Private wind developers team up with large industrial end-users of energy who agree to purchase the power. The power does not have to directly feed end-users but, rather, can be fed into the larger Mexican power grid wherever the wind projects are located and counts as an equivalent offset for the power buyers - often hundreds of kilometres away.
Mexico has brought 300MW online so far this year, nudging it over the psychologically important 500MW milestone, and thousands more projects are at various stages of development. Mexico's wind market is driven partly by its world-class wind resources. Most of the country's development is occurring in the Isthmus of Tehuantepec, located near Oaxaca in southern Mexico. The narrow strip of land separates the Pacific Ocean and the Gulf of Mexico. Shifting weather between the two bodies of water creates a natural wind tunnel in the region, providing average capacity factors well above 40%. Capacity factor measures the percentage of maximum output achieved by a plant over the course of a year.
More than 330MW has come online since 2009. However, the rush of developers into the region has led to some conflicts with local landowners and community activists. The second most fertile region for wind development is the Baja region to the north, where developers hope to tap strong wind resources and export the electricity to energy-hungry California across the border. The Mexican government has a target of 2.5GW of wind to be installed by 2012. The goal is considered realistic thanks to over 3GW of construction permits that have been awarded by regulators to private developers.