Concentrated Solar Power Now Reality in Mexico

Q: What are the main opportunities that Abengoa sees in Mexico, and which unique strengths do you bring to this market?

A: Solar energy is inexhaustible and investing in research, development and innovation (R&D+i) is the base of success for any technological company. Following this piece of advice, Abengoa’s strength has been its vertical integration in terms of engineering technology, used within the context of a global strategy powered by clear local understanding. Mexico has excellent solar irradiation levels across great parts of its territory, especially in its northern regions. The irradiation levels in certain regions are among the highest in the world, reaching up to 2.800kWh/m2 of direct annual radiation.

Q: What has been the experience of working in Mexico compared to other countries in which Abengoa has developed projects?

A: Initial support for the solar industry in a country is key for its future growth. To attract the required investment, a convincing and well-defined set of measures is necessary. According to our experience in other countries, Mexico should develop independent tenders for each renewable energy source. In independent tenders, the government defines a specific capacity to be satisfied by each renewable source in order to achieve the energy mix defined by the National Energy Strategy. The construction and operation of power plants would then be granted through such tenders. Furthermore, the government would establish a tariff cap which would guarantee competitive rates. Tender participants would have to fulfill a series of requirements, such as investment capacity, and construction and operation experience. Certain conditions would be set to avoid future problems in the project, such as having location with sufficient evacuation capacity. A long term PPA with a public company also assures the contract will be fulfilled. These mechanisms have been successfully applied in countries such as South Africa and Israel, and would help Mexico make a real commitment to solar.

Q: What are the respective roles of solar thermal and photovoltaic technologies in the development of a country’s solar industry?

A: Both technologies are necessary for the development of the solar industry in Mexico. Thermal solar technology is an ideal solution for large-scale plants due to its hybrid capacities, which allow it to be used with other renewables or with conventional plants. Its facilitation of storage also allows a plant to adjust its energy production to electric demand or to produce energy for 24 hours a day. PV technology is ideal for medium-sized plants and for distributed production. It produces clean energy at a low cost but is still intermittent. Initially, Abengoa focused its R&D+i efforts in CSP technology, but today we are a reference in PV as well.

We can develop solar projects or hybrid projects that also make use of fossil fuels such as natural gas. Solar technology is compatible with traditional technologies, and at the end of the day a country needs a diversified energy mix with renewable sources that can lower CO2 emissions. The key to the development of CSP has been thermal energy storage. Some solar plants in the US have storage capacity for 6 hours, and one solar plant in Chile has storage capacity of 17.5 hours. Through this storage capability, solar power is no longer intermittent, which gives CSP a clear advantage.

Q: How do you convince clients, financial institutions and off-takers that CSP is competitive in a market that has mainly focused on PV?

A: We have made advancements in storage capacity, and costs are being lowered due to accumulated expertise and investments made in CSP. We have been able to position CSP as a convenient alternative for traditional energy sources and that has the capacity to play an important role within the energy mix of different countries. The development of CSP helps the industrialization of certain regions of a country, while PV modules have practically become a commodity. However, CSP and PV are complementary. The government’s capacity to incentivize these technologies, the technical capacity of the developers, and being attractive to financing are all essential. Small and big companies are compatible in a market but it is clear that the market has to be opened by big companies.

Q: What are Abengoa’s priorities in the development of new technology?

A: No company can have a future without investing in this area. It is through R&D+i that we differentiate ourselves and become more competitive in the race against conventional energy. Today, Abengoa is the only technology company that masters all solar technologies and has a clear positioning in terms of innovation, thanks to its two globally recognized R&D centers in Denver and Seville. Among our new developments is high concentration photovoltaic energy (HCPV), which moves away from silica and is based on Fresnel lenses. HCPV promises to be an important technology for the future, and will be ideal for the Mexican market due to the country’s high irradiation.

Q: What are the highlights of the development of the hybrid solar power plant in Agua Prieta?

A: Agua Prieta is a reference for Mexico and Latin America, since it is the first solar and gas combined cycle plant developed in the region. Abengoa built this 12MW CSP plant for CFE, and the project was developed with a US$50 million subsidy from the Green Climate Fund. The hybrid technology allows the use of two abundant resources in Mexico and combines the benefits of cheap natural gas and zero CO2 emissions.

Q: How do such combined cycle projects compare with projects that are 100% renewables?

A: A hybrid plant is not completely renewable but it is a great opportunity to increase clean generation in countries where funding mechanisms for renewable energies are still not available. The consumer gets a cleaner energy at a lower cost. CSP is the only technology that can be hybridized in this way.

Q: What are the ambitions and possibilities for new projects in the Mexican energy market?

A: Our objective is to turn Mexico into an energy development pole and a reference in Latin America. Aside from environmental benefits, the construction and operation of solar plants generates considerable economic benefits, diversifies the energy mix, and helps the country become energy independent. It engages major Mexican companies that can complement the knowhow of international players. It will spur the development of a manufacturing industry for the exporting of solar equipment. Abengoa is already doing this; some of the parts we produce in Queretaro are used in our 100MW CSP plant in Abu Dhabi. Finally, it creates jobs for qualified personnel in the construction of plants, manufacturing of components, and in operations and maintenance.