Energy Action Group
Energy Action Group
Americas Society/Council of the Americas Energy Action Group (EAG) brings together the public and private sectors to develop strategic energy policies for the Americas. The EAG hosts forums in cities across the Americas and publishes working papers and recommendations on key energy and climate topics.
We are grateful to Chevron, Inter-American Development Bank, and others for supporting this initiative.
(Image: Government of Brazil)
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Given that Mexican oil sector is opening up 75 years after nationalization, most attention on the country’s landmark energy reforms has focused on state oil company Petróleos Mexicanos—better known as Pemex. But the underreported story is the development of the Mexican renewable energy sector, which stands poised to capitalize on its huge potential. The opening of the state electricity commission Comisión Federal de Electricidad (or CFE) could have even greater implications for Mexico’s energy industry.
In late 2014, renewables made up less than 14 percent of Mexico’s total electricity generation, but the country envisions that this figure could rise to 35 percent in the next ten years. Indeed, Mexico is endowed with some of the best conditions for solar, wind, and geothermal energy in the world. Up until now, the challenge has been how to match investment to opportunity. Fortunately, investors have been flocking to Mexico, given more affordable prices for renewable energy and attractive projects throughout the country.
Of the three types of renewable energy, Mexico’s solar industry offers the most potential. Several large-scale investments are underway, such as M+W Group’s investments in commercial projects running as high as 30 megawatts. However, the regulatory system is still being overhauled and local content restrictions continue to hamper investment. Solar, like wind, is an intermittent energy source and thus is not capable of serving as baseload power. Therefore, solar must be considered in the context of supplementing, rather than replacing, conventional energy sources. Most likely, developers will continue to target Mexico, especially the state of Chihuahua or the Sonoran Desert.
Energy experts watching the southern state of Oaxaca will observe that wind farms now dot the landscape. The country has installed capacity of 283 gigawatts of wind power, which ranks second only to hydro in terms of Mexico’s renewable energy. The south of Mexico is particularly suited to aeolic energy development due to its favorable windy geography. Barriers to investment include local content restrictions and difficulty in acquiring land rights to set up wind farms. Future challenges will involve navigating a new regulatory regime and accessing local electricity grids.
Unlike wind and solar, geothermal is a constant energy source, and Mexico is particularly well suited for geothermal production. Currently, there is 11 gigawatts installed capacity for geothermal in the country, which is a fraction of what could be. The economics of geothermal are challenging due to upfront investment costs, which can stymie potential investors. The energy reforms have laid out more favorable terms for investment in geothermal, which could lead to more interest. The potential for Mexico in the sector cannot be overstated, and officials should emphasize developing an investor-friendly framework for investment.
Given the falling price of oil, Mexico should take advantage of the lower prices of renewable energy and go headfirst in developing the renewable energy sector. As the old saying goes, "The best time to fix a roof is when the sun is shining." Mexico should capitalize on this opportunity to expand its renewable energy profile for a greater emphasis on clean, sustainable energy.
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A technology-driven revolution in energy development has amplified Asian interest in procuring energy resources from the Americas.
Americas Quarterly blog posts
- Mexico and the United States: Crude Oil Swap? by Christian Gómez, Jr. (April 28, 2015)
- The Price of Oil’s Impact in Latin America and the Caribbean. by Christian Gómez, Jr. (March 9, 2015)
- Addressing Caribbean Energy Security. by Christian Gómez, Jr. (January 27, 2015)
- Shale Gas Development in Latin America. by Christian Gómez, Jr. (September 22, 2014).
- Mexico’s Energy Reform: Lessons from Colombia and Brazil. by Christian Gómez, Jr. and Sophia Sciabica (August 4, 2014).
- HidroAysèn and Chile’s Energy Agenda. by Christian Gómez, Jr. (June 13, 2014)
Presentations
- Energy Situation of the Caribbean: New Opportunities and Green Energy Deployment, by Christian Gómez, Jr. (May 2015)
- China's Interest in Brazil's Oil, by Christian Gómez, Jr. (May 2014)
Meetings and Events
- Washington (March 27, 2017) Extractive Industries in the Americas – Opportunities and Risks. Watch a video of this event.
- New York (December 7, 2016) The Western Hemisphere's Energy Landscape in 2017 and Beyond. Watch a video of this event.
- Miami (October 19–20, 2015) Energy Conference – After the Fall: Energy Security, Sustainable Development and the Environment. Learn more about this event.
- Washington (October 15, 2015) Private Roundtable: A Conversation with Dr. Víctor Urrutia Guardia, Panama’s Secretary of Energy. Learn more about this event here.
- Houston (September 24, 2015) North America in Global Energy Markets: Infrastructure and Integration. Learn more about this event.
- Houston (September 23, 2015) Private Breakfast on Mexico’s Round One Bidding with Lourdes Melgar, Undersecretary of Hydrocarbons of Mexico. Click to see the presentation.
- Miami (July 28, 2015) Private Breakfast with Phillip Paulwell, Minister of Science, Technology, Energy and Mining of Jamaica. Learn more about this event.
- Miami (July 15, 2015) Energy Conference – Natural Gas in Central America and the Caribbean. Watch a video of this event, and read a program summary.
- Washington (May 19, 2015) Private Roundtable: A Conversation with Ali Moshiri, Chevron President for Africa and Latin America.
- New York (May 4, 2015) Mexico: Private Equity Energy Investment. Watch a video of the event.
- Washington (April 27, 2015) Private Roundtable on Renewable Energy and Human Capital in Mexico with Leonardo Beltrán, Deputy Secretary for Energy Planning and Transition, Mexican Secretariat of Energy.
- Washington (March 31, 2015) Venezuela: Political, Economic, and Energy Update. Watch a video of the event.
- Washington (March 18, 2015) Paper Launch: Energy and the Pacific Alliance. Watch a video of the event, or read a program summary.
- Washington (February 19, 2015) The Price of Oil’s Impact on Latin America and the Caribbean. Watch a video of this event, and read a program summary.
- Washington (January 26, 2015) Caribbean Energy Security Summit, an initiative of the Office of the Vice-President. Read a program summary, and read the Caribbean Energy Security Summit Joint Statement here.
- Washington (December 17, 2014) Long Term Oil Dynamics: The Price of Crude Oil, with Ramón Espinasa, Senior Oil and Gas Specialist, Inter-American Development Bank. Learn more about this event.
- Bogota (December 9, 2014) Energy and the Pacific Alliance Roundtable.
- New York (December 1, 2014) Energy Reform in Mexico: Challenges and Opportunities for Mexico’s New Energy Landscape. Watch a video of this event.
- Washington (November 13, 2014) Dinner Discussion with Dr. Lourdes Melgar, Undersecretary for Hydrocarbons, Mexican Secretariat of Energy.
- Santiago (October 20, 2014) Consulta Previa and Renewable Energy Production: Ensuring Community Participation and a Clear Framework for Investment.
- Washington (September 30, 2014) Private Luncheon on Venezuela’s Energy Sector with Dr. Thomas O’Donnell, professor, Freie Universität.
- Washington (September 10, 2014) Representative Michael McCaul on North America Energy Integration and Mexican Energy Reform. Learn more about this event.
- Washington (July 30, 2014) North American Energy Integration: Mexico and Canada. Learn more about the event.
- Washington (May 19, 2014) Asian Energy Investment in the Americas. Watch a video of the event, and read the program summary.
- Mexico City (March 11, 2014) Mexico: Opportunities for Natural Gas and Renewables.
- Calgary (December 3, 2013) North American Energy Integration: The Canadian Perspective.
- Washington (October 22, 2013) Shale Gas Development in Latin America. See a video of the event here and read a program summary here.
- Washington (September 5, 2013) Brazil’s Energy Agenda – Launch of Energy Action Group Working Paper. See a video of the event here and read a program summary here.
- Washington (July 30, 2013) Financing Renewable Energy in Latin America. Read a program summary here.