Stability Can Help Neutralize HeadwindsBy Cas Biekmann | Fri, 03/26/2021 - 09:15
Uncertainty has taken root in Mexico’s wind sector but technology and sound project design can ensure a successful future.
PRODESEN 2020-2034 shows that Mexico’s installed wind capacity made up 5.88 percent of the total capacity in 2020. Of the total renewables capacity, wind represented 28.4 percent. As several wind farms become operational, the figures provided by PRODESEN are slightly behind: Zumma Energy Consulting highlighted this number at 6.69 percent in October of 2020. Even though wind energy did not grow as much as solar energy between 2018-2020, wind energy will remain a staple of Mexico’s energy mix. For the 2020-2024 time period, PRODESEN predicts wind energy to grow by 14.81 percent. It is expected to increase to 16.46 percent between 2024 and 2035.
Development of wind energy had been highly driven by Mexico’s energy auctions, which have been put on hold indefinitely. PPAs remain an option, although experts highlight that the uncertainty in the private energy sector caused by the López Obrador administration’s state-centric measures in the sector are scaring off companies that might be interested in these long-term commitments.
In 2020 these effects were not so prominent because most projects that were recently finalized happened years ago. Many companies were even busy, Country Manager Mexico of The Nordex Group Albert Sunyer told MBN. “This can perhaps be interpreted as a contradiction against what is happening in the market; nevertheless, most wind turbine manufacturers would likely say something similar. We are seeing the results of what has been done properly by our customers in the past two years.” Sunyer, however, does not expect this trend to continue, given measures pushed by López Obrador. “Following the policy changes the government is pursuing, it is unlikely that we will see similar results in the next two years,” Sunyer said, noting that the global pandemic has complicated business even further.
While development for the short-term might be decreasing, Mexico’s excellent fundamentals offer many benefits for the country’s companies in the future, believes Jack Weisz, Commercial Director Latin America of Onshore Wind of GE Renewable Energy. “We truly believe in the country’s potential because of the superb natural resources. There is a need to be a part of the energy transition that takes us away from fossil fuels. Even if this transition does not accelerate in the short term, we believe it will happen in the medium term.”
Weisz stresses that there many reasons to stay in the market, too. “We are seeing cases around the world where renewable energy can offer the most cost-effective solutions for a clean energy transition, plus the incredibly positive impact it has on the environment and sustainability in general. This has taken place throughout Mexico’s auctions as well, and we believe there will be great returns in the future. All of this means that we remain committed in Mexico and will stay engaged with our customers and different stakeholders because there is still significant development happening now,” he said.
Innovation Enhances Potential
Renewable technologies are still far from reaching their peak in terms of efficiency and levelized cost of energy (LCOE). Wind energy is no different, and various developments are pushing the sector forward. Yet, some components remain mostly the same, such as wind turbines. Why fix something that is not broken, companies rightfully argue. Therefore, innovations in the latest turbines are built upon existing platforms, expanding the capacity and increasing the size of rotor turbines.
One particular area where wind’s largest turbine developers are quickly improving nameplate capacity is in offshore wind projects. These developments are rapidly gaining in popularity in Europe and the UK. Nevertheless, they make less sense in the Mexican context due to factors related to weaker offshore wind power and greater availability of space onshore. But no matter where the turbine development focuses on, companies need to invest if they want to remain viable and up to date. “If you want to be competitive in the renewables market, you need to be committed to investing in R&D and introducing new technologies to reduce the cost of energy. This is the primary way to increase the penetration of renewables and allow them to compete with other forms of energy generation,” Weisz said.
Not everything in the wind sector builds on old but reliable recipes, however. This is the case with battery storage, which was incorporated into a wind project for the first time in Mexico’s history at the Eolica Coromuel project. The 50MW project located in La Paz, Baja California Sur, now features a storage system that can deliver 10MW of output, useful when wind levels drop at night, for example.
Experts argue they prefer to wait until there is a more robust regulatory framework to back up their solution, as well as a fair recognition of storage’s added capacity and the auxiliary services it can provide to benefit the grid. But the potential of storage may be starting to outweigh such concerns, especially in the isolated grid of Baja California Sur, where developments such as Eolica Coromuel will likely open the door toward more storage in the renewable energy sector.