Coming Soon to the U.S.: Clean Energy from Mexico

In the steep, dry mountains of Baja California (pictured), the wind whistles through the rocky crags. That's the sound of money to wind developers who see these mountains, which enjoy some of the best wind energy on the planet, as the perfect power plant for the burgeoning metropolis of San Diego, Calif., a few hundred miles away. Already, a small 10-megawatt windfarm is going up in these hills near the town of La Rumorosa.%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%%That farm will primarily power local households. But energy developers to the North see huge potential not only in the winds whipping across Mexico but also in the hot sun that bakes the land. Perhaps most important, they see an easier, quicker and cheaper route to getting big energy projects built compared to the multiple levels of permitting processes required north of the border.

A Warmer Welcome in Baja

The alternative energy moneymen dreaming of clean energy from Mexico see several factors that make the country perfect for power production aimed at the Southwest U.S. Baja California and other parts of Mexico have gusty winds similar to those found in the world's best wind farm areas. Much of Mexico also boasts the same excellent solar footprint as California, Nevada and Arizona with bright, clear weather the vast majority of the time. In terms of total energy potential, the hills and fields of Mexico could easily supply thousands of megawatts to the U.S. without breaking a sweat.

So could alternative energy projects in California, Nevada and Arizona. But concerns about giant churning windmills marring vistas are less pronounced in Mexico, where many families still struggle to put enough food on the table. And giant solar power projects sprawling for many acres will likely get a kinder reception in Baja, where the state government has already indicated it's eager to have U.S. power development companies build wind and solar farms, and provide the tax revenues and local jobs that will come along with such projects.

Then there are the land and access prices. In areas where the wind is swift in the U.S., developers have already bid up prices, with landowners getting roughly $5,000 per year and up per wind tower in parts of the West. Ranchers in Mexico are settling for far less than that. This could change over time, but initially it reduces the upfront costs somewhat.

Readily Available Transmission Lines

At the same time, connecting a power project from Baja to the California grid is, in many cases, more economical than trying to connect from even more remote locales north of the border. Since building utility-grade transmission lines runs roughly $7 per mile, pulling wires is a major concern for energy developers that are watching every penny in this still-tight financing environment. Already, a dozen transmission lines run across the border, and Northern Mexico has a higher density of them than most of the Western U.S. The relative proximity to these lines makes jacking into the grid to export power from Northern Mexico to the U.S. relatively cheap and easy to do.

Additionally, Mexican renewable power projects could enjoy considerable political and financial support, if they choose to purchase U.S.-made windmills, solar equipment and other gear. The U.S.-based Export-Import Bank recently underwrote the first export of 27 large wind turbines to Mexico, according to Green Momentum. Those turbines, made by Clipper Windpower, represent the first such export that's supported by the government-backed export-centric bank and financing facility.

In addition to U.S. government help in underwriting such purchases, Mexico's government will likely make an aggressive push, complete with lots of incentives, to draw in renewable power producers seeking to sell to the U.S. After all, Mexico is desperately looking for alternative revenue to offset falling oil production.

Caught in a Bind

Not that all of this is happening tomorrow. According to the trade publication CSP Today, export of solar power remains a low priority for Mexico and its government. And as the country's hydrocarbon reserves fall, Mexico will likely focus even more intently on renewables for domestic use.

Still, California utilities appear to be in a bind, trapped between a state mandate that they produce 20% of their power from renewable source by 2020 and permitting procedures that make it increasingly difficult to build large, renewable energy plants anywhere environmentalists or community activists might object.

Add it all up, and the likely outcome is clear: Mexico will be, perhaps within a decade, a green-energy powerhouse. And its biggest customers will be the residents of California and Arizona.
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