Angélica Ruiz
Vice President and Managing Director México and Latin America
View from the Top

The State of Mexican Wind Power

Wed, 02/21/2018 - 13:28

Q: What is needed for wind power in Mexico to reach the level of importance it has in countries like Denmark?

A: It all comes with time. The Energy Reform is still new, having been implemented in 2014. If we look at where we are now, a lot has been done. We find ourselves in a transitional phase: the starting point of the Energy Reform in terms of power generation has been extremely successful. The results can be seen in the power auctions. We should highlight the fact that we come from a monopolistic sector, with CFE and PEMEX at the center for decades. We have just started a learning curve that is reflected in how the auctions have evolved. We have a good conceptual design but we are still lagging behind in the implementation component, such as project financing and warranties for the sector. There is one issue that needs to be addressed, which revolves around nontechnical risks: security and communities, and everything surrounding the topic of corporate responsibility. The authorities need to define the proper legal framework to address these issues and provide the private sphere with the tools to tackle them. Also, the available infrastructure has to respond to the growing energy demand, the grid has to be ready to deal with our goal of a diversified energy matrix. These are the challenges we will be facing in the coming years.

Q: How can private and public players work together to address nontechnical risks?

A: Both are necessary. We have three levels of government: federal, state and municipal. Each level already has some policies in place. We have to ensure that all those policies are coherent and in line with the goals of the reform. The interaction between these three levels of government and the private energy sector has reached an increased level of complexity, considering the previous scheme was a direct and centralized communication between these three levels of government, CFE and PEMEX. The increased number of private players in the game, as well as the diverse institutions overlooking the sector, heighten the intricacies of the private-public interaction. From the public sector, we need guidelines on how to assess communities, for instance. Decision-makers need to be able to coordinate with and advise companies on the viability and social impact studies of their projects. Private companies have business plans they must adhere to, encompassing the companies’ obligations, targets and the government’s guidelines and regulations. It has to be a joint effort. 

Q: Do you consider Mexico’s current rules and regulations sufficient to help the energy sector reach its full potential?

A: Mexico has set some very aggressive targets pertaining to its 35 percent clean energy production goal by 2024. Having defined these objectives and being part of COP21 makes an important difference. It is something quite new for Latin America; we do not see many other countries being so direct and straightforward with such goals. We believe in an intricate system in which you can plug in renewable energy and address your risks by ensuring you have a reliable backup plan to address potential issues. In Mexico’s case, we believe in a step-by-step approach, redefining the new targets as we advance. 

Q: What are wind power’s strengths in Mexico compared to other renewable energies?

A: Wind power has proven to be competitive enough to win in competition with other technologies. Technically speaking, it takes longer to develop a wind farm than a solar park, but the generation capacity is better in the former. Wind blows 24 hours a day. There is a 7:1 ratio of land usage when you compare wind to solar energy. You can find great resources in Mexico, such as in the states of Tamaulipas, Oaxaca and the northern part of Baja California, with capacity factors of 40 percent on average. It is a matter of finding the right place and the right resources, which does not necessarily mean that you will find yourself competing against other renewable resources. At the end of the day, we are looking to have local, diversified energy matrices that assist local economies and governments to diversify power risks, enable the use of both fossil fuels and renewables and optimize local power systems.

Q: How is Vestas working to introduce its V134 wind turbine to the Mexican market?

A: Ninety-five percent of the wind resources in Mexico can be addressed by this turbine. We are delighted to be working with the Ministry of Energy regarding the assessment of wind resources in Mexico. This allows us to provide the technology that is most suitable for this resource. Our plan is to make this technology available in Mexico in the shortest term. Our first project using this machine will be installed in 2018.

 Q: Is it feasible to introduce wind power into the residential self-supply market in Mexico?

A: Vestas specializes in working with industrial capacity but I absolutely believe it is. Producing renewable energy is only one part the energy triangle. You cannot disassociate energy generation from energy consumption. Consumption is all about energy efficiency. Are you aware of your energy usage at home? Are you optimizing power use while driving? Energy consumption is a mindset of its own. The energy circle starts with energy generation. Without the previously mentioned mindset, the circle remains open. Finally, you have to consider the sustainability part relative to climate change.

Q: What would Vestas bring to the table in a collaboration in either the public or private sectors?

A: Vestas’ added value for its clients, as well as the government, is its comprehensive view of the sector. We understand the business from end to end, starting with the development of a wind farm project all the way to plant generation and power consumption. These projects are not just about energy generation but also about putting money into projects and generating returns for investors. I think that this capacity of adapting to new markets, understanding the new rules of the game and being able to move all the drivers of a project that affect CAPEX and OPEX, allows us to have a competitive edge in providing any new alliance, either governmental or private, with something they are lacking, providing a competitive answer to project optimization. Understanding the Mexican context is fundamental. If you do not have the whole picture of the country’s interconnection or grid management needs, you cannot help your clients.

Q: How do you ensure that land used for wind farms remains viable for other economic activities?

A: In general, we are very careful to conduct the right environmental studies to avoid producing any negative outcomes. Shade factor calculations and permitting for certain wind turbine heights are important factors. Any potential issue that might arise is covered by the proper social responsibility program.