POWER May 2010 - 77

POWER IN MEXICO
private companies to invest in their own transmission
grid. So Mexico has the problem of
exceptional renewable energy resources but
no ability to exploit them. Eventually, helped
by the hard work of AMDEE, the wind association
headed by Eduardo Zenteno, a deal
was reached between the public and private
sectors. The cost was shared between the two,
largely picked up by the private sector, with
ownership remaining in public sector hands.
This agreement on transmission has opened
the doors for investment in Oaxaca, and it is
rapidly gaining momentum. Dana Younger of
the International Monetary Fund predicts an
explosion of international interest in Oaxaca
once a core capacity of 500 MW is reached.
Arturo Benavides, general manager of
Zetrak, a transformer producer, sees the
growth spurt as partially attributable to the
expansion in the transmission sector. He also
believes that there could be even more growth
opportunities in the future if certain changes
are made: " We see considerable demand for
our transformers in the transmission sector;
however, the lack of regulations is slowing
the country down. " Benavides' company began
in his backyard but has opened a consolidated
new facility and is expanding its three
existing factories.
Financing Equipment Means
Currency Challenges
Like most emerging markets, Mexico also
has to face the problem of currency risk when
purchasing equipment. The major wind turbine
manufacturers are based in Europe or
the U.S., thus liabilities would be in dollars
or euros, while local income would be in
Mexican pesos. Although the peso has been
relatively stable, especially in comparison
to the early 1990s tequila crisis period, any
potential currency fluctuation adds risk to a
wind energy investment.
The nature of the technologies involved
means that a large down payment is needed
to purchase the equipment, later to be followed
by small interest payments for the
energy. This situation may be resolved with
GE Energy's plans to build a Class 1 turbine
factory, which would produce the necessary
products for the Oaxaca region.
Zenteno argues that two things are needed
to make wind energy outside of Oaxaca consistently
profitable: higher oil prices that remain
high and the government introduction
of strong measures to subsidize renewables.
Solar Struggles to Gain Traction
Solar energy is very much an emerging technology
in Mexico. Solar companies haven't
developed at the same rate as their wind
equivalents, but the industry remains bullish.
Mexico does have potential, especially in the
May 2010 | POWER
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77
south of the country, but to date only 18.5 MW
of photovoltaic energy has been installed, with
a growth rate of around 1 MW per year.
Dr. Ernestina Torres, president of Asociación
Nacional de Energía Solar (ANES),
the national solar association, is optimistic.
She believes that Mexico still has more than
6 million people without reliable access to
energy, many of them in remote rural locations
off the grid. Solar energy can't compete
economically with a combined-cycle plant,
but it can compete in terms of its ability to be
sited close to loads. Additionally, due to the
relatively small size of the sector today, Dr.
Torres sees potential high growth rates for
entrants in the future.
Peter Eschenbach, business development
manager of ERDM Solar, says that since
the Spanish government reduced its subsidies
in the solar sector, global demand for
solar panels has dropped dramatically, and
his company is able to purchase products for
considerably cheaper than previously, helping
the profitability of solar in Mexico.
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POWER May 2010

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