Preparing a Hydroelectric Comeback

Just a few years ago, hydroelectric power was a front-runner for clean energy generation. The first long-term electricity auctions changed that and hydro now trails technologies such as PV and wind. Jacobo Mekler, President of the Mexican Association of Hydroelectric Power (AMEXHIDRO), says that initial costs are behind hydroelectric’s swoon. “Compared to PV and wind power generation projects, a hydroelectric project costs US$2.4 million/MW on average, while wind power requires US$1.2 million/MW and PV takes US$800,000/MW on average.”
Yet, when the long-term benefits are weighed, hydroelectric power provides the greater impact, Mekler says. “In terms of a local economic spillover effect, 75 percent of the investment in a hydroelectric project ends up back in the community. Wind and PV only generate 25 and 10 percent in local economic spillovers, respectively,” he explains.
Mekler adds that energy storage is more cost-effective when using hydroelectric power, a clear benefit considering Mexico’s efforts to increase its energy reserve capacity. “In addition to having much larger energy storage capacity, dams are the cheapest form of energy storage,” he explains. “This technology is not subject to a battery’s short useful life.”
AMEXHIDRO was founded in October 2009 to promote clean energy generation through hydropower projects across Mexico. “The association was created due to a felt lack of representation in energy policy,” says Mekler. “Few developers saw what the changes in the Energy Transition Law implied for hydroelectric power. The law defines hydroelectric power as renewable to a capacity of just 30MW.”
Mekler believes one way to promote the adoption of hydroelectric projects is to provide independent auctions for technologies that provide initial low costs as they essentially compete on different playing fields. “AMEXHIDRO wants technology-specific long-term electricity auctions where hydroelectric can participate and further contribute to the country’s energy mix,” he says. He adds that this technology is especially important considering many of Mexico’s primary hydric reserves are located in southern states, such as Oacaxa, Veracruz and Chiapas. He believes emphasis on hydroelectric power can be the catalyst for the development of the recently-created Special Economic Zones (ZEE).
The country’s new President López Obrador’s energy agenda and his desire to make Mexico self-sufficient in energy, could also pave the way for hydroelectric power. “A baseload renewable energy source such as hydroelectric can reduce natural gas imports, making it a champion of energy security and sovereignty,” he says. “We have emphasized this position before the Ministry of Energy, CRE and the Senate under President Peña Nieto.”
At the beginning of the previous administration, the outlook was much brighter for hydroelectric power. In 2012, former CFE employee Leonardo Ramos and academic Manuel Montenegro-Fragoso, published a book on the past, present and future of hydroelectric plants in Mexico (Las centrales hidroeléctricas en México: pasado, presente y future). In it, they estimated the country’s hydroelectric potential at 41,882MW of installed capacity. Today, the Ministry of Energy’s PRODESEN 2018-2031 estimates that hydroelectric will install an additional capacity of 2,213MW by 2031. Somewhere along the way, hydroelectric lost steam as the favored technology.
The previous government prioritized natural gas as a transition fuel to renewable energies but, according to Mekler, hydroelectric power was overlooked long before this. “From 1930 to 1990, the country consistently kept track of its nationwide inventory in hydroelectric potential by measuring its streambeds,” he says. “But throughout the 1990s, CONAGUA dismantled 70 percent of its hydric resource-metering capacity, to the point that we are unclear about the country’s power generation potential of its hydric resources.” As a result, figures in PRODESEN now differ dramatically from what CFE calculated in 2012. “Nationwide streambed metering activities should resume to truly gauge and capitalize on this resource’s potential,” he says.