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WIND ENERGY NOW REACHING FULL GROWTH
Wind energy is beginning to adopt the characteristics of a resilient and well established industry at a global scale. This assertive notion became a recurring theme during the panel titled “Opportunities Across the Wind Industry Project Lifecycle,” during Mexico Energy Forum 2021 on Thursday, Mar. 11. The panel was moderated by Veronica Zapata Oviedo, Kino Asset Manager at Enel Green Power. Zapata Oviedo said wind energy technology was at the tail end of a long process of maturation. Now, the industry was working with top-of-the-line components that were uniquely adapted to their own scenarios. “Technology has allowed us to constantly improve wind power. Today, we have a better acquisition portfolio and fewer interruptions in this alternative energy.” Zapata Oviedo began the discussion by asking panelists about their experiences regarding remaining obstacles to wind energy development.
Zapata Oviedo agreed with the nature of this particular problem. While panelist David Martínez, Director de SPV’s Mexico at Envision Energy, also agreed to an extent, he was also quick to contextualize this cultural resistance by explaining that wind energy is still very new to Mexico when compared to Europe, with the first wind turbine being installed in 1994, over a century after the first wind turbine was installed in Scotland. For Martínez, the prevailing challenges in the industry are more about technological implementation rather than culture. Martínez argued that upcoming onshore turbine projects in Mexico still need to adopt the latest characteristics in terms of size, which could reach up to 200m of rotor diameter and challenge the usual limit of 164m. This could also mean higher levels of generation capacity and energy efficiency. Martínez believes that technology that is classified as “modern” is perhaps not innovative or disruptive enough, so more up to date technologies need to be implemented to embrace advantages like integrated data management in wind energy assets that can optimize decision-making, making weather predictions and coordinating wind turbine arrays through digital platforms and IoT systems together with storage solutions. “Storage systems are not the future but the present. As a result, Envision Energy is promoting modern systems throughout Mexico.”
Turbine dimension was an important issue for panelist Albert Sunyer Folch, Mexico Country Manager of Nordex & Acciona Windpower,
Veronica Zapata Oviedo
Kino Asset Manager at Enel Green Power
who added to what Martínez said by making clear that new turbine sizes and technological capabilities had to be adopted. This included not just larger towers and rotor diameters but also hybrid turbines. He also explained that turbines needed to be designed to take advantage of a variety of wind conditions. “We have launched rotors for areas that are favorable for wind power and also for areas that are not so favorable. We have managed to optimize resources despite their limitations.” Zapata Oviedo agreed with both panelists when she expressed her marvel at the scales and capabilities of generation that the newest turbines were now able to reach when compared to technology from 10 years ago.
Industry best practices came up through panelist Enric Català Roig, Senior Sales Director for Latin America at Vestas, who said safety came first. Moreover, Catalá said those practices could be divided into traditional best practices and the more recently developed ones that depended entirely on technology, such as remote monitoring and asset integrity management. “We believe that in recent years, there has been an important revolution in the sector. With new technology, we have been able to optimize operations and maintenance of our equipment,” said Català. He also noted the enormous growth in the industry’s maintenance workforce, in part aided by new workshops and academic plans focused on component design, fabrication and manufacturing. Zapata Oviedo agreed, noting that none of these degrees specialized in wind energy existed when the industry was beginning. All of this leads to the development of technologies and tools that can be more reliably used in different conditions.
Other industry obstacles were also discussed in relation to offshore wind energy development. Sunyer Folch said that Mexico’s abundant onshore opportunities outweighed offshore development. He also said that Mexico had to solve many issues in states where wind potential exists, including Tamaulipas, Coahuila, Nuevo Leon and Oaxaca. Transmission bottlenecks must be resolved through the development of more infrastructure. “I do not see the need for offshore projects, since Mexico has a very high onshore potential that has not been fully exploited,” agreed Català Roig.
However, he did consider offshore wind development in the long term, giving Mexico time to begin building a regulatory framework so projects can at least enter the planning phases of their development cycle, which can sometimes take up to a decade. Martínez also agreed, saying that in Mexico it is more common to develop onshore projects. “However, we bet on offshore projects, as well. We are developing a flexible turbine that adapts to both proposals.”
Director de SPV’s Mexico at Envision Energy
FLEXIBLE POWER GENERATORS ARE THE FUTURE
lexible power generators are considered the future of the sector. Meanwhile, inflexible energies such as nuclear, coal and gas combined cycles will disappear, as they cannot meet the new demands of the energy sector, said Raúl Carral, Business Development Mexico, Central America and the Caribbean at Wärtsilä during Mexico Energy Forum 2021 on Thursday, March 11. Wärtsilä promotes innovative flexible generation solutions and is considered a leader in the sector, after delivering more than 5,000 plants, 12,000 generators and 74GW in 180 countries for electricity, industrial and oil companies. In addition, the company has more than 70 storage projects in its pipeline.
Carral shared some of the projects the company currently has in Mexico. The first was Huinalá in Nuevo Leon, where the company has implemented a Flexicycle, which is a highly efficient combined cycle that allows it to operate with resources like coal or with a flexible generator that complements renewable energy. Carral explained that flexible generation systems change according to customer needs and that the combined cycle allows gas recovery to generate additional steam-based electricity.
The company highlighted the positive results of its project at the Wind Park of Eólica Coromuel in Baja California Sur, where the company’s energy storage system allows the park to meet the requirements of the local grid. Carral explained that Wärtsilä is helping to regulate the intermittency of renewables through a GEMS smart energy management system that monitors energy production applications and controls its frequency.
Carral explained that energy can be obtained through flexible systems when it cannot be produced from renewable energies. During these intermittency times, it is important to have a flexible base that can go from 0 to 100 in less than 3 minutes. Coal, nuclear power plants and combined cycle gas turbines are not very flexible. It can take hours or even days before they produce energy. These energies are unable to face the current challenges of the sector and, therefore, can no longer be part of the new future of electricity generation.
In a recent interview with MBN, Carral explained that renewables in Mexico are currently seen as a bit of a problem, as their intermittent nature makes it more complicated to integrate them into the grid, which was not been planned for renewable integration. “If you look at energy transition and renewable integration from a planning perspective, you can make energy affordable for everyone and strengthen CFE at the same time.”
Carral said that in the energy market there is a change in generation technologies, where coal, gas and nuclear are disappearing, while flexible and renewable energies are increasing. “Natural gas will play an important role in the future. However, it will not be as it was planned, since it will also be replaced by alternative energies.” According to Mexico’s energy generation goals, in 2021, 30 percent of energy must be generated from renewable energies, increasing to 35 percent in 2024, 45 percent in 2026 and 60 percent in 2050. “I believe that Mexico will
“I believe that Mexico will achieve its goals this year. There are some challenges but renewable energies are being used more.” Raúl Carral
Business Development Mexico, Central America and the Caribbean at Wärtsil
achieve its goals this year. There are some challenges but renewable energies are being used more.”
Carral added that Mexico currently has 68 solar plants in commercial operation and that the company expects continuous growth due to its environmental and financial benefits. “We see that in the future more and more renewable and intermittent generation will be integrated iton the power grids, globally. This responds to the increasing competitiveness of wind and solar power generation. Costs are decreasing significantly, breaking world records constantly,” Carral told MBN, adding that renewable assets will help meet the Paris Agreement’s goals and protect the future of the environment.
Carral concluded that the world’s path to renewable energy includes alternative sources, energy storage and flexible generation. The company predicts inflexible power generation technologies will be discontinued. Coal, nuclear power plants and gas turbine combined cycles will diminish significantly. Meanwhile, renewables will become the favorite option as they are the cheapest power generators in the world.
SUITABLE RECOGNITION TO UNLOCK STORAGE, GRID SOLUTION POTENTIAL
In a country like Mexico, where an aging transmission and distribution system faces deeper integration of new technologies and non-conventional resources, the reliability and stability of the grid will sooner or later dominate the discussion. Building further transmission lines is a logical but costly solution. However, storage solutions can help to provide further stability and support to end-users if a blackout occurs, among other benefits. In the panel, “Preparing for the Future: Storage Solutions and Grid Stability”, moderated by independent energy analyst Rosanety Barrios, experts discussed what technology can do for Mexico’s transmission and distribution system and energy users in general during Mexico Energy Forum on Thursday, Mar. 11. After a short update presented by Barrios on a suspension against the government’s energy bill, a ‘counter-reform’ of sorts received with strong criticism by the private sector, attention turned back to why the instability of the grid is such a strongly debated topic in the Mexican energy sector. Ivette Castillo, Commercial Director North America of GE Grid Solutions, acknowledged that increased renewable capacity is stimulating this debate. “The penetration of renewable energy might contribute to instability but it is certainly not the only hindering factor,” she said, referring to the aging grid system and a change in the fuels used in the energy mix.
Furthermore, the way demand is spread throughout the day provides a further hurdle. “When you are generating more and consuming less, this creates an unbalance,” she said. If this is not delt with correctly, the system eventually blacks out. But Castillo points out that Mexico is far from being the only country dealing with these issues.
Commercial Director North America of GE Grid Solution
One technology, Castillo pointed out, is that of flexible AC transmission systems, a flexible ACbased transmission system that can enhance the controllability of the grid and increase its capability to transfer power. These large systems work as compensators for the grid and can be constructed parallel to existing substations. If transmission is adequately monetized within the Mexican context, Castillo argues that returns on investment can be achieved easily enough. Another option is flexible power, coming through storage, batteries or flexible generators. “All of these solutions together can bring balance to a grid, working as an auxiliary service that kicks in when intermittence becomes an issue,” she said. However, such auxiliary services need to be incentivized before they become attractive to the market. In Australia, where auctions for storage projects were already held, a successful precedent already exists, said Castillo.
Gianni Moreno, International Sales & Marketing Director of Hitachi ABB Power Grids, gave another example of a success story that could be of interest to Mexico. “Jamaica has had a national strategy to get 30 percent of renewables by 2030 since the year 2010,” he explained. At that time, it committed to two wind farms, totaling 38MW of capacity. With such strong government support, investors were confident and PPAs were soon signed. However, when the wind farms were ready to go online, Jamaica’s grid operator raised a red flag and signaled that wind energy was too intermittent for the power system to handle. “Intermittency is always a core part of any grid, even without renewables, I should add,” said Moreno. Limiting renewable participation in that grid was an option but the Jamaican government decided to work together with the private and academic sectors to come up with a solution, coming in the form of storage. The success of this approach convinced Jamaica to increase its 30 percent goal up to 50 percent by 2030. After all,” storage projects fixed instability in the first place,” said Moreno.
In Mexico, storage and grid solutions are already a strong topic of discussion as well. Nevertheless, the actual adoption of such technology is still somewhat limited. One company pushing the envelope is Wärtsilä. Raul Carral, Business Development Mexico, Central America & Caribbean at Wärtsilä, explained that the company has already constructed over 500MW of generator capacity in Mexico, much of which can operate flexibly. This means that they can go from 0 to 100 percent capacity in a matter of minutes. Carral notes that the company also developed an isolated-supply project for an automotive player. Even though the benefits of
International Sales & Marketing Director of Hitachi ABB Power Grids
isolated systems for the main grid are not directly obvious, taking away some demand that would otherwise have been problematic during peak hours can greatly help stability. Nevertheless, the company’s new storage for a wind project in La Paz is of particular interest. “This is a 10MW battery that supports the Eolica Coromuel wind project’s energy when intermittency becomes an issue,” Carral explained. The project is only the second storage solution integrated in a large-scale renewable project in Mexico.
For Alejandro Fajer, Co-Founder & CEO of Quartux Mexico, this trend is gaining ground. “Storage is already a viable reality and a great option for small, medium and large-scale energy users,” he outlined. “Energy storage costs have decreased around 89 percent in 10 years and investors are noticing that these systems are being adopted more widely as a result.” The fact that China and the US are quickly turning toward storage is a further sign of its capabilities. Smaller-scale systems focused on consumption for end-users are an important niche for the technology as well. “Ninety percent of Mexico’s 45 million electricity users are domestic users, after all,” said Fajer. Nevertheless, industrial users still represent 50 percent of the nation’s electricity supply. For these companies, storage can help provide electricity when demand, and thus price, of energy is at its highest during the day. “Intelligent storage systems playing toward user consumption profiles will generate many benefits, also in the case of blackouts,” Fajer added.
Guillermo García, Professor at ITAM and former President Commissioner at CRE, underwrote these benefits. “Storage is like a Swiss army knife; it can perform its stated function but also play a role in measurement, regulation, management and public policy,” he said. Peak-shaving is one major benefit, but storage’s ability to inject power makes it valuable for the national grid as well. “A lot of investment is needed when it comes to the transmission and distribution system,” he said. The lack of recognition for auxiliary services, already addressed in countries such as Australia, provides a hurdle. “At one point, CRE had the idea to recognize auxiliary services, although the plan was not fully exhaustive,” explains García. Since this has not happened yet, he argues that Mexico should define and publish regulations and subsequently issue auctions for projects providing auxiliary services. Regulation, García emphasized, is crucial to enable these developments. “We need an open dialogue in this planning to improve the stability of the system that we are all part of,” concluded Barrios.
Alejandro Fajer
Co-Founder & CEO of Quartux Mexico
BEING CLEAR ABOUT THE PATH FORWARD
Mexico Energy Forum’s last presentation on Thursday, Mar. 11, was delivered by Congressman Enrique Ochoa Reza, Deputy for Michoacan and Secretary of the Energy Commission in the Chamber of Deputies. His presentation, titled “Back to the Future,” was meant to reference the need for Mexico’s energy sector to return to a previous state of development and future opportunities which he argued were being hampered by the most recent legislative actions and controversies surrounding the sector. Ochoa began his closing remarks by mentioning the latest industry development of today: a judge has ordered a temporary suspension in general terms to the recently passed energy bill, which Ochoa Reza saw as an opportunity to rethink the priorities of this initiative and how they can be translated into a more cohesive understanding of the sector’s future.
Ochoa explained that the founding element of these new laws was that CFE needed to be strengthened, which was based on the erroneous misconception that CFE was suffering as badly as the “other productive enterprise of the state” (PEMEX). Ochoa’s figures showed instead that, while PEMEX has been closing its annual balance sheets with losses since 2016, CFE has actually stayed in black during those same years, only experiencing losses in 2020. He also mentioned that, while PEMEX’s credit ratings have been lowered below investment grade, CFE remains above investment grade, according to the three major credit rating
agencies. According to Ochoa, one of the things that made CFE strong is that it operated in an open and competitive market with clear rules. “One of the elements that strengthened CFE and its energy supply is fair competition in the market. If this is removed, it could have negative impacts on the electricity system. Mexico will only provide benefits to its electricity consumers if there is openness and fair competition; this is the future we need.”
Ochoa said that despite the law being rushed, it still cannot evade revision should it be deemed unconstitutional. Ochoa said the new law’s unconstitutional nature had been either intentionally or unintentionally ignored by legislators who pushed it through both chambers regardless.
Mexico’s energy sector has to learn from the three most recent models it has embraced so far, he said: the model that was present from 1992 to 2013, the model that was implemented in 2014 after the Energy Reform and the model that legislators are attempting to implement now. “These three visions are coexisting: they have each generated distinct international commitments backed up by international treaties. They must coexist. When we talk about reforms, people always wonder what will happen to the contracts that were agreed before. Mexico has a non-retroactive principle that says that we must respect those contracts,” he said.
Ochoa preferred not to speculate as to what the future could hold after the upcoming midterm elections. “Politics have taught me to be a historian and not a prophet when it comes to electoral matters.” However, he did make it clear that some of the proposals that he had heard so far to strengthen CFE in a way that also promoted renewable energy confused him. “For example, the revamping of hydroelectric plants is a lot more complicated than these plans would suggest.
Hydroelectric plants exist through complicated and volatile agreements with surrounding communities, whose access to vital water resources have a direct connection to the plant’s operation.” Ocha Reza concluded his presentation highlighting that the sector must maintain its future ambitions in the face of all of these challenges. “Moving into the future means generating more reliable and economical electricity, taking care of the environment and favoring public health. CFE will be the most important company in Mexico and does not need laws to achieve this but in order to promote the best international practices and technologies, dialog will be the key to its success,” Ochoa said.
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