Geothermal Power Becomes Pillar of CFE’s Clean Energy Strategy

To increase its clean power production capacity, CFE is betting on enhancing its geothermal energy project portfolio. By 2023, the state-owned company will allocate the largest percentage of investment for greenfield renewable resources to the exploration of geothermal sources. Nevertheless, CFE’s focus on combined cycle power production and its hydropower upgrade program continue to take precedence in CFE’s budget.

In 2023, CFE's greenfield investment projects in clean and renewable energies will focus on geothermal energy, where it plans to invest MX$1.5 billion (US$75.2 million). This positions geothermal energy as the state-owned company's main commitment to clean energy, displacing solar and wind-based greenfield development; According to information published in the draft of the Federal Expenditure Budget (PEF) 2023, CFE has at least 9 investment projects planned for the development of geothermal energy. Although the government suggests that the landmark 1 GW Puerto Peñasco solar park is already under construction, as it received a permit from CRE last week, it is unclear how this is reflected in the state’s budget.

The investment project with the most capital will be the "Pre-investment Study for the Development of Geothermal Areas" assigned by the Ministry of Energy (SENER) to CFE. The project will cost MX$343.4 million (US$17.2 million) and consists of studies on the exploration and drilling of wells in different geothermal areas to prove the existence of resources for power production.

The second project consists of 22 pre-investment studies for the development of seven geothermal areas located around the country. This item will have a budget of MX$170.4 million (US$8.53 million).

CFE will also invest MX$23 million (US$1.15 million) in the purchase of 225.4ha of land with geothermal potential in Puebla and Michoacán, and MX$9.3 million (US$465,934) in pre-investment studies for the Cerritos Colorados geothermal field in Jalisco.

In facilities, CFE will invest MX$13.9 million (US$696,396) in the Humeros II plant to develop, design and build a geothermal power plant with a capacity of 50MW. In the Azufres III plant (Phase I), the state-owned company will invest MX$33.9 million (US$1.69 million) to increase the installed capacity of the plant by 50MW.

Solar and wind energy were relegated in the budget, as only MX$16.7 million (US$836,678) appears to be invested in both types of generation during the next year.

Mexico has a strong renewable energy portfolio consisting of 7GW of solar, 7.7GW of wind and 976MW of geothermal energy, with ample potential to expand generation capacity in all three areas. According to the US Department of Energy, Mexico could feasibly develop another 2.5GW of geothermal energy.

"Mexico has strong potential to produce electricity through geothermal energy in the Baja California peninsula, similar to what the US is doing in the same region," explained Mark Riedy, Partner at Kilpatrick Townsend & Stockton to MBN. The prolific so-called Ring of Fire, located on the coast of California provides the excellent geological potential to develop such projects both in the US and Mexico.