Renewable Energy Sector in Mexico

An Expert's View about Renewable Energy in Mexico

Posted on: 22 Sep 2010

Mexico’s geographic location provides significant potential for energy generation from renewable energy sources. Challenges and opportunities in renewable energy sector are presented in the report.

Renewable Energy ? Mexico Sector Report Renewable Energy Sector Mexico Produced by: UK Trade & Investment Team, Mexico Last revised January, 2010 Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Enterprise & Regulatory Reform, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published January 2010 by UK Trade & Investment. Crown Copyright © www.uktradeinvest.gov.uk Renewable Energy ? Mexico Table of Contents OVERVIEW OF RENEWABLE ENERGY IN MEXICO 3 RENEWABLE ENERGY POLICY INSTRUMENTS 3 RENEWABLE ENERGY STATUS IN MEXICO BY TECHNOLOGY 8 MARKET OUTLOOK AND CHALLENGES 13 OTHER PROJECT OPPORTUNITIES 13 KEY METHODS OF DOING BUSINESS 14 MORE DETAILED SECTOR REPORTS 15 PUBLICATIONS 15 EVENTS 16 MEXICO ENERGY CONTACTS 19 www.uktradeinvest.gov.uk Page 2 of 20 Renewable Energy ? Mexico OVERVIEW OF RENEWABLE ENERGY IN MEXICO Challenges and Opportunities Mexico is a big fossil fuel producer with large hydrocarbon reserves and are also an active promoter of renewable energy projects - mainly through large-scale hydroelectric plants which currently represent almost 20% of the total electric installed capacity. Currently 14% of domestic energy supply is generated from renewable sources in Mexico through approximately 12,800 MW of installed electric 1 capacity. Other important primary sources of renewable energy are wind power, with an rd estimated potential of 5,000MW, and the 3 largest geothermal capacity in the world with 964MW of generation and potential capacity of 13,110 MW. Mexico?s geographic location provides significant potential for energy generation from renewable energy sources. Historically, private sector participation in 2 electricity generation was limited and mostly reserved for the state through LYFC (this company was declared in bankruptcy by President Calderon and now all its operations are part of CFE) and CFE, the state electricity companies. However, since 1992 the Electric Energy Public Service Law (LSPEE) other mechanisms such as Cogeneration, Independent Power Production, Small Production and Self supply, and Exporting and Importing schemes, which are not exclusive of the state 3 agencies (718 out of 770 of these permits are held by the private sector). Mexico has obtained over US$81 million from GEF (Global Environment Fund), the World Bank and UNDP to stimulate development of renewable energy projects and promote research and technology development. RENEWABLE ENERGY POLICY INSTRUMENTS The Strategy for Climate Change (CC) was one of the central themes of President Felipe Calderon's public policy, which was defined, in the National Development Plan for 2006-2012. The President recognised the effects CC could have on the country and is committed to emissions reduction, projects promotion and development. Currently the Executive Office prepares the Special Programme for Climate Change, which will reconsider production and consumption habits and would include promotion of clean technologies R&D in order to reduce Mexico?s dependency on fossil fuels. As a consequence of this, Mexico is promoting renewable energy and energy efficiency as part of a continuing sustainable development strategy. The ongoing process of improving the regulatory and legal framework seeks to promote the development of Renewable Energy technologies and ensure that these obtain the corresponding economic retribution. 1 CFE,2009 2 th On October 11 2009, the Mexican Government announced the close down of the state-run power company LYFC, responsible for supplying electric power to the central area of the country; the tasks of this company will be absorbed by CFE. 3 Sener, 2009 www.uktradeinvest.gov.uk Page 3 of 20 Renewable Energy ? Mexico Reforms included the passing of the new Law for the Use of Renewable Energies and the Financing of the Energy Transition (LAERFTE) and the Law for Sustainable Use of Energy (LASE) in November of 2008. Also, in 2008, the Government of Mexico took two major steps towards developing a bio-fuels production and development policy. These steps were: 1. The Ministry of Energy (SENER) commissioned a feasibility study on the potential for ethanol and bio-diesel use and production for transport in Mexico. 2. The Mexican Congress launched the Bio-Fuels Promotion and Development Law (LPDB) in February 2008. LAW FOR THE USE OF RENEWABLE ENERGIES AND THE FINANCING OF THE ENERGY TRANSITION Objectives This law is designed to improve the legal framework for private investment in renewable energy projects, in order to give private investment in this area greater legal protection. It will help achieve the goal of 25% RE contribution to the total primary energy generation installed capacity (additional to big hydro projects), by 4 the year 2012. Content The LAERFTE regulates the use of renewable energy to supply electricity for the public sector. This emphasis on the public sector relates to Article 27 of the Mexican Constitution, which states that the supply of energy for the public sector is a task strictly reserved for the state. However, the legislature has made it clear, that the use of renewable energy to generate electricity should be developed via private investment. It covers the following types of renewable energy sources: ? Wind Power ? Solar Power ? Hydropower ? Geothermal Power ? And covers any other power that the Secretary of Energy should deem to be a renewable energy source. The Law proposed the creation of an Energy Transition Fund that would foster the use of RE technologies and help finance ?The energy transition and the use of renewable energy?. The Fund provides incentives to the application of large scale commercial technologies for electricity generation (55%), to support technologies in transition for electricity generation (6%); rural electrification (10%); bio-fuels 5 (7%); other non-electrical applications and R&D (7%). It is important to clarify that this Law does not set targets for the participation of renewable energy in the supply of electricity, but instead delegates the task of creating such objectives to the Ministry of Energy. 4 Infrastructure Plan, 2009 5 CONAE, 2007 www.uktradeinvest.gov.uk Page 4 of 20 Renewable Energy ? Mexico This Law assigns the operators of renewable energy projects with a capacity greater than 25 MW, with certain obligations. These obligations mean that project operators must: ? Ensure the involvement of local communities through public meetings and consultation. ? Pay compensation to the owners of land that will be occupied by the renewable energy projects. ? Promote the social development of the community, which resides in the land where the project will be exercised. ? Abide by international practices, rural sustainable development norms, environmental protection norms and respect agrarian rights. The new regulation: The Use of Renewable Energy and the Financing of the Energy Transition Regulation nd The Regulation took effect on the 2 of September, 2009. It regulates the use of renewable energy in Mexican territory and the financing methods that will help achieve the energy transition in the years to come. According to this Regulation, the Regulatory Energy Commission (CRE) will define the necessary methodology to calculate the monetary consideration of RE producers and efficient co-generators. The Commission will also issue the criteria and guidelines for independent power producers, including self-supply renewable energy projects with total capacity of 0.5 MW. Renewable energy and cogeneration tenders Projects will be tendered according to the following criteria: 1. Projects can have national or regional scope. 2. Projects will have a maximum capacity limit and a permitted variation rate. 3. Producers may offer total or partial capacity. 4. The tenders will be flexible enough in order for the interested producers to define the technical content of their proposals, considering the specific technology, design, engineering, construction and location. 5. The Mexican Government will define mechanisms to promote projects that contribute to national firm capacity as well as others that can be available in peak energy hours. The Commission will define the methodology to calculate the maximum monetary considerations that national suppliers (CFE) will pay to RE providers, based on the estimated efficient cost of the project, plus a reasonable profit. BIO-FUELS PROMOTION AND DEVELOPMENT LAW Objective The LPDB was created to promote and develop all the actions necessary for the establishment of a national bio-fuels strategy, considering the production, commercialisation and efficient use of bio-fuels as key aspects for the reactivation of the rural sector, creation of new employment opportunities, and life quality improvement of traditionally marginised communities. www.uktradeinvest.gov.uk Page 5 of 20 Renewable Energy ? Mexico Content This law became effective on February 6, 2008; and established the need to focus on: ? Establishment of a national bio-fuels strategy; ? Development of a Sustainable Feedstock Production Programme, and a Bio- fuels Introduction Programme (which will include incremental targets considering the national production of bio-fuels); ? Establish a regulatory framework for permit emissions for production, storage, transport, distribution, and commercialisation; ? Develop specific norms and regulations in order to secure a sustainable production and use of bio-fuels; ? Research and development, as well as technology transfer related to bio- fuels; ? Tax exemptions and subsidies to organisations involved in bio-fuel production and development The rules and objectives for this Law were defined by the Ministry of Energy and th published on the 19 of June, 2009. The New Regulation: Bio-fuels Promotion and Development Regulation The promotion and development of bio-fuels in Mexico should take into account the following rules and objectives: ? Develop a prepared, competitive, and modern rural sector, capable of producing and commercialising bio-fuels. ? Promote research and development in the bio-fuels sector. ? Attract national and international investment for the promotion of bio-fuels industry. ? Assure that environmental standards and national food security are protected. ? Promote the use of bio-fuels in different government fleets of cars and trucks. According to this regulation, the development of bio-fuels in Mexico will be a co- ordinated effort of the public and private sectors. The majority of the investments needed for the development of bio-fuels should be carried out by the private sector, notwithstanding the public support that will be provided by municipal and state governments. The Ministry of Energy (SENER), the Ministry of Natural Resources and the Environment (SEMARNAT), and the Ministry of Agriculture, Livestock, Rural Development, Fisheries and Food (SAGARPA), should be the responsible parties for providing the required permits for the production, storage, transport, pipeline distribution and sales of bio-fuels (bioethanol, biodiesel, biomass and biogas). In accordance with the National Strategy to Promote and Develop Bio-fuels, the Ministry of Energy has announced that the first stage of the Bio-fuels Introduction Programme would take place in the Guadalajara metropolitan area. It is expected that the second and third stages will take place in Monterrey and Mexico City metropolitan areas, commencing during the second trimester of 2010. This would allow the development of necessary supplies to introduce ethanol in both metropolitan areas during the fourth trimester of 2012. www.uktradeinvest.gov.uk Page 6 of 20 Renewable Energy ? Mexico OTHER TAX INCENTIVES st Aiming to promote investment in RE projects, on the 1 of December 2004, a modification of the Income Tax Law (LISR) came into force. This modification states that companies investing in machinery and equipment for power generation with renewable energy may deduct up to 100% of the investment in a single year. Moreover, there is a fiscal credit of 30% for research and development in RE 6 activities. DECREE THAT SHUT DOWN THE STATE-RUN POWER COMPANY OF LUZ Y FUERZA DEL CENTRO (LYC) th On October 11 2009, the Mexican Government announced the closure of the state- run power company of Luz y Fuerza del Centro (LYFC), responsible for supplying electric power to the central area of the country. In an area measuring less than 20,531 square kilometres, that is, less than 1% of the national territory, LYFC used to meet the electricity needs of almost twenty-five percent of Mexico?s inhabitants. This segment of the country?s population lives in Mexico City, and the states of Mexico, Hidalgo, Morelos, and Puebla, and represents more than 6 million customers that consume about 24% of the electric power at a national level. The government announced that LYFC results were notably inferior compared to organisations that provide the same services internationally and compared to the Federal Electricity Commission (CFE), the larger state-operated electricity company. The firm's costs between 2003 and 2008 were 433bn pesos (£20.6bn; $32.5bn) while its sales were 236bn pesos. The utility company could not continue to be 7 funded without increasing electricity rates or taxes. By closing the state-run company, the government could expect to save $1.49 billion USD and to offer a cheaper and better-quality energy service. CFE, which provides power for most of the country, will take over LYFC?s operations; therefore, the closing of LYFC would not be a prelude to privatising Mexico's power industry. 6 Lower Chamber, 2009 7 Presidency, 2009 www.uktradeinvest.gov.uk Page 7 of 20 Renewable Energy ? Mexico RENEWABLE ENERGY STATUS IN MEXICO BY TECHNOLOGY Hydro Power There has been a strong promotion of mini hydro projects which already represent 365MW of installed capacity and will add up to the large hydropower projects that already represent 11,094 MW of installed capacity. In the large scale hydro power sector, CFE is currently developing the Yesca Project in the state of Nayarit; this 8 plant will have an installed capacity of 750 MW. Wind Power Mexico has a lot of potential for wind capacity. 5000 MW has been identified in different regions within the country including the southern part of Tehuantepec Isthmus, the Baja California and Yucatan peninsula, the central region of Zacatecas, Mexico US border, central high plains and the coastal regions of Mexico. Although the Wind Energy Mexican Association estimates that these regions have a potential of 10,000 MW, another study made by NREL US Laboratory estimates that only in the State of Oaxaca the wind capacity is closer to 3,000 MW. It is highly likely that 9 the national wind capacity has been underestimated by previous reports. The state-owned company, CFE, started the first wind project, La Venta I, with a potential of 1.5 MW. In March 2007, La Venta II was inaugurated with an 80 MW capacity. st th From January 1 to June 30 of 2009, the Ministry of Energy, CRE, and CFE developed a Public and Private Partnerships scheme, ?Open Season?, to promote the use of wind power as a primary source of energy in Mexico. Through this scheme 2,473 MW, derived from public and private projects to be developed between 2009 and 2012 in Oaxaca and Baja California, will be integrated into the National Interconnected System (SIN for its Spanish acronym). The projects that have been registered so far include 12 private projects (under the Independent Power Production scheme) and 5 public ones, and these are expected to provide 10 4% of the System?s demand by the year 2012. Using The World Bank funding, the Mexican Government will also grant an economic incentive to the wind project of CFE, La Venta III, by 1.1 cents of a dollar per kilowatt-hour given to the network, during the first five years of the project. Geothermal Power The installed capacity will be increased by 100 MW, 25 MW and 21 MW with the projects Cerro Prieto V, Los Húmeros II Phase A, and Los Húmeros II Phase B, accordingly. 8 SENER, 2009 9 CONUEE, 2009 10 SENER,2009 www.uktradeinvest.gov.uk Page 8 of 20 Renewable Energy ? Mexico Solar Energy The potential for solar energy in Mexico is one of the highest in the world. 2 Approximately three-quarters of the territory?s average solar potential is 5 kWh/m per day. According to the National Commission for Energy Efficiency (CONUEE), in 2001, approximately 115,000 sq meters of photovoltaic panels where installed in Mexico. Currently, the total installed capacity is 18.5 MW which generates an average of 8,794.4 MWh per year. The Mexican Government plans to upgrade the photovoltaic installed capacity to 30 MW by the year 2012. Mexico is one of the ten largest producers of solar thermal energy in the world. A surface of 400 thousand square metres of collectors has been installed, producing 4.5 PJ per year. The Federal Government has supported the use of solar thermal energy through a national Programme of Solar Water Heating Systems (PROCALSOL) for the 2007-2012 period. The objective of the programme is to promote natural gas savings in traditional water heating systems on residential, commercial, industrial and agricultural sectors, through combined natural gas/solar heating systems. 1.8 million square metres of solar water heaters are to be 11 installed by 2012. In 2006, Mexico?s City government made it mandatory (Environmental Norm NADF008-AMBT-2005) for new and totally refurbished facilities that need water heating systems (including kitchens, washing and cleaning, swimming pools and facilities for more than 51 employees) to cover al least 30% of their hot water th demand through solar heaters. Furthermore, on February 5 2009, the Federal Government published a Technical Standard (NUSIM005.01), regarding the installation of solar water heating systems, in the Diario Oficial de la Federación (DOF) ?the official gazette of the Federal Government in Mexico?. This standard aims to evaluate and certify the companies in charge of the installation of solar water heating systems in Mexico. Biomass and Bio-based Products Biomass energy is produced in Mexico from various sources such as water treatment, solid waste management, sludge gases, industrial waste incineration, and agricultural waste. The last displaces open field burning with minimum control over emissions. Consequently, many CDM projects have been registered by the agricultural sector. The potential for biomass use in Mexico represents between 2,635 and 3,771 PJ per year. Wood fuel is between 27 and 54% of this potential and agro-fuels 26%. The Ministry of Energy estimates that the use of 73 million tons of agricultural and forestry wastes, and the solid wastes from the ten largest cities in the country, could generate 803 MW of electricity. Therefore, Biomass could represent between 7 and 17% of Mexico?s energy consumption in 2030. Currently, the CRE has issued 54 permits for electricity-generation plants that use biomass and biogas, which represents 498 MW. In the agro-industrial sector, the Ministry of Energy has calculated that sugar cane waste potential for electricity generation reaches 3,000,000 MWh per year. The use 11 CONUEE, 2009 www.uktradeinvest.gov.uk Page 9 of 20 Renewable Energy ? Mexico of bio-fuels in Mexico based on wood and sugar cane represent 8% (408 PJ) of primary consumption in Mexico. 25 million Mexicans burn wood in rural areas but it?s also used by small-scale bread and tortilla industries. Isolated rural communities satisfy their energy needs burning wood and this source represents 75% of their homes? energy supply. Ethanol In 2006, Mexico produced approximately 60 million litres of ethanol from sugar cane. During the same year, domestic consumption was 219 million litres, importing approximately 160 million litres. 90% of the imports came from Brazil, Cuba, Guatemala, Italy, and the USA. Ethanol is used solely for the food, beverage and chemical industries in Mexico. The Ministry of Energy (SENER) and the National Oil Company (PEMEX) will launch a first pilot project in Guadalajara (Centre-West Mexico) to blend ethanol with gasoline. This project was announced during the launch of the Bio-fuels Promotion and Development Law in 2008 and will be the first project in Mexico to use ethanol as transport fuel. Specific blending percentages are still to be agreed. The Government mentioned that this project would use national produced ethanol and was up and running by 2009. PEMEX forecasts domestic ethanol demand to reach 230 million gallons per year by 2012, and the state oil company will begin using ethanol as a fuel additive in Guadalajara in 2010, and Mexico City and Monterrey by 2012. PEMEX would buy, not produce, sugarcane ethanol which it said would be grown on 300,000 hectares of Mexican lands by 2012. There is much speculation about the construction of a number of corn based ethanol plants. One which is currently under construction in the state of Sinaloa is a $56 USD million project developed by DESTILMEX. BioDiesel Biodiesel production in Mexico is limited to a few small-scale plants with total production of 3,300 MT per year. Some of the current projects are: ? Monterrey Institute of Technology (ITESM) A research plant with an output capacity of 200 litres, it uses waste vegetable oil as feedstock and currently runs at a capacity of 8 cubic meters/month (84 MT/year). The production is used to make a 20% biodiesel blend (BD-20) that fuels a student transport bus, two diesel engine cars owned by ITESM staff, and an emergency generator for peak-hour electricity generation. ? Grupo Energéticos Using beef tallow the company?s current production levels are 300 cubic meters/month (3,200 MT/year). They are aiming towards doubling the output and build another facility in the state of Oaxaca in the near future. ? Vasconcelos University www.uktradeinvest.gov.uk Page 10 of 20 Renewable Energy ? Mexico Located in the state of Oaxaca and using waste vegetable oil, this research biodiesel plant has a capacity of 3.6 cubic meters/month (38 MT/year). The production is used to make a BD-20 blend used in the university?s bus. There are additional private efforts and projects that include biodiesel production in Mexico, but they are badly documented, so it is difficult to include them in a national survey on biodiesel development. The largest snack manufacturer in Mexico, Sabritas (Pepsi Co.), is contemplating using its waste grease for biodiesel production for use in the company?s vehicle fleet. Similarly, Bimbo Company, one of the most important bakeries in the world, currently has a 27,000-vehicle fleet and is looking to produce biodiesel from oil seeds to reduce their fuel consumption. Biogas The Electric Research Institute (IIE) estimates a national production of 94,800 tons per day, of solid waste, from which 300MW could be generated considering that Mexican waste has an average content of 50% organic waste. Mexican waste practices are still underdeveloped, only an estimated 87% of the solid municipal waste is collected. Of this share, only 60% is finally disposed of in landfills in 12 controlled sites, where biogas is neither collected nor burned. According to the Ministry of Energy, this alternative source of energy is only profitable in medium and large cities that generate more than 500 tons per day, with an average population of 500, 000. In 2003, the first landfill of a methane recovery project from anaerobic fermentation of solid waste was initiated in Nuevo Leon at the SIMEPRODESO landfill. The project started with an installed capacity of 7.0 MW and a generation permit of 58.2 GW/year. In June 2008 it was upgraded to 13MW and has a potential of up to 25MW. In 2006, two permits were granted by the Energy Regulatory Commission (CRE) for the generation of electricity through Biogas usage. This Biogas is produced by anaerobic fermentation of sludge at two water treatment plants in Monterrey and generates up to 10.8MW. Algae The US Company Algenol and Biofuels will invest $850 USD million to build a saltwater algae farm in the Sonora Desert to produce ethanol and will start production in 2009 and begin sales by the end of 2010. The facility is located a few miles away from a power generation station and by pumping carbon dioxide from the station to the algae farm they expect to produce 10,000 gallons of ethanol per acre per year. CLEAN DEVELOPMENT MECHANISM PROJECTS (CDM) The National Ecology Institute (INE) estimates that Mexico has a potential reduction of 81 million tons of CO2 annually between 2008 and 2012. This can be translated to a CDM market of 480 million dollars annually. 12 SEMARNAT, 2009 www.uktradeinvest.gov.uk Page 11 of 20 Renewable Energy ? Mexico Mexico is the fourth most active country in CDM projects accounting for 119 projects from 1859 worldwide, registered at UNFCCC, falling behind China, India, and Brazil. Most of Mexico?s projects involve methane recovery and emission mitigation projects. Due, however, to the comparatively high number of small projects, Mexico recorded a share of almost 3% in Certified Emission Reductions (CERs) for the registered measures, putting it in fifth place. According to information on the UNFCCC website, the Mexican projects had been awarded a total of almost 5.9 million CERs by mid-June 2009, a clear increase on 2007, when the figure generated was only 1.5 million. At national level, 189 projects have so far received approval from the designated national authority (DNA) ? the Inter-Ministerial Commission for Climate Change?. Although there is broad scope of possible project fields for CDM in the country, most of the measures initiated till now address emission reductions in mass livestock farming (extraction or use of methane in pig and cattle farms). The CO2 emissions of the National Oil Company, PEMEX, represent 6.7% of Mexico's total emissions. The main opportunities for GHG reductions in PEMEX are located in energy efficiency, cogeneration, fuel substitution, and gas flaring projects. So far, PEMEX has identified some 60 opportunities for CDM projects; 19 of them already have a Project Idea Note (PIN) and Non Objection Letters granted by the Inter Ministerial Commission for Climate Change, UN?s National Designated Authority for CDM. These are some of the registered projects: ? 6 projects to eliminate methane emissions, including a gas flaring project. These projects will reduce emissions by 761,861 tons of CO equivalent per year. 2 ? 11 projects of energy efficiency to reduce 495,072 tons of CO per year. 2 ? 2 cogeneration projects, to eliminate the emission of 1,050,456 tons of CO per 2 13 year. Because of the high carbon intensity of its energy supply, Mexico is a strong candidate for the development of CDM projects in the energy sector. There is still considerable scope for reducing greenhouse gas emissions in the operating segments of PEMEX and the national power supplier CFE. Almost 100 larger-scale projects have been identified here, most of which are still awaiting implementation. There are extensive prospects for reducing emissions, for example, in power and heat cogeneration or in the use of waste heat contained in gas exhausts derived from the oil refinement processes. Twelve CDM projects have already been assigned to 6 development partners such as ENDESA, Statoil, and Ecosecurities. Hydrogen in Mexico Hydrogen initiatives in Mexico are at a very early stage. The most important efforts are been made by Mexican Hydrogen Network and Foro Consultivo (R&D for Government). Both institutions are in the process of developing the first National Hydrogen Technology Roadmap for Mexico with assistance from the Pure Energy Centre from the Shetlands, UK. The intention is to create a hydrogen market map 13 SEMARNAT, 2009 www.uktradeinvest.gov.uk Page 12 of 20 Renewable Energy ? Mexico and gradually integrate new technologies to develop a hydrogen economy in Mexico. MARKET OUTLOOK AND CHALLENGES CFE Projects (hydro, geothermal, wind and solar) According to CFE Project Development Plan, between 2007 and 2015, CFE will install and start operation of 3 160 MW for public services with renewable sources such as the following: 2,390 MW hydro, 158 MW geothermal, and 25 MW solar. Additionally 150 MW from mini-hydraulic and biomass will come into operation for self-supply. Between 2009 and 2012, 2,473 MW, derived from public and private projects to be developed in Oaxaca and Baja California, will be integrated into the National Interconnected System (SIN for its Spanish acronym). The projects that have been registered so far include 12 private projects and 5 public ones, and there are 14 expected to provide 4% of the system?s demand by the year 2012. OTHER PROJECT OPPORTUNITIES Specific renewable energy opportunities can be found in the following areas: ? Wind farms ? Electricity Generation with Methane in: - Landfills - Manure in farms (cows, pigs, etc) - Water treatment systems ? Minihydro and Geothermal ? Solar water heating systems for residential and hospital use ? PV systems for rural electrification and pumping ? Efficient use of ovens in the rural sector: wood burning ? Cogeneration in sugar industry ? Cogeneration industry through waste heat recovery ? Bio-fuels Production The Mexican Government is planning to increase power generation through renewable resources. According to the National Infrastructure Programme, 25% of the country?s electricity should be generated by RE, including hydro power plants, by 2012. A substantial number of projects need to be developed in order to achieve these goals, meaning an unprecedented opportunity for investors. Investors can obtain financial aid for Renewable Energy (RE) projects from different sources, including: ? The Infrastructure Investment Fund of BANOBRAS; ? Incentives for generation, such as those provided by the Global Environmental Facility, the UNDP and the World Bank; ? CER?s (Certified Emission Reductions) issued in accordance with the regulations of the Clean Development Mechanism of the Kyoto Protocol; ? VER?s (Voluntary Emission Reductions) issued under voluntary schemes for the reduction of GHGs; and 14 SENER,2009 www.uktradeinvest.gov.uk Page 13 of 20 Renewable Energy ? Mexico ? Fiscal incentives: The Income Tax Law has an accelerated depreciation rate of 100% in a single tax year for investments in machinery and equipment for RE generation. Oaxaca has one of the best wind power generation potentials in the world, due to the large proportion of hours in the year the wind is strong enough for generating a plant factor of close to 50%. In Europe, where wind energy is more developed, it amounts to 30%. There are difficulties implementing the schemes for interconnection to the SIN. The public costs acceptable to the CFE have been delayed. There are financial plans for a wind farm in Tamaulipas (Northeast of Mexico), which will require an investment of $300m USD. The project was to begin in the fourth quarter of 2009 with 40 MW and the rest will start in 2010. nd On January 22 , 2009, Mexican President Felipe Calderon celebrated the development of the EURUS wind farm project already underway, which will have 250 megawatts (MW) of power production capacity that will be consumed mainly by CEMEX under a Cogeneration scheme. The wind farm represents an investment of $550 million USD (approximately $427 million EUR Euros) and will be developed by the Spanish company ACCIONA. Other international companies interested in this energy sector are: Electricité from France, Iberdrola, and British Petroleum. There are specific interconnection contracts for the power projects from renewable sources of energy: ? Capacity recognition and energy bank (self-supply) ? Net metering (small production of solar power) ? To have open access to transmission and distribution grids to exploit superficial and underground hydro resources. It is required to have a usage or exploitation permits (SEMARNAT-CAN). The state energy operators (PEMEX & CFE) tenders/public bids, as well as every institution from the Federal Government, are available at the e-procurement site Compranet. UKTI publishes international business opportunities gathered by our network of British Embassies, High Commissions and Consulates worldwide. These opportunities appear in the Opportunities portlet on the relevant sector and country pages on the UKTI website. By setting up a profile you can be alerted by email when relevant new opportunities are published. New or updated alert profiles can be set in My Account on the website. KEY METHODS OF DOING BUSINESS Background information on doing business in Mexico can be found on UKTI?s website. Simply go to the Mexico country page where you will find information on: ? Economic background and geography ? Customs & regulations ? Selling & communications ? Contacts & setting up ? Visiting and social hints and tips www.uktradeinvest.gov.uk Page 14 of 20 Renewable Energy ? Mexico MORE DETAILED SECTOR REPORTS When considering doing business in Mexico it is essential to obtain legal, financial and taxation advice. A useful contact list of lawyers and other relevant professional bodies as well as further tailored information on the sector is available from the UKTI team in Mexico City. For further details, please contact: Irasema Mendoza Trade and Investment Officer Tel. +52 (55) 5242 8534 Fax +52 (55) 5242 8522 Email:Irasema.mendoza@fco.gov.uk http://www.embajadabritanica.com.mx Research is critical when considering new markets. UKTI provides market research services, which can help UK companies doing business overseas including: ? Overseas Market Introduction Service (OMIS). Bespoke research into potential markets, and support during your visits overseas ? Export Marketing Research Scheme. In-depth and subsidised service administered by the British chambers of Commerce on behalf of UKTI Contact your local International Trade Adviser if you are interested in accessing these services or for general advice in developing your export strategy. PUBLICATIONS ENERGÍA A DEBATE Contact: David Shields Campbell (General Director) Address: Sadi Carnot no.35-21A Col. San Rafael C. P. 06470 México, D. F. T./F. +52 (55) 92 27 02, (55) 57 03 14 84 E. energia_adebate@yahoo.com.mx W. www.energiaadebate.com/ Comments: Energía a Debate is a bimonthly, Spanish-language magazine devoted to promoting constructive, analytical debate on the future of Mexico's energy industry. The articles published in the magazine deal with key issues and are written by top-level experts, businessmen and researchers involved in the industry. The magazine has a strategically controlled circulation, so that it is read by professionals in the oil and energy industries. It is delivered to government officials and businesspeople throughout the Mexican energy industry, in particular, to state- run companies such as PEMEX and the Federal Electricity Commission. ENERGIA HOY Contact: Laura Mckenzie (Commercial Director) Address: Av. Mexico No. 49, Col. Condesa. C.P. 06100, México, D.F. T./F. +52 (55) 5553-3637 E. ventas@energiahoy.com W. www.energiahoy.com Comments: Energía Hoy is an energy sector specialised magazine founded in April 2004. It?s objective is to be the link between the private agents and the governmental public policy makers related to the oil, gas, electricity, petrochemical, and renewable energies sectors. www.uktradeinvest.gov.uk Page 15 of 20 Renewable Energy ? Mexico GLOBAL ENERGY Contact: Mariano Rodríguez (Commercial Director) Address: Hacienda de Mayorazgo 283, int. 201, Hacienda del Parque, Cuautitlán Izcalli, Estado de México, CP 54769 T./F. +52 (55) 5886 1159 Mobile. 044 (55) 1914 1360, Nextel: 9992 840009 ID. 62*15*29987 W. www.globalenergy.com.mx Comments: Global Energy is a journal of power resources in Mexico and Latin America. It is a communication and information link between suppliers, service providers, human capital and consumers in the Mexican energy sector. It has developed a bond between the biggest state-owned companies, Petroleos Mexicanos and Federal Electricity Commission, and the supplier companies focused in the energy sector. EVENTS MARKET VISIT TO MEXICO Venue. Mexico City and Guadalajara Date. Monday 8th ? Friday 12th March 2010 Organiser. UK Trade & Investment (UKTI), South East and London regions and Mexico. T. +44 (0)8452 717 400 Email: overseas.events@uktisoutheast.com W. www.uktisoutheast.com/marketvisits To help you find out more about the opportunities, UK Trade & Investment (UKTI) South East and London regions are leading a Market Visit to Mexico, with the opportunity to visit the ANTAD Exhibition. This visit gives companies a chance to explore two key markets in North America: Mexico City and Guadalajara. Prospects exist for companies across a variety of industry sectors including: Aerospace, Automotive, Creative & Media, Healthcare, Education, Environment, Financial Services, Food & Drink, Infrastructure, Oil & Gas, Power and Energy and Security. Eligible companies in the South East and London regions may receive financial support of £800 towards their costs. Companies based outside these regions will need to seek funding with their regional office. WASTE AND RECYCLING EXPO MEXICO Venue. World Trade Centre, Mexico City, Mexico Date. TBC 2011 Organiser. Messe Frankfurt USA W. http://www.wasterecyclingmexico.com/index.htm Waste and Recycling Expo Mexico is an international trade show for waste management, collection and recycling technologies. With 150 exhibitors anticipated to participate in the first event, Waste and Recycling Expo Mexico will be Mexico?s only consolidated trade show for the waste collection, hauling, disposal, and recycling sectors. Attracting an estimated 3,000 visitors from the public and private sectors, this event will bring key decision makers face to face with some of the most innovative products, technology and services in the market. www.uktradeinvest.gov.uk Page 16 of 20 Renewable Energy ? Mexico 12TH INTERNATIONAL ENERGY FORUM (IEF) MINISTERIAL & 4TH INTERNATIONAL ENERGY BUSINESS FORUM (IEBF) Venue. Cancún, Mexico Date. 29-31 March 2010 Organiser. The International Energy Forum (IEF) W. http://www2.iefs.org.sa/Documents/12th_IEF_Ministerial_Factsheet.pdf The world?s largest recurring gathering of Energy Ministers - unique in that participants include not only IEA and OPEC countries, but also key players from Brazil, China, India, Mexico, Russia and South Africa. The IEF countries account for more than 90% of global oil and gas supply and demand. Through the Forum and its associated events, IEF Ministers and Energy Industry Executives participate in a dialogue which is of increasing importance to global energy security. BRITISH WEEK Venue. Mexico City Date. TBC (May ? June) Organiser. The British Embassy & British Chamber of Commerce in Mexico City. Address. Río Lerma No 71, Col. Cuauhtémoc, 06500, México D.F. E. irasema.mendoza@fco.gov.uk W. http://ukinmexico.fco.gov.uk The overall objective is to raise the UK's profile in Mexico through a series of events, which showcased the modern and vibrant face of its industries and lifestyles. UKTI's main objective is to promote its priority sectors through a series of roundtables, breakfasts and lunches on selected subjects featuring Energy and Environment Services, Financial Services, Legal Services, Education, and Creative Industries amongst others. A major "Mexico Matters" set of activities will be organised in May/June during "British Week", organised in conjunction with the British Chamber of Commerce and the most important Mexico businessmen's club the Club de Industriales. WIND POWER 2010 CONFERENCE AND EXHIBITION Venue. Dallas, Texas. Date. 23 ? 26 May 2010 Organiser. American Wind Energy Association (AWEA) W. http://www.windpowerexpo.org The Wind Power Conference & Exhibition gathers the leading experts from the wind industry to discuss opportunities for the expansion of this market, how to strengthen the economy with wind technology, and how to establish long-term policy support for wind energy integration in the U.S. THE GREEN EXPO (THE GLOBAL RENEWABLE ENVIRONMENTAL & ENERGY NETWORK) Venue. WTC Mexico City Date. 28 ? 30 September 2010 Organiser. Ministry of Environment and Natural Resources W. http://www.ejkrause.com/thegreenexpo/ THE GREEN EXPO sets companies, environmental experts, government representatives and the civil society from different industries in an International Business Forum that cover the whole range of environmental disadvantages, pollution, new energy and providing development solutions in our country. www.uktradeinvest.gov.uk Page 17 of 20 Renewable Energy ? Mexico Enviro-Pro Mexico and PowerMex Clean Energy and Efficiency have been leaders among the environmental and power industries for years. By integrating the Water Mex and Green Cities Exhibitions, THE GREEN EXPO (Global Resources Environment & Energy Network) has surged as a single show representing a more complete range of the environmental issues facing our planet today. ENERGY DAY 2010 Venue: Mexico, D.F. Date: TBC (September) Organiser: The British Chamber of Commerce T./F. +52 (55) 5256 0901, 5211 5451 E. tdelay@britchamexico.com W. www.britchamexico.com The Energy Day is a seminar that features many renowned experts whose professional careers and worldwide expertise make it a true source of knowledge. It is an event that gathers the leading experts in the energy industry in Mexico. SEMANA NACIONAL DE ENERGÍA SOLAR (SOLAR ENERGY WEEK) Venue. Guanajuato, Mexico Date. October 2010 Organiser. Asociación Nacional de Energía Solar (ANES) W. http://www.anes.org/anes/index.php CONGRESO INTERNACIONAL DE TRANSPORTE SUSTENTABLE & 16º. CONGRESO LATINOAMERICANO DE TRANSPORTE PÚBLICO Venue. WTC Mexico Date. 4 ? 8 October 2010 Organiser. Centro de Transporte Sustentable W. http://www.congresotransportesustentable.org This is a Latin-American conference dedicated to foster urban mobility and sustainable transport solutions. The International Conference on Sustainable Transport provides a unique forum for private and public sectors as well as for civil society to discuss, exchange ideas and reach commitments that pave the way to find solutions to the challenges currently faced in our cities. UK Trade & Investment?s Tradeshow Access Programme (TAP) can help eligible UK businesses take part in overseas exhibitions. Attendance at TAP events offers significant benefits: ? Possibilities for business opportunities both at the show and in the future ? A chance to assess new markets and develop useful contacts ? Grants are available if you meet the criteria ? UKTI staff overseas will be available to assist delegates Find out if you are eligible to apply to attend this event, and more about the support UKTI can offer, on the UKTI Market Entry web page. Details of TAP events can be found in the Events portlet on the Mexico page. Other Market Visit Support may be available via your local International Trade Adviser. www.uktradeinvest.gov.uk Page 18 of 20 Renewable Energy ? Mexico MEXICO ENERGY CONTACTS Irasema Mendoza Martínez Trade and Investment Officer British Embassy, Mexico +52 (55) 16703234 irasema.mendoza@fco.gov.uk Luis Darío Ochoa Rodríguez Trade & Investment Officer Monterrey Consulate +52 (81) 8356 5359 dochoa@ukconsulate.org Alejandra Espinosa Mendoza Trade & Investment Officer British Embassy, Mexico +52 (55) 16703274 alejandra.espinosa@fco.gov.uk Karim Omar Lara Ayub Trade & Investment Research Officer British Embassy, Mexico +52 (55) 16703252 karim.lara@fco.gov.uk UKTI?s International Trade Advisers can provide you with essential and impartial advice on all aspects of international trade. Every UK region also has dedicated sector specialists who can provide advice tailored to your industry. You can trace your nearest adviser by entering your postcode into the Local Office Database on the homepage of our website. For new and inexperienced exporters, our Passport to Export process will take you through the mechanics of exporting. An International Trade Adviser will provide professional advice on a range of services, including financial subsidies, export documentation, contacts in overseas markets, overseas visits, translating marketing material, e-commerce, subsidised export training and market research. References Electricity Federal Company (CFE), Statistics http://www.cfe.gob.mx/QuienesSomos/queEsCFE/estadisticas/Paginas/Indicadores degeneración.aspx Energy Regulatory Comission (CRE), Electricity Statistics http://www.cre.gob.mx/articulo.aspx?id=171 National Plan for Infraestructure, Presidency http://www.infraestructura.gob.mx/ Legislation, Lower Chamber http://www.diputados.gob.mx/LeyesBiblio/ref/lisr.htm www.uktradeinvest.gov.uk Page 19 of 20 Renewable Energy ? Mexico Third Progress Report, Ministry of Energy, 2009, Strategic Planning and Technologic Development Department, Ministry of Energy (SENER) Mexico City, 2009. Electricity Sector Outlook 2009-2024, Ministry of Energy, Mexico, 2009. Promotion of Solar Water Heating Systems Program 2007-2012 (PROCALSOL), National Commission for the Efficient Use of Energy (CONUEE previously CONAE), Mexico, 2007. Ministry of Environment and Natural Resources (SEMARNAT), Climate Change and CDM Statistics http://www.semarnat.gob.mx/cambioclimatico/pages/mdl.aspx National Program for Prevention and Comprehensive Management of Solid Waste 2009-2012, SEMARNAT, Mexico, 2009. www.uktradeinvest.gov.uk Page 20 of 20
Posted: 22 September 2010

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