Skip to main content

Mexico's energy bet: Fossil fuel -- just like Trump. But Technology is moving faster than old political reflex

Mexican industrial investments in renewable energies, like private micro-grids, wind/solar farms supported by storage infrastructure such as batteries are economically justifiable investment decisions by the owners and CEOs.  The economics of solar at less than $0.015 /Wh make them a far more efficient, but timing-sensitive technology – today new affordable green and long-lasting storage is available – efficient and price competitive

A few weeks ago the Mexican government confirmed its intention to focus on coal and oil fired power plants reducing the role of renewable “disruptive” energies like solar and wind power, because of perceived grid instability.  The government cited the coronavirus pandemic as a justification for new rules that will prevent businesses to use the grids to transport renewables. 

This announced shift is not anything new, since within the fine lines in the 2018 published  Prodesen 2019-2033 development program of Mexico’s national grid, it was evident that within the 600 pages document that Mexico’s government was unhappy that private enterprise had access to CFE grid network. This was communicated in so many ways as a warning to investors. 

Obviously its a sad news as it will affect 28 solar and wind projects that were ready to go online, and 16 more under construction, with a total of $6.4 billion in investments , much of it from foreign firms.  This energy will be sorely missed by Mexico’s enterprise as there are already regional shortage and a lack of power transport across the country.  In fact, CFE has indicated that it will raise tariffs in 2020 (we presume after the Covid-19 crisis). 

However, green energy continues its path forward, and prices continue to decline.  Rumors are that the latest plans were ready to sell their energy at less than US$ 0.015 /Wh which represents a world record in terms of energy prices.  CFE’s own capital issues and the increased energy demand by Mexico’s industry makes closed systems more and more attractive.  The strength of wind and solar are its low distribution costs – when they produce.  Their weakness is their Stochastic output; storage is a viable and price competitive solution.

North American companies are now offering to Mexican industry “power by the hour” at rates 10% to 15% than what CFE offers.  The economics of green alternative energy are obvious – and are less costly than CFE’s offering.  A decoupling from the National grid is now not only possible but also cost effective!

But at the same time, it opens other windows of opportunities. 

Comments

Post a Comment

Popular posts from this blog

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b)...
Post a Comment
Read more

Spray painting Taylor Swift G650 aircraft (updated)

 First, a bit of paint will not harm anyone.  These climate activities are going to learn two things in the next few days:  (1) Trespassing at an airport is a felony almost anywhere in the world.  That means criminal prosecution.   (2) removing paint from an aircraft is expensive.   So these climate activists are about to find out the reach of the British criminal system and it will not be pleasant, the UK has very strict laws about that, I would be surprised if cleaning the aircraft of all the paint will cost less than $100,000.     I am sure that when they planned (premeditation) this little show they had a very valid logic to doing this.  Tonight, they are probably realizing the depth of their troubles.   I understand that in the UK it's a minimum one-year jail sentence.    Also, good luck travelling with a criminal trespass charge against you.  I am relatively certain that the airline industry will ...
Post a Comment
Read more

Janet Yellen from China supporter to Hawk...

There is rarely serious news in the world these days, it seems that most newspapers are filled with headlines and little else, and then Ms Yellen went to China.  Secretary Yellen has long been known in the Biden administration as the voice of moderation when dealing with China, yet as her trip which concluded yesterday a hawk was born:  She warned the Chinese against dumping goods in the United States.    fighting words! The American administration is very concerned about the lack of Chinese domestic consumption.   Even before the COVID-19 epidemic, there were already the beginning signs of a slowdown, automobile sales were off.   China is facing domestic deflation (a clear sign of collapsing demand) China imports few consumer goods, they import raw materials and intermediary goods.   It seems that the American administration is concerned that the Chinese administration will dump consumer goods abroad to keep its manufacturing machinery ...
Post a Comment
Read more