Sonora Clean Energy Plan, a wink, but Mexico has not corrected the course in electricity production

The photovoltaic park being built in Puerto Peñasco, Sonora, presented last Friday by Mexican authorities to the United States presidential special envoy for Climate Change, John Kerry, represents a nod from the federal government to renewable energies; however, there are still no elements that allow us to assume that the government is committed to generating electricity through the use of renewable energies.

Óscar Ocampo, Energy Coordinator of the Mexican Institute for Competitiveness (IMCO) pointed out that this is good news but, of course, it is not enough in terms of what the country requires in terms of meeting its demand for the coming years and complying with its international commitments to help reduce global warming and climate change.

He explained that the photovoltaic park, considered by the government of Sonora as the most ambitious and largest public project in Latin America and the seventh in the world, is large, but the question that must be asked is regarding what?

In an interview, he said that it is true that it is the largest in the region, in terms of photovoltaic solar panels, but what they do not say is that it will be ready until 2028, “when who knows if it will be the largest.”

According to the government of Sonora, it will have a capacity of 1,000 megawatts, and its initial operation is expected in 2023, with an estimated investment of 1,685 million dollars, which will provide electricity to more than 538,000 homes by 2027, when completion is anticipated.

Ocampo explained that what will be inaugurated this year is about 400 megawatts, which will make it a relatively large park, but not something that is unprecedented in the country.

He explained that this is intended to produce a gigawatt of clean energy in a period of six years. In this sense, he recalled that with the long-term auctions that took place between 2015 and 2017, almost seven were produced.

For her part, Inder Rivera, manager of Clean Energies at the World Resources Institute (WRI) Mexico, commented that the Sonora Plan is a good clue as to where Mexico should go in the framework of the energy transition.

They are indications that, at least at the state level, we are doing well and hopefully they will be the spearhead to start seeing a federal strategy in the same direction, he mentioned.

In his opinion, this type of project will allow the CFE to confirm that generating electricity through renewable sources is cheaper than using fossil fuels.

It is not that the CFE does not have generation plants with renewable energy in its project portfolio, in addition to the fact that it already buys energy produced with renewable energy, but with this they will have many lessons learned.

What is expected, the specialist pointed out, is that with these signals the issue of renewable energies, whether private or government, will begin to be unlocked.

For Óscar Ocampo, what is worrying is that the Sonora Plan is the only ambitious project that the federal government has in terms of generating electricity through renewable energy, which is totally insufficient for the country to reach its goals of reducing emissions, generating of clean energy by 2024.

To think that this project by itself shows some commitment to climate change or talks about triggering investment in renewable energies is not realistic.

It is insufficient to achieve the goal of producing 35% of electricity through clean energy by 2024. Right now we are at around 28%, almost finishing 2022.

There is no way for the country to comply, due to a political decision because the appetite of the private sector to invest is there and a good pace was being brought to reach the private investment necessary to meet the goal, but since 2019, when it was closed, everything became impossible. .

He said that the delicate thing is that if Mexico does not comply, it will become unattractive to investment because companies, for example in the automotive sector, have a policy of risking their money where they can produce with clean energy. And that will limit the growth of the national economy.

Inder Rivera stressed that in Mexico there is already a lot of experience in generating electricity through the use of renewable energies, what has been lacking is paying more attention to the creation of a Mexican value chain, because there is no national content.

Mexico adjusted its forecasts in renewables

According to an analysis carried out by the IMCO on the updates to June 2022 of the Program for the Development of the National Electric System (Prodesen) 2022-2036 of the Ministry of Energy (Sener), the government adjusted its growth forecasts for renewable energies in the national energy matrix.

He refers that while Mexico’s emission reduction objectives set forth in the 2015 Paris Agreement, as well as in the General Climate Change Law and the Energy Transition Law, establish that the country must generate 35% of its energy from from renewable sources by 2024, the document postpones compliance with this percentage until 2031.

That means “seven years later than originally planned, without proposing a credible critical path to achieve this goal.”

He emphasizes that this delay is not due to economic and/or technical reasons, but to the decision that CFE is solely responsible for expanding renewable generation capacity by closing the door to private producers to undertake new projects in the sector.

The serious thing is that this decision contravenes the current legal and regulatory framework established in treaties such as the Mexico-United States-Canada Treaty (T-MEC) and in the Electricity Industry Law.

We are not on the route to satisfy the demand

Óscar Ocampo said that what has been announced so far in terms of investment in the sector and approved by the government in turn is not enough to meet the country’s demand for the coming years based on its rate of economic growth.

He explained that Mexico should be investing enough today to generate an additional 4 gigawatts per year, to meet the growth in demand.

The total project portfolio of the CFE does not allow for that because it does not have the capacity for it and it should not have it, only that the federal government has practically bet on that company the generation of the electricity that the country will need to satisfy the demand, which he said, is absurd.

Therefore, the specialist considered that this should be accompanied by more permits for private investors to invest and generate more electricity through wind technology, photovoltaic panels, geothermal energy, among others.

He drew attention to the fact that, until now, there has been enough energy to meet the demand, but if more private investment is not incorporated to generate electricity, it is likely that blackouts will be recorded in the medium term.

“In 2022 or 2023, you are not at increased risk; in 2024 you can already have a risk that at certain times of maximum demand you will not have enough energy to inject into the electricity grid”.

At the end of 2021, Mexico had 86,153 MW of installed capacity. With the additions contemplated until 2036, the installed capacity will be 127,230 MW. If adjusted by the average plant factor of each type of technology (which reflects the relationship between the real energy generated in a given time and the energy that would have been produced if the plant operated at 100% of its capacity, which does not happens due to maintenance, repairs, lack of fuel, among others), the real generation capacity of the country will be 465 thousand 716 GWh 2036.

According to the IMCO, Prodesen 2022-2036 estimates that the installed capacity will increase by 48% by 2036. The plans include additions in solar, nuclear, combined cycle and internal combustion energy of 251%, 155%, 40% and 209%. respectively.

In the opinion of specialists from the center, the government figures are alarming, since the CFE does not have the necessary resources to carry out this expansion —private investment in electricity generation amounts to 44,000 million dollars, according to estimates by the Coordinating Council Business—and Prodesen does not provide specific information on how these projects are planned to be financed.

diego.badillo@eleconomista.mx