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Analysis

Wind Power Blowing Past Tehuantepec

Wed, 02/22/2017 - 16:05

In 2016 wind consolidated as a reliable source of renewable energy in Mexico's electricity sector. The country's wind power potential is estimated at over 50GW and the regions with the most promise such as the Isthmus of Tehuantepec and La Rumorosa in Baja California are developing several projects to harness that power. In Baja California, there are three wind parks under construction and two operating, while Oaxaca, a pioneer in this technology with 21 parks already operating, has three under construction.

The new market rules have given private companies a wider scope for power generating schemes, launching a rapid expansion of new wind developments way past Oaxaca and Baja California, with places like Tamaulipas also sailing the high winds of energy generation. But where wind turbines once ruled supreme — and almost alone — in the Mexican renewable energy matrix, the new rules and power auctions have also brought increased competition from other renewable sources like solar.

With solar PV being so successful in the first power auction, wind had to step up and increase its costcompetitiveness to ensure its position in the second power auction. This increase in competition also resulted in several wind developers considering diversification into other renewable sources. “We realized we needed to diversify our services and after doing some benchmarking we decided to go for something that was already established. We went for solar, which is a product people are asking for and which has an important opportunity in the country,” says Sergio Martínez, CEO of MASE Energy, which previously had been mainly a wind farm developer.

THE AUCTIONS

The results of the long-term power auctions made clear investor confidence in the feasibility and costcompetitiveness of this renewable resource. Private companies showed readiness to invest in wind projects, which resulted in wind being the second most awarded technology in both auctions, at 11 projects with a total capacity of 1,522MW. The largest project awarded was Parque Eólico Reynosa, a 387MW plant to be developed by Intaván México. With those results, wind consolidated as a promising renewable resource for the Mexican power industry. Even though PV energy was awarded a larger share of capacity, it remains a novel technology in the national context. Wind, on the other hand, already has 34 parks installed and operating and 26 more parks in construction across the country. “Wind farms tend to be more solid than other renewable energy projects because they have longer maturing periods, being supported by extensive wind forecasting studies and permitting processes,” says Jorge Lobatón, Director General of Gamesa for Mexico & LATAM.

THE CHALLENGES

To keep developing this technology, new and prospective projects must be met by an equal development in transmission. Because of the delay in several infrastructure projects, many of the projects planned for the Oaxaca government’s first energy open season have not been able to begin construction. The planned Oaxaca-Valley of Mexico HDVC line, to be auctioned in 2017, is expected to benefit this industry the most, as it will open new markets to the energy developments of the windy Tehuantepec corridor.

The coming years will be crucial as the government strives to accomplish its goal of producing 35 percent of its power from clean energy sources by 2024, for which wind power will hold a key position. In its 2016 Mexico Energy Outlook, the International Energy Agency (IEA) projects a 5-20 percent cost reduction in the long term for wind power in Mexico, resulting from technology development. The Internet of Things and other technological advances have already started penetrating the industry, with the potential of increasing competitiveness and efficiency. Monitoring solutions are beginning to shape the industry and boost the performance of wind parks.

“Control is critical,” says Armando Negrete, Energy Leader Wind Power of ABB México. “Imagine wind farms as large fields with several subsystems, which include subtransmission and transmission power systems. All elements have to be coordinated in such a way as to deliver efficiency despite all possible variations. It is necessary to balance the system to optimize it.”

Financial schemes and the regulatory framework will also determine the evolution of the wind industry in Mexico, as initial investments for renewable projects, especially for wind parks, is still extremely high. Innovation and adaptation will be the main elements for achieving success for wind project developers and the banks and institutions that are willing to bet on the future of this promising technology.