Brad Donovan
Honorary Consul General
Iceland in Mexico
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View from the Top

Iceland Eager to Help Mexico Develop Its Geothermal Resources

Wed, 02/24/2016 - 18:39

Q: How can the Icelandic geothermal model serve as an example for Mexico as it begins to develop its own geothermal sector?

A: We have faced so many challenges that we have overcome, and sharing those experiences with Mexico is a great pleasure because it helps speed up the process of geothermal development. The electricity produced from renewables in Iceland is 20 times the domestic demand, and geothermal energy has changed the economic landscape of the country and created not only a high standard of living for its citizens but also an environment conducive to indirect exports. The steel and aluminum factories are benefitting from low electricity prices, attracting indirect exports and creating employment, which leads to an enhanced quality of life. This goes beyond just technology, risk mitigation, and finance, and leads to the main agenda and the ultimate goal of the Energy Reform, which is communal development of the country.

Q: What actions should the authorities take to further promote the development of the geothermal sector?

A: The government is currently doing well, taking advantage of a dynamic time with results that will emerge in the medium- and long-term. We were able to communicate with the Presidency, Congress, and the Senate, and all levels were extremely effective in the reengineering of CFE with a reinvigorated CRE and the new system operators, CENAGAS and CENACE.

The structural work has been carried out at the federal level and now the implementation must be passed down to local levels. I suggest states within Mexico set up energy boards whereby we can replicate models not only for investments in energy, but also the universal economic implications arising from those developments. Those boards will be able to attract investment, carry out the necessary training, and act under the auspices of this new legal body. First and foremost, we need to promote this practice in an intelligent way that protects the local population, whether that be through royalties or production sharing contracts, or through simple job creation and training. The commissions will be in charge of ensuring that the benefits of the Energy Reform trickle down to the appropriate segments of the population locally.

Q: How can the geothermal energy sector ensure compliance with environmental regulations?

A: Let us use the current example of Iceland. As of January 2015, if a geothermal facility falls out of the safety and environmental parameters, it is shut down that same day and it does not reopen until it meets compliance requirements. Therefore, there is no doubt in the minds of the constituents that the environment is being respected. Prior planning is the key to integrity for the environment and performance of the economic model. Again, we have so much experience in geothermal that there is no reason why there should be any form of environmental disaster occurring in Mexico as a result of exploiting geothermal energy. If we treat the communities with respect, I believe they will embrace this power concept and economic development mechanism.

Q: Where will geothermal find its strength in Mexico’s renewable energy mix?

A: That will be led by the data. There is such a wealth of statistics about proven geothermal resources, and so we are going to pursue those and develop them under the auspices of the federal government of Mexico with the interest and contribution of the domestic and international investment community. It will be a natural progression given that so many studies have been done. The more renewable energy we can introduce into the grid to help meet the president’s goal of renewable energy content, the better.

Q: What does the geothermal sector need to thrive in Mexico?

A: Honestly, I think all of the elements are in place for this sector to finally flourish. Mexico has significant potential for geothermal, and there is so much research being conducted in the country as well as sizeable amounts of implementation. Finance and technological experts are looking to enter Mexico to take advantage of the new legal framework. In addition, the new planning schemes for the transmission network will certainly help in the development of the geothermal industry, with mechanisms like the Geothermal Risk Mitigation Fund playing a crucial role. All of the pieces are in place; it is up to us to simply put them together.