Mexico Renewable Energy Initiative

Leading Actor(s)	Mexico / Ministry of Energy
Participating Actor(s)	Energy Regulatory Commission (CRE); Federal Electricity Commission (CFE); Electricity Research Institute (IIE); National Bank for Public Works and Services (BANOBRAS); Legislative Branch; Multilateral Funding Agencies; Private Sector Investors; Local Governments; NGOs
Project status	underway
Brief status report on Action*	IAP COMMITMENT: ''Initiate legal and regulatory framework adequacy, market based incentives, and innovative financing schemes in order to foster all renewable energies, and promote private investment.'' ACTION: • Initiative of Law for the Use of Renewable Sources of Energy (LAFRE). Establishes the creation of a Program for the Use of Renewable Sources of Energy. A minimum percentage of 8% in renewable energy contribution to total power generation is established as a goal for 2012 (does not include big hydroelectric plants). It was approved in December 2005 by the Low Chamber and is currently awaiting approval by the Senate. • New Interconnection Agreement for Self-Supply from Intermittent Sources of Energy with credited capacity. This new agreement incorporates a methodology to estimate and credit the capacity contribution of these sources of energy to the National Electric System. • Wind farms regulation. Development of a Mexican Official Standard aiming to protect the environment, throughout construction, operation and dismantling of a wind farm. • Law for the Development and Promotion of Bioenergy. This Law promotes the production of ethanol and other biofuels, as a means to foster the national agroindustry, diversify energy supply and achieve sustainable development. The Law was approved with modifications by the Senate on April, 2005, and is currently awaiting for review and approval by the Low Chamber. IAP COMMITMENT: ''Design and implement transparent methods and systems to estimate, and internalise the environmental benefits and impacts of energy technologies in the total generating costs.'' ACTION • The LAFRE (see above) states the development of methodologies to assess the stability that the use of renewable energy brings to the electric system, and to measure the economic advantages of long term price stability of RE technologies and of energy diversification. International resources from GEF, GTZ and REEEP also contribute to the development of these methodologies. IAP COMMITMENT: ''Promote large-scale power renewable energy projects, as well as expansion of the use of renewable energy technologies for rural sustainable energy supply in isolated areas.'' ACTION: • Large Scale RE Project (PERGE). This project has a grant through the World Bank and its goal is to promote grid-connected RE in Mexico, thus contributing to avoid polluting emissions. An incentive will be given to RE power producers through the Green Fund. • Green Fund of PERGE. Financial mechanism that will seek the progressive recognition of the real value of renewable energy for their contribution to the reduction of the risks in energy supply and energy price stability, and for its potential to reduce regional and global environmental impacts. • Integrated Energy Services for Small Rural Communities (SIEPRCM). This project is coordinated by the Ministry of Energy with the joint participation of the Commission for the Development of Indigenous People and the World Bank. The program will bring electricity within the next 5 years to 50,000 rural households isolated from the national electric grid, in the states of Chiapas, Guerrero, Oaxaca and Veracruz. • Wind energy development. In 2005 CFE began the construction of La Venta II, the first large-scale wind power plant in Mexico (83 MW) located in the state of Oaxaca. This plant will initiate operations in October 2006. In the coming months CFE will bid La Venta III, a 100 MW plant to start operating by 2008. Under the same scheme, CFE had programmed four more tenders for La Venta IV, V, VI and VII, with 100 MW each – all are expected to begin operation between 2009 and 2012. • Additionally, CRE has granted eight permits to install a total wind capacity of 1076 MW for self supply purposes: 716 MW in the state of Oaxaca and 360 MW in the state of Baja California. • Mini-hydropower. The Mexican company Comexhidro has developed minihydro-power projects of energy use of existent agricultural dams. The minihidroelectric Chilatán, a 14 MW plant located in the State of Michoacán, began operations in 2005. The most important project of the enterprise, “El Gallo”, in the State of Guerrero, will have a 30 MW capacity, and has been under construction since 2004. The project is using the new regulation on interconnection for intermittent sources of energy. • Biomass generation-self supply. The CRE granted a permit for 40 MW of additional capacity. In addition, two paper mills have a permit from CRE to cogenerate steam and electricity with biomass, one with bagasse (10MW) and the second incinerating black liquor (10 MW). Three more permits are in operation based on biogas from landfills (18.2 MW) and a fourth one using biogas from the industrial process (1 MW). One more project is under development, and has been authorized to generate power using biogas produced by anaerobic fermentation of cow manure (10.6 MW). • Thermosolar generation-public service. CFE plans to bid this year (2006) the installation of a new hybrid power plant (combined cycle + thermosolar) under the financed public work scheme.The plant will be located in Agua Prieta, Son., with 240 MW of thermal capacity, and 30 MW of thermosolar capacity. The project will receive a grant of 50 million dollars from the Global Environment Fund (GEF). IAP COMMITMENT: ''Initiate and foster National and International Cooperation Programs among the Federal Government, Local Governments, the Academia, Research Institutes and International Research and Financing Organizations to promote capacity building, research and technological development, and technology transfer.'' ACTION: • Large Scale RE Project (PERGE). 5 million dollars from this project have been allocated to capacity building and technical assistance. • Integrated Energy Services for Small Rural Communities (SIEPRCM). This projects considers the provision of training for the development of energy related productive activities to the pilot populations. It will also provide local technical assistance for equipment maintenance and will aid in the integration of inter-institutional structures for the development of RE rural electrification projects, thus ensuring replication of the pilot project in surrounding communities. • Action Plan to eliminate barriers for the development of wind energy generation in Mexico. SENER has participated in the development of the Action Plan to eliminate barriers for the development of wind energy generation in Mexico, financed with a GEF grant, through UNDP, and executed by IIE. In its first phase, it has a funding totaling 4.5 million USD for the development of a Regional Wind Research and Development Center (CERTE, for its acronym in Spanish) in Oaxaca, and 2 million USD to measure wind speed with the installation of anemometers in diverse locations of the country, as well as the execution of three wind energy projects. • Cooperation with the German Technical Cooperation through GTZ. Since June 2005, the GTZ is implementing the project “Renewable Energy Promotion - PromovER”. The objective of this program is to contribute to the efficient promotion of renewable energy markets through the following four lines of action: strategy and policy development (focused on biofuels in a first stage), advice in adjusting the legal and regulatory frameworks, project and market development (focused on solar heaters in a first stage). South-South cooperation. • Cooperation with USAID. Development of a pilot project to provide electricity services to 600 people in Cacahuatepec, Guerrero. • Cooperation with REEEP
Investments involved in Action*	• RE projects in operation and under development. USD 2,600m (USD 386m for projects under development and USD 2,214m for projects under construction). • Large Scale RE Project – PERGE. USD 25m of which 20m will be assigned to la Venta III (a 101 MW wind energy project) and the remaining 5 will be for technical assistance activities.
RE production increase through Action*	280 MW
CO2 reduction through Action*	750,000 t / year
Next steps envisaged for implementation of Action	• Approval of the Law for the Use of Renewable Sources of Energy (LAFRE) by the Senate. • To increase the power transmission capacity and infrastructure in order to allow the evacuation of electric power generated by independent power producers.
Impacts of Action as expected by end of 2010	• To reach a renewable energy contribution of 8% to total power generation by 2012 (not considering big hidroelectric plants). • To provide electricity to 50,000 rural households (25,000 people) isolated from the national electric grid, in the states of Chiapas, Guerrero, Oaxaca and Veracruz. • To have the Regional Wind Research and Development Center (CERTE) in operation.

* = as of end 12/2005 unless otherwise indicated