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While Less Mature than US Market, Mexico Wind Expected to Grow

Wind energy in Mexico should continue to show steady growth in the coming years, Agustin Valdivia of Virginia-based MPR Associates said during Renewable Energy World North America Conference and Expo in Orlando, Fla.

“The U.S. is a very mature market,” with a detailed regulatory regime and better wind and weather information, Valdivia said during a panel session.

Mexico’s wind market has grown from virtually nothing in 1994 to a pace that is expected to hit 1,560 MW, or roughly 3 percent of grid capacity, in 2014, according to Valdivia’s presentation. Valdivia, a senior engineer, works in renewable development out of MPR’s Houston office.

Growth prospects look good given 300 MW of average annual installed capacity in 2010?2013. There is much speculation about growth. Mexico had a development pipeline of 2,500 MW at end of 2012, Valdivia said.

“There are three main areas of good wind” — Baja California, Tamauilipas and Oaxaca, Valdivia said. “There are very good class 6 and class 7 winds in Oaxaca,” he said. About 90 percent of Mexico’s installed capacity in based in Oaxaca.

Two Spanish companies, Gamesa and Acciona, currently have a combined 65 percent of the Mexico wind turbine market although General Electric (NYSE:GE) is looking to expand there. GE currently only has about 1 percent of the Mexico market.

Wind development is generally coordinated through the Comisión Federal de Electricidad (CFE), which is the state-owned electric utility in Mexico.

Early stage site selection is complicated because the national power company makes little grid information available for national security reasons. As a result it’s more difficult to identify favorable points of interconnection than in the United States, Valdivia said.

On the plus side, CFE inherits the point of interconnection substation/switchyard; and is motivated to get it right, Valdivia said.

Some “self-supply” agreements are also created, often through consortiums formed by independent power producers and off-takers, Valdivia said.

Power purchase agreements (PPAs) tend to run 15-to-20 years, similar to the situation in the United States.

Market opportunities can be found through high CFE tariffs, ranging from $97 to $245 per MWh, Valdivia said. Off-takers can choose between CFE or self?supply schemes, he added.

Some big companies in Mexico, such as Cemex and Wal-Mart, have elected to self-supply wind power projects. 

As far as wind incentives there is accelerated equipment depreciation offered. There is also an “energy bank," Valdivia said.

On the downside, there are fewer meteorological stations available near potential wind sites. That can complicate early research and planning, he added.

Land acquisition can be complicated given that some municipalities have loosely defined boundaries. As a result, some developers help local governments and landowners resolve property rights. Site theft, targeting copper components, is a major and costly problem in Mexico, Valdivia said.

This article was originally published on GenerationHub and was republished with permission.

Lead image: Wind turbines via Shutterstock

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