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U.S. State Department highlighting geothermal business opportunities in Mexico

U.S. State Department highlighting geothermal business opportunities in Mexico Los Azufres III, Phase 1 (Unit 17) geothermal power plant, Mexico (source: ThinkGeoEnergy, creative commons)
Alexander Richter 1 Feb 2017

Highlighting the great and mostly untapped geothermal potential of the country and recent changes to the energy policy framework, the U.S. State Department highlights the geothermal business opportunities in the country in a new article on its website.

In a recent report on business opportunities for American companies, in a publication called “Overseas Business Insights” of January 27, 2017, the U.S. State Department describes Mexico’s geothermal potential.

Today, Mexico ranks no. 4 in terms of geothermal resources, according to the report, behind the U.S., the Philippines and Indonesia. The country is today the sixth largest geothermal operator with an installed geothermal power generation capacity of 926 MW (with more not operating). The plants operated by the Federal Electricity Commission produced around 6,330 GWh of electricity, or around 2 percent of total power generation in Mexico that year.

CFE’s plants are located in the states of Baja California (Cerro Prieto), Puebla (Los Humeros), Michoacán (Los Azufres), and Baja California Sur (Tres Vírgenes). The Cerro Prieto plant, with an installed capacity of 720 Megawatts (MW), is the largest geothermal plant in Latin America and the third largest in the world.

Sitting along the largest volcanic belt provides ideal conditions for tapping into geothermal resources for the country.

A Clear Regulatory Framework Aims to Boost Competition and Innovation

State-owned CFE was so far the only company allowed to develop geothermal resources prior to Mexico’s broad energy reform, but the market is now open to private sector competition and new investments.

The 2014 Geothermal Energy Law allows the government to award private companies three-year exploration permits and 30-year production concessions. Since July 2015, the Energy Ministry (SENER) has awarded 13 exploration permits and five concession contracts to CFE, covering areas with a combined generation potential of 448 MW. SENER also awarded eight exploration permits to private Mexican companies and the first concession for geothermal development to a private Mexican company, which plans to invest approximately $240 million in a geothermal power generation project in Nayarit.

SENER and the Mexican Science and Technology Commission (CONACYT) established the Mexican Center for Geothermal Energy Innovation (CeMIE-Geo) in 2016 in Ensenada, Baja California, to promote Mexican research and development in the field. SENER and CONACYT invested $54 million in the center, to bring together academia and industry to foster knowledge and technical skills, develop the geothermal energy sector in Mexico, and contribute to sustainable economic growth.

To address high upfront costs and subsurface data information challenges, SENER is using new mapping and data tools, as well as a nation-wide renewable energy inventory (INERE), to provide information on Mexico’s renewable resources and improve the country’s natural resource management. INERE is a statistical and geographic information system, available for public use, collecting data and creating maps of electricity generation, natural resources, and wind, solar, geothermal, and biomass potential. Mexico’s primary development bank (NAFIN) also created a $120 million “Insured Exploration Credit” fund for geothermal companies to reduce exploration risks and encourage investors.

The U.S. Department of Energy (DOE) and the U.S. Foreign Commercial Service will host a bilateral U.S.-Mexico Geothermal Market Opportunities Workshop to bring together public and private sector stakeholders from the United States and Mexico to discuss new opportunities for investment and potential collaboration in the development of Mexico’s geothermal energy resources.

Source: U.S. State Department