"The government target is realistic," says Jorge Huacuz, head of the energy department at the state-run Electrical Research Institute (IIE). "The Energy Regulation Commission (CRE) has issued more than 3GW in permits."
The IIE has studies going back some 30 years covering Oaxaca’s Isthmus of Tehuantepec. "The winds in the area are strong and stay consistent during most of the year," says Huacuz. "This creates capacity factors [the percentage of maximum output] of 40% and more. In other parts of the world these are in the 25% to 30% range." Oaxaca already has more than 500MW in place, around 550MW in construction and nearly 1.5GW on the drawing board, according to the Mexican Wind Power Association (AMDEE).
"Evaluations have measured the wind power potential of the Isthmus at 5GW that could be extended to 10GW," says Claudio Estrada, head of the Energy Investigation Centre at the National Autonomous University of Mexico. "But some people are talking about as much at 30GW to 50GW."
Outside Tehuantepec, Baja California, a state on Mexico’s north-western border with the US, already has 10MW of installed power and is set to add 2GW of capacity for export. A 161MW project is also coming online in 2011 in the north-eastern state of Tamaulipas.
Private and public
The explosion in Oaxaca’s Isthmus capacity is the result of an elaborate decades-long tango between private industry, Mexico’s government and even foreign aid agencies, resulting in 400MW being installed in the past two years, according to the AMDEE. "Around 12 years ago we were tasked with focusing on the development of the Isthmus of Tehuantepec," says the IIE’s Huacuz. "We have been working to co-ordinate actors: central and regional government, private wind farms and public wind farms."
Key wind studies in 2003 created the security that investors needed, says AMDEE. Repeated and targeted revisions of government regulations have allowed Oaxaca to attract foreign firms and private investors in large numbers.
This strikes out at some notions Mexico has held dear since its 1910 revolution, including the view that the energy industry should be state-run. The trend began in 1975 when legislation opened the door to electricity production for self-supply, sale to the federal energy commission (CFE), the import and export of power and use of emergency generators. In 2003, the CRE created contracts allowing renewable energy projects to connect to the grid on preferential terms, while the CFE built new connection capacity to export power from Oaxaca to the rest of the nation.
Many of the Oaxaca schemes are self-supply models where a heavy electricity user forms a venture with a power supplier, using the CFE electricity grid to take the power, which is then offset by the producer’s supply. Buyers include Mexico’s largest cement company, Cemex, and retail giant Wal-Mart de Mexico. Power producers using this scheme include Acciona, Gamesa and Iberdrola.
But the sudden arrival of a large number of foreign firms in a low-income rural area has caused conflict, with community activists arguing that locals have signed contracts out of fear their land will be expropriated if they don’t co-operate — and without fully understanding that the contracts are for 20 or 30 years. The AMDEE, meanwhile, argues that long-term contracts are a benefit, offering income streams that can be passed on to dependents.
Uncertainty has also been added with the change of government in Oaxaca in July, when the Institutional Revolution Party was replaced by the National Action Party, a pro-business party that came to state power in a broad coalition of left- and right-wing parties, and which may face divisions on how to move forward.
It seems likely that Mexico’s central government will reach its goals and might even choose to extend them. Capacity beyond published goals is being built, a rare event for Mexico. Even so, there are plenty of bottlenecks within the system and poor public perception of developers that could prevent the nation from making full use of the immense potential in its southern state.