Shortly after meeting US president Joe Biden and Canada’s prime minister, Justin Trudeau in January, Mexican president Andres Manuel Lopez Obrador announced that state power utility CFE will build four wind farms in southern Mexico’s gusty Isthmus of Tehuantepec, to be financed by the US.
Scant details
“This is an agreement from the United States to help address the problem of climate change,” the president, known widely as Amlo, said last month in a press conference to publicise the announcement.
So far, details are thin on the ground with the names and capacities of the proposed facilities still unknown.
All the president would reveal is that the US will provide the credit with preferential interest rates and that the plants will be built by US and Mexican companies on land set aside by the government for industrial development.
More clarity is likely later this month when John Kerry, the US climate envoy, is due to visit the isthmus and give details of the finance package.
Welcome policy shift
Despite the lack of detail, the announcement is a welcome shift from the president’s previous stance, says Leopoldo Rodriguez, president of Mexican wind energy association Amdee.
Since taking office in 2018, Amlo has railed against the ills of wind power and especially a decade-old reform of the energy sector which allowed private investors to build generation capacity and sell directly to consumers.
Amlo – who favours strong state intervention known as dirigiste economics – has focused on the difficulties caused for state-owned CFE and oil giant Pemex by a decade of energy policy liberalisation.
Five-year window
Between 2013 and 2018, developers installed more than 8GW of wind capacity, which provided stiff competition to the aging thermoelectric plants run by CFE, which had previously enjoyed a near monopoly in Mexico.
With another 7GW of turbines in development, Mexico was on the path to meeting its climate change commitment of slashing its carbon dioxide emissions by 2030.
Blocking wind
The existing turbines have helped to cut electricity costs but, by selling electricity to CFE at a profit, the president accused wind farm owners of profiteering at Mexicans’ expense.
CFE has also blamed the wind farms for destabilising the energy grid, including a power cut that affected more than ten million people in 2020.
Investment in new turbines sank as his administration halted permits for new wind farms and denied generation permits for many plants already under construction.
But Amlo’s scepticism towards wind hit the political buffers last year when opposition lawmakers blocked a constitutional reform which would have limited private participation in energy supplies and strengthened CFE’s control of power markets.
Glacial change
Since then the government has begun to grant some permits, says Rodriguez, but administrators are moving at a glacial pace.
There are still around 600MW of wind turbines in place, but they are still unable to connect to the grid.
Meanwhile, the newly announced CFE wind projects are likely to take at least five years to begin commercial operations, given the time required to measure, design and built a new site, says Rodriguez.
Mexico ‘can’t do it alone’
The proposed area for the wind farms lacks the additional transmission capacity necessary to carry the power to people further north.
At this pace it, will be difficult for CFE to build the 30GW of renewables required to meet Mexico’s climate change goals.
“The government needs to understand that it can’t do it alone,” says Rodriguez.
Despite the gridlock, developers remain hopeful that Mexico’s overall energy policy will change soon, but whether that will happen before Amlo steps down in 2025 remains unclear.
