Government Actions to Promote GeothermalWed, 02/19/2014 - 16:10
Q: What role does AGM aspire to play in developing the geothermal sector?
A: AGM is a civil association that is affiliated to the International Geothermal Association and was founded in 1991 with the objective of reinforcing academic, scientific, industrial and technological collaboration between the national geothermal community and international institutions. Its goal is to promote and inform about the development, exploitation and research activities of the geothermal energy sector in Mexico. AGM has become an analysis and discussion forum that allows the exchange of knowledge and experience between its around 100 members.
Q: How has private participation evolved in the Mexican geothermal sector?
A: For many years, the participation of the private sector in the geothermal industry was zero or limited to public work contracts or engineering services. The development and execution of the geothermal projects have been dominated by CFE. After the publication of the Law on the Use of Renewable Energies and the Financing of the Energy Transition (LAERFTE), and the objectives established by the federal government to increase the participation of renewable energy in Mexico’s energy mix, the private companies have developed a keen interest in the geothermal sector. Even though no commercial geothermal project is in operation yet, the first efforts of the private participation in geothermal exploration are starting to be noticeable.
Q: How can the legal and operating framework be improved to make the sector more attractive for private investment?
A: LAERFTE states, among other clauses, the obligation SENER has to create a Special Program for the Use of Renewable Energies, as well as a National Strategy for the Energy Transition and the Sustainable Use of Energy. In the case of geothermal energy, regulation is almost inexistent. There are a few articles in the National Water Law that mention geothermal energy, but we need to adopt models of other countries to efficiently regulate the resources and give legal certainty to future developers and to CFE. There is a lack of awareness about geothermal energy, meaning that obtaining the right paperwork becomes difficult and is a drawn out process. We need to create a dedicated team, possibly within Congress Energy Commission, to regulate the future use of geothermal energy in order to exploit it in a sustainable manner. There is practically no investment in the Mexican geothermal sector due to the lack of legal certainty among investors. Somebody within the government needs to take charge of this.
Due to the high risk involved at the initial stages of developing geothermal energy resources, the government has focused more on solar and wind energy. While these renewable energy sources require only short periods to evaluate the potential resource and to build a power plant, developing a geothermal project takes between five and seven years. Nevertheless, the government is interested in geothermal energy as a base load energy source with a high plant factor, offering long-term reliability and profitability.