The government has put significant funding into developing new technologies through its Geothermal Innovation Center. As a volcanic region, Mexico has significant potential for geothermal, a firm energy source that can complement intermittent sources such as wind and solar. The resource potential is spread throughout the country, but concentrated in the volcanic central, eastern, and southern regions.
The Geothermal Energy Law created new opportunities for deploying this resource by establishing a framework for private companies to explore and develop geothermal resources and drawing a distinction between geothermal and drinking water supplies. In 2015, SENER held a “round zero” for geothermal to determine which prospective sites and projects would be developed by CFE and which would be auctioned to investors in future bid rounds. Since the reforms, SENER has granted 21 exploration permits in seven states, and under the new scheme the private sector is expected to cover about 40.7 percent of electricity demand from geothermal resources by 2030, with the CFE covering 21 percent of demand, small producers 3.4 percent, and self-generation 8.4 percent.
This developing potential notwithstanding, it is unclear how quickly geothermal energy use will grow in Mexico. Although new projects are planned, and the recent power auctions have awarded some new geothermal capacity, several units are also scheduled to be decommissioned, meaning that a larger number of new projects will have to be built just to reach a net increase in capacity. The high exploration costs, especially costs associated with drilling wells to assess the technical and economic potential of estimated resources, pose the greatest barrier.
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