Gary Hardke, Cannon Power Group's president, expects producers to pour in $1 billion for every 500MW installed, adding that 3GW of wind power could come online by 2015. These estimates are three times what the windy region bordering California has received in the 2005-2010 period.
So far, 70MW is in operation but this is about to change as Cannon and several other US and Spanish utilities break ground on more than 2GW of projects. While Mexico's grid will consume some of this output, the majority is expected to be exported to California, which has fallen behind in its ambitious renewable power agenda.
The upcoming projects include an 800MW wind park that will be developed by Spain's Union Fenosa and US-based Sempra Energy, mainly for export. Fuerza Eolica also plans to install 400MW, while Cannon, in partnership with Spanish wind giant Gamesa, hopes to start up as much as 1GW by 2014.
The project's first phase is on track to break ground in 18 months.
Echoing other observers, Hardke says California's saturated wind market and difficult permit environment, coupled with Baja's untapped wind resource, will drive foreign utilities to the market.
"There are no wind resources available in California like we have in Baja," Hardke said. "There is a huge corridor along the mountain range that is still untapped."
That resource in the peninsula bordering southern California - which stretches 10 miles wide and 80 miles long - has 10GW (and possibly even 20GW) of commercially viable wind-power potential, observers say.
Dirk Matthys, Gamesa's North American CEO, said Hardke's estimates were feasible but that the transmission network connecting Mexico with California must be expanded to spur further investment.
Currently, there are two transmission lines linking the two countries, but Sempra Energy's Sunrise Powerlink is expected to build a line in California in 2012 that will increase the transfer capability between Baja and California.
Mexico, alongside Brazil, is one of the key markets for Gamesa in Latin America and the company is looking to establish a manufacturing site in the next 12 months, Matthys says. This could entail either a wind turbine and tower factory, or a combination of both, but would not provide more details, he adds.
Gamesa is looking for new contracts to supply turbines for the upcoming projects but is also building its own wind park in the region of Oaxaca, Mexico, where several developers plan to install as much as 2GW in three years.
The scheduled projects will export much of their energy to California. This energy, in addition to that installed in California itself, could equal up to 5GW of wind capacity by 2015 and as much as 8GW-12GW by 2020.
While California's difficult permit environment will make Baja a more attractive production destination, "it's not quite on the map yet", notes Nancy Rader, executive director of the Californian Wind Energy Association. Hardly any power purchase agreements have been signed to import its power, she says, and the international transmission network needs to be widened.
Hardke said Mexico's permit process is "a lot more efficient and quicker" than California's where multiple agencies have "overlapping and contradictory" requirements. "California's legislature is working hard to streamline the process and they ought to be applauded for it. Still, the permitting process remains very laborious," Hardke adds. Permit approvals can take years in the US and just months in Mexico.
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