Mexico Energy Monitor / March 6, 2024
Regulator Blocks More Than 800MG of Installed Capacity – Wind Energy Association
- According to Mexico’s wind energy association (AMDEE), the country’s energy regulator, CRE, has been obstructing approximately $5.8 billion in potential new wind energy investments. This statement was made during a press conference held on February 22nd.
- According to AMDEE, the CRE has delayed the issuance of seven permits for wind power projects that are already built. These projects have the potential to add an additional 800 megawatts (MW) of installed capacity to the grid. Additionally, there are 28 extra permits for projects in various development stages that remain blocked by the regulator.
- AMDEE has been critical of the energy policy of President Andres Manuel Lopez Obrador (AMLO) and of various regulatory decisions adopted by CRE, including the current methodology used to issue clean energy certificates (CELs).
- In May 2023, the CRE approved a resolution to update the methodology for issuing Clean Energy Certificates (CELs). However, this decision sparked significant backlash among market participants. Under the new resolution, energy generated from steam in combined cycle plants will now be classified as clean energy.
- AMDEE contends that CRE’s resolution artificially inflates the proportion of clean energy within the electricity system. Furthermore, they argue that this action undermines the standards necessary to advance Mexico’s energy transition and achieve emissions reduction targets.
Sonora Governor Greenlights Amigo LNG Construction Work
- Alfonso Durazo, the Governor of the Mexican state of Sonora, announced on February 27th that Singapore-based development company LNG Alliance reached an agreement with state-run utility CFE to advance the construction of the proposed 7mtpa onshore export project Amigo LNG liquefaction plant in Sonora. Durazo added that he expects construction work to start in July 2024.
- In 2020, Texas-based company Epcilon LNG obtained long-term authorization from the US Department of Energy (DOE) to export up to 395 billion cubic feet (bcf)/year of natural gas to Mexico on a 20-year basis. A portion of this gas will later be re-exported as LNG from Amigo LNG. Epcilon LNG is a shareholder in the project and the midstream company responsible for sourcing gas from the Permian shale basin and supplying gas to Amigo LNG.
- The Amigo LNG project has yet to make a final investment decision (FID). Amigo LNG was originally presented as part of the so-called Plan Sonora, which is at the center of AMLO’s approach toward energy transition in Mexico, but skepticism remains as the administration has not released many specifics.
- Several publicly available details do not align with the actual conditions on the ground or the requirements of this substantial project. One notable example is the claim that the administration will eventually connect Baja California to the national SEN grid.
- The Sonora Plan encompasses a solar plant that, as per statements from the Mexican federal government, is poised to become the largest facility in Latin America. In addition to this flagship solar project, the plan outlines the construction of five supplementary solar plants to be completed by 2028. Furthermore, it includes a couple of LNG (liquefied natural gas) projects and aims to develop supply chains for lithium, semiconductors, and electric vehicle production.
- However, several critical issues raise skepticism about the feasibility of the plan. These concerns include the lack of transmission projects near the solar plant, delivery dates for various components, the feasibility of certain aspects, particularly related to the Amigo LNG project and its financial considerations.
Iberdrola Considering 800MG of Renewable Projects in Puebla
- Iberdrola is currently evaluating several renewable energy projects that have the potential to add an additional 800 megawatts (MW) of installed capacity in the Mexican state of Puebla. According to company, this initiative aligns with Iberdrola’s commitment to reinvest the $6.2 billion in profit generated from the sale of various assets to the Mexican government.
- The policies and regulatory changes implemented by Mexico’s federal government have not decreased investors’ appetite in Puebla state’s energy sector. Puebla, a state in central Mexico, created its first energy agency in November 2019, shortly after a new state administration took office. Compared to other Mexican states such as Tamaulipas or Chihuahua, Puebla is a relative newcomer when it comes to attracting investment to become an energy hub.
- The current state government understood the strong link between energy and economic development and decided to have a stake in conducting policies affecting the state, as well as to attract the type of investment that best meets the state’s needs.
- Its geographical location gives the state a logistical advantage, which adds to its energy potential. When it comes to natural gas infrastructure, Puebla is home to two compression stations, with two main pipelines belonging to the Sistrangas national grid crossing it. The state offers potential for the development of natural gas-related projects, as the current consumption of natural gas by the local industrial sector still has room for growth.
- While the mountain range area bordering Veracruz state has potential for the development of small-scale hydropower projects, the state’s central area offers ideal conditions for photovoltaic projects, such as high solar radiation and around 320 days with plenty of sunlight.
- Other projects being contemplated in Puebla include the construction of a natural gas pipeline to supply Tehuacan, the state’s second largest city, as well as an LNG distribution terminal in Puebla City’s metropolitan area.
EYES ON ENERGY
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