Page 146 - STRATEGY Magazine

New Power: Efficient and Clean
Goeser is enthusiastic about the business opportunities in Mexico. But
her real excitement is about the nation’s energy reforms. “Mexico’s energy reforms are based on best practices from around the world. They’re using the best technology available.” Goeser continues, “Along with more efficient power generation and a dedication to clean energy, Mexico is developing an energy superhighway. Even power from alternative sources like wind will be transmitted with minimal loss.” She adds that “current systems lose up to 40 percent through outdated transmission lines.”
LOUISE GOESER
President and CEO Siemens Mesoamerica
regime, which will grant Clean Energy Certificates with a lifetime of 20 years, as well as energy packages with 15-year lifespans.
A RENEWABLE MANDATE
According to the International Renew- able Energy Agency, Mexico is one of the top 10 global markets for renewable energy. Andrea Bernardi, the Country Manager of photovoltaics company En- erray Mex, agrees, positing that Mexico will continue to be a global leader in re- newables for years. “One reason is that it’s the only country that has targets for solar written into its law,” he notes. Mandated targets include reducing greenhouse gas emissions by 22 percent by 2030 and generating 35 percent of total power—nearly 20 percent higher than in 2015—from clean energy by 2024.
The Development Program of the Na- tional Electric System (PRODESEN), in its projections for 2016–2030, indicates that the total investment for power gen- eration infrastructure in Mexico will be about US$89.5 billion, of which a signif- icant percentage will go to clean energy sources—by the end of the period, most of Mexico’s generation growth will occur in renewables. Those familiar with the country’s role in the Paris Climate Con- ference might not be surprised by these numbers, as Mexico regularly stands with the most aggressive nations when it comes to the environment. Indeed, Gabriel Alonso Imaz, CEO of Energías de Portugal Renovables for North America, is excited that, due to compet- itive market conditions, the nation is
now buying the world’s cheapest solar and wind power, with the result of lower prices for its end users. Energy reform, he says, is “one of the areas where Mexi- co sets an example for other countries.”
Mexico has the third-greatest potential of any nation on earth when it comes to solar energy investment. The northern and northeastern states boast in excess of six kWh/m2 of average solar radia- tion, and even the more temperate south hovers around four. Santiago Morales, a Partner at renewable energy investment company Becquerel Capital adds, “In most of Latin America, the fundamen- tals of solar energy make sense. Sooner than we think, solar will be a primary source of the region’s electricity mix.” That’s why investors see solar as one of Mexico’s primary energy sources in the coming decades. For example, renewable energy in the nation received US$13.5 billion in foreign direct investment in 44 projects from the United States, Spain, and Germany from 2010 to 2015 alone.
UNEXPECTED OPPORTUNITY
While solar energy has the highest potential, wind and hydropower lead the renewable energy pack in installed ca- pacity and generation. Of the two, wind has the brighter future—today, wind has an installed capacity of over 3,000 MW, with more than 7,303 GWh generated each year. This makes up only 5 percent of the industry’s estimated potential, leaving ample room for growth. Cur- rently, more than 40 projects are under construction throughout Mexico.
“The good thing that resulted from the high oil prices from a few years ago was
that it became worthwhile to invest in renewable energy technology,” says Luis Vielma Lobo, the President and CEO of CBM Exploration and Production. Viel- ma points to Tehuantepec in southern Mexico as one of the top three places
in the world for wind power potential. He explains that both wind and solar power are much more efficient. “We have already reached the breakpoint where you no longer need high oil prices to make it worth it. I think over the long term, oil is going to become much less relevant and renewable energies much more relevant.”
Adding to the relevancy of renew-
able energy is a growing demand for cross-border collaboration on solar and wind projects. California and other border states place a premium on clean electricity, and Mexican leaders are more than ready to talk. The United States’ federal system means that states have some leeway in facilitating projects
of this sort without the approval of Washington, D.C. As a recent panel of experts at the University of Southern California confirmed, businessmen and environmentalists on both sides of the border have an active stake in seeing it take shape.
GLOBAL PROBLEMS, MARKET SOLU- TIONS
Vielma adds that Mexico is trying to make its mark in addressing climate change. “We have proposed innova-
tive measures and aggressive goals to reduce our carbon footprint. We are still burning fossil fuels, but fortunately we have more and more renewables.” As
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