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

what people get wrong about tariffs

 The issue is simple. What percentage of the economy is dependent on tariff goods? The truth, is that the US economy is far more closed than people understand. People genuinely believe that all manufacturing has ceased to exist in the United States all given to China on the altar of woke policy the truth can be further from That statement. Only about 15% of US GDP is related to foreign trade. Of that amount, slightly more than half is from Canada in Mexico. And half of that is energy. What that means, is that about 7% of US GDP is tariff dependent. The proof in the pudding, is how little money tariff generates. People think that 30 or 50 billion is a lot it’s not in an economy that has $3 trillion. The impact on the US economy will be less visible but not absent. Inflation hasn’t occurred yet first because tests have hardly started to bite, but more importantly it’s such a small percent of the economy. Now certain things are critical. The rare earth metals from China were critical....
Post a Comment
Read more

Trump and Venezuela...

The US now owns Venezuela…and not in a good way.  America is not known for its nation building skills, and yet it now owns the disaster that is Venezuela.   Starvation and exodus are the natural progression.   In addition it will become a haven for narco-terrorists, more so than it already was. I am sure that Trump and his friends really thought that little attack very well…I guess that he will now attack Iran now.  
Post a Comment
Read more

Demographics

 I am preparing a kind of family tree for our children so that they know where they came from.  In my family I am the only survivor, although my brother and sister died recently they were both in their seventies (a story I told already).    It was a fun process, but it provided more than that.  First, I married relatively young I was 26 when I married and nearly 30 when our first child was born.   I was looking at my ancestors.  On my mother's side, she had 6 siblings, Four died before the age of 30, two in war, and two from illnesses.  Only she and a single sister survived.   The two boys had a child each but they died in WWII, and the other sister died as an infant.   what is interesting is that every one of my mother's siblings had children in their early 20s.   I know that my mom was hardly 20 when my brother was born.    What is remarkable is that among our friends, we are the only ones to have fou...
Post a Comment
Read more