By Adam Critchley -
Mexico's geothermal production potential is greater than what was forecast by state utility CFE and the energy ministry (Sener), according to an executive at global energy firm Reykjavik Geothermal.
Mexico's geothermal development has been slow in the past because it is a capital intensive energy source and the CFE has not been able to allocate funds to the sector, but this will change with the energy reform, strategy and project financing director Chris McCormick said at an energy forum in Mexico City.
The high cost of geothermal development will continue to slow the sector's growth, but public-private partnerships (PPPs) will inject the much needed capital, he said.
The reform gives priority to the PPP over the independent power producer (IPP) model, even though IPPs can mean a more efficient deployment of capital, McCormick said.
Sener will launch the geothermal 'round zero' during the current quarter to determine which projects will be developed by the CFE and which ones will be tendered to the private sector.
The CFE submitted its request for geothermal projects to Sener in January, the ministry's under secretary of energy transition planning, Leonardo Beltrán, said at the same event. The information regarding projects requested is confidential, he added.
Sener will respond to the request and award CFE projects within a period of 120 days, he said.
McCormick said Mexico's post-reform electricity sector needs clearer offtake rules and green energy certificates, which would provide certainty around long-term power purchase agreements and allow investors to hedge against transmission costs.
He said long-term PPAs will come about and project financing will be cheaper as capital becomes easier to procure for the sector.
"There is a significant amount of capital ready to be deployed in the hands of large project financers around the world, who are looking for sustainable projects. That money is global money and Mexico is a wonderful market to deploy it in," he said.
Luis Carlos Gutiérrez Negrín, president of the Mexican geothermal association (AGM), said last month the sector would grow 40% by 2020 to surpass 1,400MW through US$1.6bn in investments.
Mexico currently has three geothermal power stations in operation: Los Humeros, in Puebla state; Cerro Prieto (Baja California), which is Latin America's largest, and Las Tres Vírgenes (Baja California Sur).
The 50MW Los Azufres III geothermal plant in Michoacán is slated to enter operation this year.
Mexico's geothermal development has been slow in the past because it is a capital intensive energy source and the CFE has not been able to allocate funds to the sector, but this will change with the energy reform, strategy and project financing director Chris McCormick said at an energy forum in Mexico City.
The high cost of geothermal development will continue to slow the sector's growth, but public-private partnerships (PPPs) will inject the much needed capital, he said.
The reform gives priority to the PPP over the independent power producer (IPP) model, even though IPPs can mean a more efficient deployment of capital, McCormick said.
Sener will launch the geothermal 'round zero' during the current quarter to determine which projects will be developed by the CFE and which ones will be tendered to the private sector.
The CFE submitted its request for geothermal projects to Sener in January, the ministry's under secretary of energy transition planning, Leonardo Beltrán, said at the same event. The information regarding projects requested is confidential, he added.
Sener will respond to the request and award CFE projects within a period of 120 days, he said.
McCormick said Mexico's post-reform electricity sector needs clearer offtake rules and green energy certificates, which would provide certainty around long-term power purchase agreements and allow investors to hedge against transmission costs.
He said long-term PPAs will come about and project financing will be cheaper as capital becomes easier to procure for the sector.
"There is a significant amount of capital ready to be deployed in the hands of large project financers around the world, who are looking for sustainable projects. That money is global money and Mexico is a wonderful market to deploy it in," he said.
Luis Carlos Gutiérrez Negrín, president of the Mexican geothermal association (AGM), said last month the sector would grow 40% by 2020 to surpass 1,400MW through US$1.6bn in investments.
Mexico currently has three geothermal power stations in operation: Los Humeros, in Puebla state; Cerro Prieto (Baja California), which is Latin America's largest, and Las Tres Vírgenes (Baja California Sur).
The 50MW Los Azufres III geothermal plant in Michoacán is slated to enter operation this year.
