A ceremony was held with top officials on Saturday, who further signaled the nation’s transition towards state-operated hydro and geothermal projects in lieu of private renewables.
Originally expected to start in January 2019, the second phase at Azufres began to start up operations in October, according to a prepared government statement announced at the event.
The new unit has an installed capacity of 27MW, replacing 10MW of less efficient technology and is expected to provide an additional 17MW to the national grid.
‘Totally different plan’
Speaking at the event in Michoacán state, President Ándres Manuel López Obrador (AMLO), reiterated the government's commitment to statist energy policy, “We're determined to rescue the energy sector, to move Pemex forward, to move CFE forward, two major companies in the nation, and convert the energy sector into a lever for national development.”
He said that with respect to CFE the government would now be following “a totally different plan” than that conceived with 1989 legislation that marked the first tenders on electricity projects for the private sector, a move he said had caused CFE plants to close and be underutilized, leaving the breakdown of generation in Mexico at 44% private and 56% public sector at present.
AMLO cancelled the fourth long-term energy auction in February, leaving hoped-for private renewables projects on hold indefinitely.
AMLO, pictured at the event (second right) with energy minister Rocío Nahle (far right) and CFE CEO Manuel Bartlett (second left), said Saturday that without the new initiative this rate would have transitioned to only 20% public generation by 2024.
He added, “This means we're going to compete and that they will have to invest and they have to supply the energy to the market in proportion to the growth in demand, because we at [CFE] are now prepared.”
“If the private sector doesn't invest, we will do it ourselves and it could be that we end this six-year term [in 2024] with 60-70% of production in the market via the [CFE],” said the president.
Bartlett also offered comments suggesting the path forward in renewables for Mexico would be hydro and geothermal projects coming from the state-run utility.
“Although we're committed to bringing electricity to all Mexicans, we're also committed to clean energy,” said Bartlett.
In the past couple of months, CFE and private renewables have brought a dispute over the definition of clean energy licenses (CELs) to the courts, with CFE looking to make their hydro, nuclear and geothermal projects eligible on par with solar and wind projects – a move that could allow the government to claim advances on climate transition with its own projects.
Mexican geothermal overview
The prepared government statement Saturday also claimed that Mexico currently ranks sixth in the world in geothermal power generation with four geothermal fields in operation: Cerro Prieto in Baja California, Los Humeros in Puebla, Tres Vírgenes in Baja California Sur, and Los Azufres in Michoacán. Together they add generation capacity of 928MW.
Of this capacity, 27% is due to the Los Azufres geothermal field, in Michoacán, an exemplary state that also generates all of its energy from renewable sources. Located in the San Andres mountains, 80km to the east of the city of Morelia, the geothermal plant 'Los Azufres', began operations in 1982 with five generating units of 5MW each.
However, this data does not include the volcanic Domo de San Pedro geothermal plant (phase 2), in the state of Nayarit, currently in operation.
This plant, operated by concessionaire Grupo Dragón, is facing strong opposition to operations from the local population, with reports in recent weeks and months of noxious fumes polluting the air in the area.
Other projects in the pipeline not listed at the event include the Ceboruco geothermal project also in Nayarit. The project has been delayed by government policy decisions, which are expected to be resolved in early 2020. The EPC will be offered for bidding upon successful drilling.
The project is expected to start operating in 2022, Chris Mccormick, project strategy and financing director at Mexxus RG, told BNamericas.
Another is the Celaya Guanajuato geothermal power plant, currently in early works. Last May, Mexico’s environmental regulator declared that the project is environmentally viable and authorized it, albeit with conditions.
Last year, the government cancelled the Cerro Prieto 5 geothermal project in Baja California, near the US border.
According to the BNamericas project profile database, looking at all 10 projects in various stages of operation, the total capex is US$1.03bn, with the largest project capex at US$252mn and the smallest at US$40mn.
