The sad state of affairs for geothermal energy development in Mexico
With the current lack of any support by the government to push geothermal development in Mexico, development is on hold and the country resulting in lack of investments not only in development but also maintaining operating plants.
Mexico has been on the forefront of geothermal energy utilisation for a long time ranked number three in the national rankings of geothermal power generation capacity. But clearly it seems now to be one of the forgotten sources of energy in the reform of Mexico’s energy market, having not seen the takeoff observed by other energies, such as solar and wind, so a recent article in El Heraldo.
With an installed (operation-able) capacity of today 951 MW, the country has fallen behind countries like Turkey and Indonesia that have grown its capacity in the past 10-15 years.
There is simply not just no real impactful development happening, the country also sees the constant drop of production capacity in the country’s largest geothermal field of Cerro Prieto. With little to no investment over the last decade, so publication La Voz de la Frontera in an article in June, that the plants in the field operate at only 350 MW or about half of the set up capacity of 700 MW. With unclear data, this even puts the reported 951 MW of overall installed geothermal power generation capacity in Mexico in doubt.
In the Latin American context though, Mexico remains above its peers in Central and South America, such as Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Chile.
In Mexico, the Federal Electricity Commission (CFE) has four hydrothermal geothermal fields in operation with a capacity to meet the electricity demand of two million average Mexican households. On the other hand, the Dragon Group of Mexico, which operates geothermal power plant at the Domo San Pedro field in Nayarit, is currently the only private company operating geothermal plants in the country.
The use of geothermal has a long tradition in Mexico. It is estimated that before the Spanish conquest, many settlements, mainly in the central part of the country, developed thanks to hot springs . However, the first studies to use geothermal resources to generate electricity occurred until the early fifties.
At the end of 1959 the geothermal field of Pathé, Hidalgo, a 3.5 MW capacity plant was inaugurated. This was the first plant that was installed in the Americas and was partially operational until 1973, when it was dismantled.
In 1958 the first geological surveys were carried out in the geothermal field of Cerro Prieto where in April and October 1973 the first two units of 37.5 MW began operating.
Currently geothermal fields generate 6,041 Gigawatts (GWh), which represents about 1.84 percent of electricity generated in Mexico.
According to data from the Energy Regulatory Commission (CRE) , Mexico’s geothermal power potential with hot dry rock resources, capable of being developed with improved geothermal systems (EGS) technologies, is 24,700 MW for maximum depth of 3,000 meters.
Looking though at permits and planned projects, Mexico could add up to 1,200 MW in geothermal power generation capacity and move on-par with the Philippines and Indonesia, based on today’s status. Of which 50 MW are in construction, 131 MW are allocated and authorised and in development, while 1,090 are in very early stages of development.
“ Mexico is one of the countries that have more geothermal resources, but it is a complex energy, the plants necessary for its operation are not simple. In addition, the investments that have to be made are high, ” said Enrique Alba Carcelén, CEO of Iberdrola México.
He said that it is a technology that is not widespread, “ therefore the know-how is not widespread, so that combination that is not an easy technology, that they require significant investment and that there is not much knowledge worldwide, ends being a barrier so that the full potential of Mexico cannot be exploited , ”he said.
“ Mexico can grow in geothermal energy, it has the conditions, the resource and it has the knowledge, as an engineer I think it is an opportunity, ” he said.
“ Our country was one of the first countries, along with Italy, to have geothermal plants and we have forgotten it. There are not enough investments , ” said Antonio del Río Portilla, director of the Institute of Renewable Energies at UNAM.
He said that research should be done to explore other types of geothermal reservoirs: “ Those who know how to exploit well are those in which there is water, but there are other dry rock deposits that are volcanic and have no water, so you have to inject water to to warm up and use this source of electricity generation in a turbine, but more studies are needed to have it already applied in a plant, ”he said.
He commented that care must be taken with this energy source and exploit it in a responsible way, since “ we can pass our hand and draw more water than we can get and the reservoir cools , ” he warned.
For Gonzalo Monroy, GMEC consulting analyst , “ geothermal energy is the great orphan child of energy reform, because the potential is wide but the past administration forgot to develop it. They should have taken an open season or tenders, not much was done and CFE is doing less because it does not come out of coal and fuel oil, ”he said.
“ The issue of geothermal energy has been left as one of the pending issues, after the second time commitment to natural gas. The commitment to natural gas as the main source for generating electricity has hindered the promotion of renewable energy and this is reflected in the case of geothermal energy, ” said Fluvio Ruiz Alarcón, former independent director of Pemex.
Great efforts were made push development in the geothermal market and this with the support of private developers by the previous administration, strongly supported by the Inter-American Development (IDB/ BID) and the World Bank. Several international players have been eyeing the development of geothermal power projects, among them French power company Engie/ Storengy, as well as several Mexican players such as Grupo Dragon and Grupo Enal. With the auction system for renewable energy technologies leaving geothermal at a disadvantage, an approach was made to give special bonus to geothermal energy and its baseload attributes in electricity auctions. Furthermore an incentive program for development in the form of risk mitigation was launched. But with a new President and a new administration, there has been complete stand still. Part of that seems to be a focus on public sector electricity generation rather than allowing the private sector to participate.
So all the positive signs for development and kicking off of further development in the geothermal sector in Mexico have gone and there is no real sense of things will at all improve in the near or longer term.