While the country's sector is already on the road to meeting around a third of that target, it is nevertheless widely viewed as too ambitious.
The announcement comes on the heels of a record year of wind development in Mexico, with more than 1GW of new capacity installed in 2014, and the cumulative total reaching nearly 2.6GW, according to Mexican Wind Energy Association Amdee. A further 732MW is currently under construction, with over 3GW in the pipeline.
But "given ongoing regulation uncertainty in Mexico, we don't see more than 4GW of new capacity as likely to 2018," said Make Consulting analyst Brian Gaylord.
Energy minister Pedro Joaquin Coldwell revealed the wind-energy investment plan on 12 January before Amdee and other power sector players. But the government's wind plan does not yet exist as a single document.
Rather, it represents a compilation of the government's ongoing work to flesh out specific policy measures of its electricity reform law of December 2013. That law already marks a 12GW cumulative minimum wind target to 2020 and calls for market liberalisation, ending state utility CFE's 75-year power generation and trading monopoly.
Still, Coldwell's announcement was welcomed by Spanish wind developers, which already dominate Mexico's online and pipeline wind market.
Gamesa said it planned investments in around 500MW of new wind capacity to the end of 2017. Fellow Spanish firm Acciona, already operating 556MW wind capacity in Mexico, underlined investment plans for new capacity in the country totalling $650 million.
Spanish utility Iberdrola claims to be the country's biggest power provider. With 230MW of wind online already and 66MW under construction, the company plans to direct an — as-yet-undetermined — chunk of its $5 billion investment plans in Mexico to new wind projects. Fellow Spanish utility Gas Natural, together with Italy's Enel also have wind development stakes in Mexico.
Similarly, Mexico's state-run utility CFE will develop eight projects totalling around 2.3GW, confirmed the company's director general, Enrique Ochoa. This includes the 102MW Sureste Phase II in Oaxaca, which is expected to come online this quarter.
Need for framework
So while, strong commitment is clearly there, the challenge remains to complete a regulatory framework and market rules for wind power within the electricity reform, said Hipolito Suarez, Gamesa's director for Mexico and Central America.
"Even with such a framework in place, the Mexican market and administration are not geared up for beyond 2GW a year over the next three years," said Gaylord.
Still, the most relevant aspect of the newly announced 2018 plan is the demonstration of government support for wind development, added Suarez.
Coldwell confirmed ongoing work to create a wholesale electricity market in Mexico. Nevertheless, Amdee has been arguing since 2014 that wind prices are attractive enough for development to remain on the basis of private power purchase agreements (PPAs). Online wind in Mexico to mid-2014 averaged a capacity factor of 35%; often much higher. The price achieved for wind power in CFE's auctions hovered around the $65/MWh mark 2008-2012, according Global Wind Energy Council figures. In 2013, some private PPAs were cited as high as $95/MWh.
Draft regulation to reduce the size of customers allowed to sign private PPAs was already on the table in 2014 and is expected to be ratified this year. Coupled with wind's attractive price, that could spur a wave of smaller wind developing outfits, said Mauricio Velasco, research coordinator at Amdee.
Meanwhile, Coldwell highlighted the wind plan's outlining of obligatory and thorough public consultancy procedures to offset the mounting blockading of wind projects by indigenous communities.
Such blockades have already brought about the cancellation of the 396MW Mareña project in San Dionisio del Mar. Consultation "is not a process that can be done at speed", said Gaylord. "Mexico has huge potential and is moving in the right direction but any cumulative target much beyond 6GW to 2018 is overly ambitious."
