Geothermal is a well-established power source in Mexico with significant growth potential
Countries with vast geothermal potential are trying to expand capacity because it is an abundant source of energy and enjoys high capacity factors of 80% on average. This is well ahead of other renewable energy sources, such as solar and wind, with average capacity factors of 14% and 29% respectively.
By the end of 2017 Mexico was the sixth largest country by installed geothermal capacity after the United States, Philippines, Indonesia, Turkey and New Zealand. Across Mexico, geothermal was the 3% of the total energy supply, with significant upside for growth.
History of Geothermal in Mexico
Geothermal has a long history in Mexico. The first development was in 1959, when the Federal Electricity Commission (CFE by its acronym in Spanish) installed a 3000 kW pilot plant in the Pathe, Hidalgo, 125 miles from Mexico City. This plant led to bigger developments such as the Cerro Prieto.
The geothermal energy production in Mexico is due largely to the use of six major geothermal fields. The most important field is the Cerro Prieto. Two-thirds of the energy produced supplies the domestic market, and about 30% is transmitted to California.
When looking at the history of Mexican geothermal growth, the largest phase of expansion took place until the early 1990s. By 1992 the geothermal installed capacity was around seven times the installed capacity in 1980. During the 1990s and 2000s, geothermal electricity generation fluctuated around 5500 GWh without any meaningful increases in capacity.
New Regulations Present Opportunities for Investors
Over the next five years, we expect geothermal energy to see better growth rates. In 2014, the Geothermal Law, which is part of a set of reform legislations, was passed and implemented. The law aimed to differentiate geothermal use from water extraction, and also regulated and expanded development through geothermal concessions.
The large potential for geothermal energy in Mexico and the new regulations provide for a great opportunity for investors. Geothermal is a stable source of energy with high capacity factors. It also has the capability to replace base-load fossil fuel plants.
We expect this opportunity to help the government easily meet its ambitious clean energy targets. Please contact Paola Moreno, Senior Consultant, for more information on how to capitalize on the geothermal opportunities in Mexico.