Bridging the Gap Between State and Federal Governments
STORY INLINE POST
Q: What context necessitated the creation of Hidalgo’s Energy Agency?
A: Every energy project has a territorial impact that will encroach on municipal spheres. Given the many administrative procedures related to permits for construction, land use and rights of way, the need for a governmental agency to cover these issues locally became urgent. With the creation of legal frameworks such as the Organic Law of the Hidalgo Energy Agency as well as the Law for Sustainable Energy Development, the state was given several faculties and objectives to fill the gap in the collaboration between the federal and state entities. At the Energy Agency, our goal is to support successful projects that lead to a win-win situation for both the federal government and the state.
Q: What characteristics position Hidalgo as a leading destination for energy investment?
A: The state has always been involved in the country’s energy industry. Important projects like Zimapan’s hydropower dam and Miguel Hidalgo’s thermoelectric plant, with 292MW and 1605MW of installed capacity each respectively, positioned Hidalgo as one of the states with the highest primary energy generation at a national level. Due to this growth, many gas pipelines, polyducts and transmission lines travel through the region. For renewables, this is a great advantage as the presence of transmission infrastructure defines where a project should be located. In addition, Hidalgo is located at a very good altitude. Solar panels work at specific temperatures, whereas hot environments can affect performance. Hidalgo’s position at 2,000m above sea level, added to a solar insolation of 5.7 hours per day, creates the perfect conditions for achieving maximum efficiencies. Companies like SunPower and Atlas Renewable Energy have seized this opportunity. The latter inaugurated Nopala’s 129-MW Guajiro Solar Plant in 2Q19 to become the first auction project developed in the state. Tula’s refinery has also catalyzed the industry’s growth, as many companies have developed fuel storage facilities around this project. Mexico’s fuel reserves are under the minimum requirements outlined by the OECD. From a logistics standpoint, Hidalgo is as a strategic location to store this commodity.
Q: What specific actions is the agency taking to turn these advantages into profitable businesses?
A: The agency has developed an energy development plan to identify priority segments for investment. We have updated our energy balance and some of the results suggested that while Hidalgo has a good electrification infrastructure, its natural gas levels are under the national mean. Our goal is to take advantage of the pipeline network that passes through the region and develop branched systems, considering the construction of a combined cycle plant on our doorstep. The exploitation of water basins is another priority because we believe these are a good alternative for energy storage purposes and can balance renewable intermittency.
To attract corporate users, we are also supporting the development of PPAs by prioritizing companies that are generating value in the state through renewables. Industries such as mining, pharmaceuticals, breweries, metal-mechanics and distribution centers for heavy industry have immense potential in this area. In addition, we are seeking to create a sustainable mobility cluster in Sahagun city, where the automotive industry is quite developed. The value chain for EVs is different from that for internal combustion engine vehicles. Companies like Dina, Bombardier and Giant Motors are already developing this technology.
Q: What will be the state’s energy priorities in 2020?
A: What differentiates Hidalgo from other states is our legal certainty, as we ensure that every project is efficiently developed. For instance, the second largest beer factories at a global level was constructed in the state without a single problem from a social perspective. As we work closely with the federal government, companies willing to invest in the state can have the confidence that this path has already been paved. We want to consolidate energy projects where the agency holds a relevant participation. Given the faculties provided by Hidalgo’s legal framework, the agency promotes the creation of specific-purpose companies. Many foreign businesses hire consulting services to develop their operations. Our proposal is to support entrant companies with the related intricacies that every project presents. Since the government is involved, this provides certainty for long-term investments.
The Energy Agency of the State of Hidalgo (OECD) is an agency taking care of legal frameworks regarding energy in Hidalgo, aimingg to fill the gap in collaboaration between federal and state entities.