Mexico: Positive Outlook for Private Investment in Geothermal Energy

Opinion: Industry Trend Analysis - Round Zero Results Strengthen Positive Geothermal Outlook (Business Monitor International)

We expect this upcoming tender to attract significant interest from IPPs, due to Mexico's conducive regulatory environment and the availability of supportive financing schemes for geothermal developers

The outcome of Mexico's geothermal 'Round Zero' - the process through which the government determined which unexploited sites will be developed by the state-controlled utility Comision Federal de Electricidad (CFE) and which ones will be awarded to the private sector through an upcoming tender - has reinforced our positive outlook for private investment in the sector. The government has awarded only a minor part of Mexico's geothermal resources to CFE and encouraged cooperation with private players in the development of those sites, thus supporting our view that independent power producers (IPPs) will realize business opportunities in the market over the coming quarters.

On July 24, the Mexican Ministry of Energy (Sener) awarded five geothermal concessions to CFE, of which four correspond to fields where the company has already developed power plants in the past (Cerro Prieto, in Baja California; Los Azufres, in Michoacan; Los Humeros, in Puebla; Tres Virgenes, in Baja California Sur) and one which is still completely unexploited (Cerritos Colorados, in Jalisco). The CFE also obtained 13 permits for the exploration of sites in Baja California, Nayarit, Guanajuato, Puebla, Chiapas and Jalisco y Michoacan. Meanwhile, IPPs will be able to compete for concessions covering the bulk of Mexico's probable geothermal resources, estimated by Sener at 5,700 megawatts (MW). The tender for sites that are yet to be awarded is expected to start in August 2015.

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Magaly Flores Armenta of the Mexican Federal Electricity Commission will give  a presentation on Present and future development of geothermal energy in Mexico at the GRC International Session on Monday, September 21, part of the 39th GRC Annual meeting & GEA Geothermal Energy Expo in Reno, Nevada, USA.

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