Sener Is Optimistic About 66Gw Forecast

In November 2014, several legislators voiced their concern over the fact that the 2015 budget for renewable energy was reduced by more than 60% compared to 2014. The budget for renewable energy investment for 2015 is US430 million, while in 2014 this amounted to MX1.83 billion. SENER, on the other hand, seems rather optimistic about the investments that will flood the Mexican electricity industry. C'esar Hern'andez, Undersecretary of Electricity at SENER, recently spoke at a webinar for the Institute of the Americas and said that Mexico will add 66GW to its power grid over the next 15 years, with investments for renewables reaching US90 billion. As a first step, CFE recently announced that it will tender 12 projects for natural gas and electricity infrastructure that will require a total investment of US3,276 million. Besides adding 666MW to the installed capacity, these tenders will add 989.10km to the transmission lines and 15km of natural gas pipelines. This statement is attune with information from SENER, which announced that investments for the Mexican wind energy sector will total US14 billion over the incoming four years. Currently, Mexico has a wind power installed capacity of 2,551MW and a goal of reaching 9,500MW by 2018.

Part of the Reform's objectives is to reduce electricity costs, which will be done by diversifying the country's energy mix and assuring a reliable service. Although it is too soon to see these expected results in full extent, electricity prices for the residential segment dropped by 2% at the beginning of 2015 and declined 16% for the industrial segment over the past 12 months. These early results have prompted CFE to pledge further drops in prices.

Hern'andez stated that the Energy Reform will foster a competitive market that will promote the use of renewable energy sources through the awarding of clean energy certificates. Suppliers will meet their clean energy requirements by purchasing clean energy certificates. The revenues from the sale of these certificates will allow energy generators to cover costs, thus becoming more competitive. Along these lines, Mexico will also see more investments in transmission to optimize connectivity, which has been a constant hurdle for renewables, as well as reducing energy losses and financial risks.

According to Hern'andez, the authorities envision a process in which the modernization of the energy industry reduces the costs of services, ultimately benefiting end users. This process has already begun with natural gas replacing fuel oil for energy generation in CFE plants. Hern'andez claims the use of renewables is becoming increasingly cheap, but there is a general concern among renewable companies regarding how these sources will be able to compete with a source as cheap as natural gas. However, data from SENER suggests that Mexico has enough resources to exceed its goal of having 30% of electricity generation coming from non-fossil fuels by 2024, 40% by 2035, and 50% by 2050.