Background on the Situation
On December 19, the Mexican government granted generation permits for 12 solar farms and six wind farms, totaling 3,475 megawatts, to 14 companies. However, these projects still need to secure energy sales contracts for financing and overcome social, environmental, and interconnection risks, according to analysts.
Expert Opinions
Víctor Ramírez Cabrera, an expert in the Mexican electricity sector, explains that although the projects for 2,451 megawatts of solar power and 1,023 megawatts of wind power were selected in the priority attention call, they are not guaranteed to be realized. This is because bilateral energy sales agreements and financial backing still need to be secured.
“The financial aspect depends on the bilateral energy sales agreements that companies manage to achieve. Remember, this call is different from previous auctions; it only aims to obtain permission. Now, companies must seek appropriate bilateral agreements, and this does not ensure their security,” Ramírez Cabrera told El Economista.
Carlos Flores, an energy specialist at Egade Business School, adds that project assignment does not guarantee execution. He believes it is unlikely that 100% of these projects will be built, which does not invalidate the government’s actions but suggests that expectations should be moderate and realistic due to lingering investor distrust following Andrés Manuel López Obrador’s six-year term.
“This process minimizes regulatory risk, but projects still face other risks like financial, social, environmental, and interconnection challenges. Therefore, it’s reasonable to anticipate that Sener’s announced goal may not be achieved in this first round, though it could be attained by combining multiple rounds or calls,” Flores explained.
Project Details
Some of the largest projects granted permits include:
- “La Alegría” and “La Esperanza” solar farms in Campeche with 694 MW and 350 MW capacities, respectively, developed by SunStone Power with headquarters in Shenzhen, China.
- “Panabá 8” wind farm in Yucatán with a 252 MW capacity, developed by Elecnor, based in Bilbao, Spain.
- “Central Energía Solar Herrera” in Tecali de Herrera, Puebla, with 231 MW of solar capacity developed by Energía Solar Herrera.
- “Zapoteca” wind farm in Juchitán, Oaxaca, with 200 MW capacity developed by Zapoteca de Energía, which had been seeking transmission capacity since 2015.
- “Vientos del Caribe” wind farm in Othon P. Blanco, near Chetumal in Quintana Roo, with an estimated investment of $181 million for its 208 MW capacity.
Some of the developers are backed by Dhamma Energy, part of Italian oil company ENI’s energy division, and Green Park Energy, the Mexican subsidiary of Spanish firm Iberdrola.
Key Questions and Answers
- Q: What do the recent permits mean for renewable energy projects in Mexico? A: The permits granted by the Mexican government for 12 solar farms and six wind farms totaling 3,475 megawatts are only the first step. Projects still need to secure energy sales contracts, financial backing, and overcome social, environmental, and interconnection risks.
- Q: Why are experts cautious about the projects’ realization? A: Experts like Víctor Ramírez Cabrera and Carlos Flores highlight that securing bilateral energy sales agreements and financial backing remains uncertain, making it unlikely that all projects will be executed.
- Q: What are some of the largest projects granted permits? A: Some of the largest projects include “La Alegría” and “La Esperanza” solar farms in Campeche, “Panabá 8” wind farm in Yucatán, “Central Energía Solar Herrera” in Puebla, “Zapoteca” wind farm in Oaxaca, and “Vientos del Caribe” wind farm in Quintana Roo.
- Q: Who are some of the developers behind these projects? A: Developers include SunStone Power, Elecnor, Energía Solar Herrera, Zapoteca de Energía, and firms backed by Dhamma Energy (ENI) and Green Park Energy (Iberdrola).
