructure and workforce development  that helps attract investments in facilities that produce and distribute clean energy.

“One of the main reasons we have energy reforms in Mexico is to have reliable energy at low prices,” he said, adding that Mexico’s leaders want their country to be competitive in the global marketplace. “Having regulatory certainty is also important. We want to make sure Mexico sends signals that its regulations are fair, transparent and predictable.”

As far as regulations go, Mexico is working out how best to use regulations to help incentivize consumers and providers of different sizes toward renewable energies. Large electricity consumers must buy certificates to meet a federal obligation to get 5% of their energy from renewable sources by 2018. Such incentives played a role in Mexico’s successful first-ever private auction of contracts to produce renewable energy. In the auction held earlier this spring, Mexican energy developers won contracts to generate 1,720 MW, which in turn is expected generate more than $2.1 billion in investments by 2018.

“Our energy ministry updates its requirements every year,” said panelist César Alejandro Hernández Alva.

Alva, who oversees electric market analysis for Mexico’s secretary of energy, said such things as certificates and credits should help to promote the Mexican government’s eco-friendly attitude toward a reformed energy market.

“We are opening the markets with a green policy,” Alva added.

Fellow panelist Jose Zayas, a director in the U.S. Department of Energy, said the world’s 7.125 billion people have rising energy needs, but governments muist meet those needs while reducing their carbon footprint.

“We’re starting to see a distinct awareness that we have to transform and look towards a renewables policy,” he added.

Canada obviously must be part of a discussion of how to expand best practices for diversifying energy across North America, and find ways to make buying sustainable energy more cost-efficient, Zayas said.

“Canada is an exporter of energy. We’re a net importer, but we’ve realized we also need to look to the south (for help),” Zayas added.

Garza and Pablos repeated that sentiment in their panel.

“Mexico is our biggest trade partner,” Garza said. “We have a vested interest in their success.”

“The thing is, we are here talking about economic prosperity for our citizens – to create jobs, innovations and an exchange of ideas,” said Pablos. “Communication and coordination (on both sides of the border is) extremely important.

More than 150 people attended the forum. AEM’s Bi-National Energy Committee organized the event in partnership with the City of San Antonio, CPS Energy, the North American Development Bank (NADB) and other Mexican and U.S. groups.

 

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Top image: The 990-acre Alamo 7 solar farm has 378,000-solar-panels.  Photo by Kathryn Boyd-Batstone. 

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