How Mexico's wind power industry wants to take advantage of the current 'crucial moment'

Although Mexico’s wind power industry is hopeful that regulator CRE and the federal government issue permits and unlock a 10GW portfolio, the outlook remains complicated.

Last year, only 70-80MW of renewable projects were built, Gerardo Pérez Guerra, vice president of EDF Renewable Energy and head of wind power association Amdee, tells BNamericas in this interview. Pérez became the head of Amdee on September 8. 

He also talks about nearshoring, and why the current juncture is crucial for the industry.

BNamericas: In what state did you receive the association?

Pérez: I have been a member of Amdee practically since I joined the company I run today, nine years ago. I know the wind system well and the history of the system from the beginning, which was around 20 years ago, when we started with the first projects in Oaxaca. 

I participated as a builder of the electrical infrastructure for some of the most important projects in Oaxaca. So … I know the situation well, mainly the social aspects, which are very important, and the entire development process of a project, from research to conclusion.

How have I received Amdee? A little, but I don't want to say totally, subdued, but it’s very slow because the project development process has been stopped during the last four or five years due to regulatory, ideological and pandemic issues. There have been no permits, there have been no responses, there has not even been openness to changes. Everything has stopped.

Of these five years, perhaps three were due to [CRE] stopping processes during the pandemic. What has been resumed progresses very slowly, recovering those lost years.

I receive Amdee a little depressed, in the sense that we could not advance all our plans. We had around 10,000MW to install, of which 5,000MW were in a more mature stage. They were not ready to start operating tomorrow, but mature enough that perhaps construction and the network connection could have finished within one year.

Last year, only 70MW or 80MW were built, which is nothing. One park was finished and could have been connected, but it was the only one. We could have grown 800MW or 1,000MW last year, but it has not been possible for one reason or another.

BNamericas: Although CRE has a huge renewables backlog, it issued some permits in September last year. Could the same happen this year? Is it possible a project starts this year or next?

Pérez: Of course. I am sure that if those opportunities arose today, the industry would immediately finish projects and, of course, it would be a great motivator for companies to restart everything, their strategy and their work.

BNamericas: Your predecessor, Leopoldo Rodríguez Olivé, said 10GW of wind projects were ready to start, but needed CRE permits. What can you tell us about these projects?

Pérez: We are made up of three groups. One is the generator group, dedicated to generating, producing and selling energy. The other group is equipment manufacturers, and the third is developers and service providers.

The world’s largest companies are in the generators group. We have Italian, Spanish, French, German companies that own major percentages in these projects. Of those 10,000MW, probably 6,000MW come from them. And the other 3,000-4,000MW come from developers, whose job it is to find opportunities and channel them toward some generator that will keep or fund them.

BNamericas: And where are they located?

Pérez: Between Oaxaca and Veracruz, on the isthmus, about 800MW or 900MW more could be considered. Nothing is done, although the wind potential there is actually the second biggest in the world. But we have no way to transmit the energy. In other words, the transmission network is saturated.

A direct current network was planned but canceled in 2019-20. And that network was planned to transmit up to 3,000MW. So, with that room for many projects, including from [state company] CFE and [federal oil company] Pemex, arose, which were part of an original plan, called the second open season.

And that was more or less about 2,000MW, of which half was private and half CFE and Pemex. We did the whole process, but then we couldn't continue. We migrated the projects to the electrical industry law, implemented under the previous administration, since we could no longer develop them within self-supply. We mulled creating our own network in which only we could participate.

And then, well, the direct current [project] came, but was canceled. At least 10 more projects are on standby. One or two registered a lot of progress before construction, they just need to be built now.

The other interesting areas are Tamaulipas, Nuevo León, the center of the country and the southeast, Campeche and Yucatán, but all face different problems.

BNamericas: Would an opening by the government and CRE encourage investments?

Pérez: Yes, of course. The investments, although they were planned and existed, had to be stopped for these reasons and because the rights associated with some projects were uncertain. Obviously, large investors are viewing the situation with [caution].

And I think this is a crucial moment for me and for the sector because we face the challenge of doing something through the association, such as negotiating with the authorities.

This is a good time because it is the end of one administration and the beginning of another. Whoever arrives arrives. So we have no problem working with anyone. We are sure that it will be better because it is simply an obligation for that to happen.

BNamericas: Former Mexico City mayor Claudia Sheinbaum or senator Xóchitl Gálvez are most likely to become president next year. Will you try to establish links with either?

Pérez: Yes, of course. In fact, that is a main objective. They may not be the only candidates right now, but I am sure they will be the strongest.

Although one of them [Sheinbaum] is a scientist and has technological knowledge, we will have to work a lot with the teams of both to find elements we agree on. And I think that objective can be climate change and our responsibility for the citizens of the world or, in our case, of Mexico.

BNamericas: US authorities revealed a plan to support building wind farms along the interoceanic corridor. Is this plan still underway?

Pérez: This question is difficult because they have the capacity to do it. What I don't see is a will to do it in that region. In fact, one of these two projects is very close to being able to serve the entire corridor and the development poles that are being generated there, but it is a matter of whether they can reach an agreement.

I understand that or those two projects are being planned by CFE trying to probably find a public-private partnership or something where they supply together the government's priority projects there.

BNamericas: Do you see potential in companies that are nearshoring to Mexico?

Pérez: Yes, we have nearshoring opportunities, probably depending on regions because obviously if a nearshoring area has no wind resources, it will not offer opportunities for us, but maybe for others.

In Nuevo León, you just have to see the capacities of the plants that are being built to know if it could be an objective for us, especially because of size, since, unlike solar, wind power is large. It is not the best approach nor the most profitable one to build a small wind farm.