mexico renews itself - ProMéxico

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In Search
of the
Perfect Storm
México Power Group is propelling radical change in the energy
industry. After sweeping in on northern winds, its turbines now spin
in the far south.
____
by omar magaña
photo courtesy of cannon power group
The Law for the Exploitation of Renewable Energies and
Financing of the Energy Transition (LAERFTE) was the
spark that ignited a new and sprightly industry in Mexico.
Announced in 2009 by the Ministry of Energy (SENER),
the new law invites the private sector to participate in mechanisms
for the planned, sustainable consumption and generation of nonfossil-fuel
energy, i.e. energy obtained from renewable sources such
as the wind, sun, water and biomass.
This broadened the horizons of Cannon Power Group, a California-based
company specializing in wind farms that had previously
been restricted to exporting the electricity generated by La Rumorosa
wind farm, in Tecate, Baja California to the US. Now it is free to
sell the energy it generates in Mexico on the domestic market, and
what better incentive to increase production capacity.
Cannon Power Group and its partner, Coram Energy Corporation,
both have 30 years’ experience in the development of wind
projects worldwide. In July 2011, they decided to grant their Mexican
office greater autonomy. The result was the founding of a new
company –México Power Group– with John Prock as CEO.
“The new legislation introduced by the Mexican government
changed our approach and outlook. Now it makes more sense for us
to supply companies and government entities here in Mexico with
our green energy,” says Prock.
México Power Group had barely incorporated when its board
chairman, Gerald Monkhouse (also board chairman of Cannon
Power Group), president Brian O’Sullivan and CEO John Prock
announced their first major investment in Mexico: 2.5 billion usd
for the construction of three wind farms –one in Baja California,
a second in Zacatecas and a third in Quintana Roo– which will
produce a total of 312 megawatts (MW) during their first phase
of operations.
The Promised Land
The sheer magnitude of this outlay by México Power Group indicates
the course Mexico is taking as the second-largest recipient
of investment in the wind energy sector in Latin America, outdone
only by Brazil, which has embarked on a race to cover the entire
country with turbines.
According to studies conducted by the industry worldwide, all
both countries were lacking was a regulatory framework to clarify
the rules for private sector participation in the generation and
transmission of clean electricity.
As such, LAERFTE constitutes a huge step forward for Mexico,
by defining mechanisms for the transmission of wind-generated
and other renewable sources of electricity via the Federal Electricity
Commission (CFE) grid, and generation models that allow for
private sector participation.
In its 2011 Global Wind Report, the Global Wind Energy
Council (GWEC) mentions some of the most significant changes
that took place in Mexico in that year: new transmission points
were installed in Oaxaca –Mexico’s windiest state–, the price
of turbines fell, leading wind generator developers (Acciona,
Vestas, Gamesa and Clipper) entered the domestic market and
financing became more available.
Meanwhile, SENER is seeking to promote the generation of
clean electricity and a gradual reduction in transmission costs by
developing new interconnection models and entering into agreements
with generators.
It was back in 2010 when Mexico set itself the goal of increasing
its total installed capacity for wind-generated electricity in a very
short timeframe. That year, 316 MW were added to extant output at
wind farms in Oaxaca and a handful of other sites around the country,
closing the year at 519 MW. By 2011, this figure had risen to 873
MW and in all likelihood will have reached 1 gigawatt (GW) by the
time you read this, putting the country well on track to its goal of 3.5
GW by year-end 2015.
Baja California, Where the
Winds of Change Blow
A large portion of investment in Mexico’s wind energy industry
ends up in Baja California, specifically the mountainous areas of the
Sierra de Juárez, on the Mexico-US border.
This is where the strongest winds and the largest projects can
be found, each with an estimated production capacity of 1,000 MW.
“Cannon Power Group has been keeping a close eye on this area
for the last 16 years, and began working closely with communities
in the vicinity of La Rumorosa as far back as 2006, with a view to
exporting electricity to the US,” says Prock.
In 2007, the company sold a 250-MW generation project to
Sempra Generation under a co-development agreement in the community
of Jacume, in the middle of the Sierra de Juárez. A year later,
it purchased an additional 20,000 hectares in the area, according to
information published on its website.
In July 2011, Cannon Power
Group and Coram Energy
Corporation decided to grant
their Mexican office greater
autonomy. The result was
México Power Group.
Then, in 2010, Cannon Power Group entered into an alliance
with wind-generator manufacturer Gamesa, to build a 32,000-hectare
wind farm in Aubanel Vallejo, which is currently managed by
México Power Group. During the first phase of the project, México
Power Group will occupy only 750 hectares and will produce 72
MW, although total capacity is estimated at 1 GW.
“We are waiting for the perfect storm, a situation in which the
natural resource –the wind–, transmission lines at our disposal and
customers for the electricity we generate come together,” says Prock.
México Power Group is still negotiating permits for its project in
Baja California, under which it will export electricity, supply crossborder
assembly plants and provide street lighting for the municipalities
of Tecate, Rosarito, Ensenada and Tijuana.
Substantial progress has also been made on the other two sites
covered by the investment announced in 2011. During an initial phase,
60 MW will be generated on 3,400 of the 6,000 hectares the company
owns on the island of Cozumel in Quintana Roo, and another 180 MW
on 1,500 of the 6,500 hectares it owns in La Bufa, Zacatecas.
Trees and Turbines
As Far As the Eye Can See
Even when renewable energies represent an a priori green alternative
to fossil fuels, companies like México Power Group need to
ensure their activities have a minimal impact on the environment
and wildlife habitats.
“Since green energy is our only business, we want to protect the
environment. The impact on the land is less than 2%; if it is common
land or is being used for something else, it can still be used for
that purpose,” says Prock, adding that during the first phase of the
Aubanel Vallejo project in Baja California, the company will pay 1
million usd a year for usufruct of the land where the wind turbines
are to be installed, even though they will not necessarily interfere
with the land’s current use.
In response to concerns voiced by environmentalists about
the impact on birdlife, Prock said that the turbines México Power
Group plans to install are fitted with new generation rotor blades
that have a larger diameter and are just as effective at capturing
wind energy, but that spin at a reduced speed of 15 revolutions per
minute (rpm) and are therefore less disruptive to birds.
Prock is confident Mexico will continue to make progress
on the legislative front. And as a pioneering force in the energy
revolution that’s already on its doorstep, México Power Group
hopes this progress will eventually afford private sector players
greater freedom to generate and sell electricity without the need
for a middleman. n
www.mexicopowergroup.com