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News Article

For Mexico’s Energy Storage Development, The Time is Now

By Pedro Alcalá | Thu, 03/10/2022 - 16:47

As Mexico’s generation capacity continues to increase at a pace that its transmission infrastructure cannot keep up with, the development of storage infrastructure becomes even more urgent if the Mexican electricity system is to function efficiently and reliably, agree industry experts.

Carla Ortíz, Country Manager, RER Energy Group, highlighted that the relevance of storage discussions in the industry has never been as high as it is now, especially since storage project development is understood as a vital part of the global energy transition. “We have waited a long time for this great leap forward in the energy transition, which is now beginning to gain momentum in Mexico,” said Ortíz. She also mentioned that the development of demand for such infrastructure is a process that other countries have already experienced organically. This gives Mexico a chance to learn and get ahead of the demand, which will inevitably show up if it does not exist already. As Ortíz put it, “Other countries have invested a lot of time to perfect their storage systems. If this knowledge is exploited, the learning curve for Mexico could be shorter and more efficient.”

Emmanuel Moctezuma, Energy Storage Business Development Director, AES, specifically noted Chile and the US as success stories. He differentiated between the construction of large scale-storage projects and the participation of Mexico in the supply chain of storage components, specifically the lithium required for battery technology. “There is an opportunity for lithium batteries to be manufactured in Mexico, although it will take some time for the country to reach the level of competitiveness we are seeing at Asian manufacturers,” said Moctezuma. He made a parallel between battery and solar panel manufacturing. Mexico’s manufacturing capability for both types of components is slowly growing toward the competitiveness of products from Asian markets, a benchmark they are fated to reach. Moctezuma also noted that battery storage projects were essential to meeting decarbonization goals, a fact that will become increasingly clearer as the economics of launching these projects start to look plausible. “As the costs of storage systems decrease and their efficiency increases, it becomes clear that batteries are a great ally to achieve decarbonization,” he said.

Alexandro Debler, Sales Director Industrial Power Generation, Siemens Energy, agreed with Moctezuma. He argued that Mexico must begin boosting the competitiveness of its nationally manufactured battery products. “The implementation of battery storage, both in existing power production projects and in the industrial future, is the potential energy area with the greatest benefit for Mexico,” he emphasized. Debler said that battery storage created a new way of managing costs for operators, since energy could be bought at lower prices and sold when prices increased. While lithium is currently the leading energy storage technology, hydrogen would end up being the industry standard as its use continued to expand globally, predicted Debler.

Patricia Tatto, Americas Vice President, ATA Renewables, underscored the fact that energy storage is key for renewable energy generation due to the role it plays in flattening and stabilizing these peak-prone energy sources: "Regulating the frequency of the electrical system and guaranteeing the reliability of the grid are priorities for Mexico,” she said. Debler agreed, adding that “the implementation of batteries is not only attractive to combat intermittency in renewable energy, but can also help in geothermal energy generation and in the frequency regulation of the power grid.” Tatto also expected automation technologies to play an increasingly larger role in the development of storage projects. Through these tools, electrical grids can be stabilized further via the prediction of peaks, which in turn makes the grid more efficient and resilient. 

Miguel Osio, Director of Development and M&A, Sempra Infrastructure, highlighted one of the most important larger-scale storage projects in Mexico, the Volta de Mexicali (VDM) power plant. Though it is located in Baja California, the project actually supplies energy to the US-side of California, using its first phase featuring a 100MW capacity. In the future, the project could grow as large as 500MW. Osio mentioned that VDM exemplified a key trend: "the energy future is based on renewable energies, such as wind and solar PV Generation.” As such, storage is increasingly needed to inject much-needed flexible power into the grid. He noted that one of the most important obstacles standing in the way of storage development in Mexico continues to be the legal and regulatory certainty of projects. “Hopefully, we will soon have clarity from the authorities regarding regulation, so storage projects can take off,” said Osio.

Pedro Alcalá Pedro Alcalá Senior Journalist & Industry Analyst