Prevailing Winds: How the Mexican Government Harnessed its Renewable Energy

Mexico Renewable EnergyThe Mexican government’s sustained efforts to boost utilization of the country’s vast wind resource are finally bearing fruit: policy changes and incentives have now made renewable energy a competitive electricity source.  The country’s installed renewable energy capacity from wind grew from just over 2 MW at the end of 2000 to 524.5 MW at the beginning of 2011, with a pipeline of at least 3,400 MW of committed wind energy set to come online through 2016.  This rapid growth in wind energy was made possible by a series of proactive efforts by the Mexican government to overcome entrenched barriers.

In a recently released policy paper, Case Study: Mexico’s Renewable Energy Program, authors Stacey Davis, Mark Houdashelt and Ned Helme take an in-depth look at both the many barriers that impeded wind energy development and the steps the Mexican government took to support use of this clean energy resource.  A key initial driver was a shift in the authority over private sector generation from the national electric utility to a government regulatory agency, the Energy Regulatory Commission (CRE), an advisory body to the Ministry of Energy (SENER).  CRE/SENER used its new authorities to overcome resistance from the public electric utility to private sector participation in wind energy.  For example, the government was able to require full-scale demonstration projects, adjust the rules for private sector access and developed a new “open season” bidding system to facilitate finance of new transmission.

Thanks to these and other policy changes and new incentives for renewable energy that were established in the last decade, the average time to develop new wind projects in Mexico has dramatically dropped from more than ten years to between 3 and 5 years.

From an examination of Mexico’s efforts and achievements in establishing a renewable energy program, it is clear that wind power, in particular, faced numerous barriers that were overcome through strong government leadership by employing a combination of mandates, regulatory changes and incentives that systematically address each impediment. As other countries look to develop their renewable energy sector, Case Study: Mexico’s Renewable Energy Program, can serve as a blueprint to overcoming similar barriers that stand in the way of wind energy deployment.

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