Solar Energy Potential - in Mexico's Northern Border States July 2012
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RE-Energizing the Border: Renewable Energy, Green Jobs and Border Infrastructure Project
Solar Energy Potential
in Mexico’s Northern Border States
July 2012
Sergio Romero-Hernandez
Department of Industrial Engineering and Operations,
Instituto Tecnológico Autónomo de México
Bernardo Duarte Rodríguez-Granada
Department of Industrial Engineering and Operations, Instituto Tecnológico Autónomo de México
Omar Romero-Hernandez
Center for Responsible Business,
Haas School of Business, University of California, Berkeley
Duncan Wood
Department of International Affairs,
Instituto Tecnológico Autónomo de México
Senior Advisor, Mexico Institute Renewable Energy Initiative
Contact details: sromero@itam.mx
www.cdt.itam.mx
Mexico Institute
Mexico Institute This report is part of a series of four papers that explore the potential of renewable energy projects in the U.S.-Mexico border region. The project was made possible by generous support from the Council of State Governments-WEST and USAID. The writing of this report also owes much to the support given to a number of the authors by the Asociación Mexicana de Cultura A.C. and the Instituto Tecnológico Autónomo de México. The Mexico Institute and the authors are grateful for the support of these organizations, but neither they nor the Woodrow Wilson Center are responsible for the content, views, or data contained in the reports, which exclusively represent the views of their authors. The authors would like to thank Chris Wilson, Miguel Salgado and Estefania Ortiz for their support and assistance during this project. We acknowledge the faith put in us by Andrew Selee. Thanks are also due to Gabriella Ippolito for her assistance in editing the reports. ISBN: 978-1-938027-00-0 July 2012 Mexico Institute Woodrow Wilson International Center for Scholars one Woodrow Wilson Plaza 1300 Pennsylvania Avenue NW Washington, DC 20004-3027 www.wilsoncenter.org/mexico
Solar Energy Potential in Mexico’s Northern Border States
Introduction consumption by businesses and residential
Mexico’s geographic location and its customers. Nonetheless, it is unlikely that
world-class solar resources make it a prime large-scale generation for the national
candidate for solar energy development. grid or for export to the United States will
To date, however, investment in the make economic sense in the near future.
sector and government support for the Several barriers continue to hold back the
industry has been quite limited, and solar sector. Initiatives at Mexico’s state and
energy has lagged far behind wind and national level are needed to pave the way for
geothermal generation. This paper argues private investment. In the long run, solar
that the northern border states of Mexico energy holds the potential to significantly
provide an extraordinary opportunity strengthen Mexico’s energy sector and
for investment in solar energy for local economic development.
Methodological Note
Due to the difficulty in obtaining comprehensive data regarding the development of solar energy in Mexico,
much of the information in this report was obtained from site visits, personal communication with state
government officials, journal and newspaper articles. A total of thirty-three journals and newspapers were
analyzed. Three of these have a national circulation, while the rest were local newspapers from Mexican
Border States. When possible, the information found in newspapers was confirmed by a second or third
publication.
The proliferation of governmental and non-governmental organizations that promote and regulate
the development of renewable energy in Mexico, combined with the lack of a single agency serving as an
information clearinghouse, complicates comprehensive analysis of renewable resource development. Energy
projects below 1 MWp (MW peak power) have no reporting or regulatory obligations. Such small, often
unreported projects are the most common use of solar energy in Mexico. In fact, there are only two CRE-
approved Photovoltaic (PV) projects, one 3.8 MWp in Aguascalientes and another in 30 MWp in Jalisco.
In addition to many national and international private sector firms, the main agents involved in the
development and regulation of renewable energies in Mexico are:
Government Institutions
CFE: Federal Commission of Electricity, (CFE, Comisión Federal de Electricidad)
CONUEE: National Commission for Energy Savings, (CONUEE, Comisión Nacional para el Uso
Eficiente de Energía)
SENER: Ministry of Energy, (SENER, Secretaría de Energía)
CRE: Energy Regulatory Commission (CRE, Comisión Reguladora de Energía)
Non-Governmental Organizations
ANES: National Solar Energy Association, (ANES, Asociación Nacional de Energía Solar)
Inter-governmental Organizations
BECC: Border Environment Cooperation Commission
NADB: North American Development Bank
1
RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
Mexico’s Global globe. The most “sun-favorable” belt exists
Geographic Position between 15°N and 35°N. This includes
Solar radiation is unevenly distributed the regions that are naturally endowed
around the world. It varies in intensity with the most favorable conditions for
from one geographic location to another solar energy applications. These semi-
depending upon latitude, season, and time arid regions are characterized by having
of day. In recent years, there has been the greatest amount of solar radiation,
growing demand to identify geographic more than 90% of which comes as direct
areas with favorable conditions for solar radiation because of the limited cloud
energy development. This resource mapping coverage and rainfall (less than 250 mm
is of central importance for developing per year). Moreover, there are usually over
countries that have started solar projects for 3,000 hours of sunshine per year.2
energy production and distribution.1 The majority of developing countries fall
For convenience and simplicity, it within the more favorable regions, between
has been generally established that the 35°N and 35°S. For this reason, they can
geographic distribution of total solar depend on solar radiation as a steadfast
radiation is divided in terms of intensity source of energy that can be readily and
into four broad sun belts around the cheaply exploited by both rural and urban
Map 1: Global Solar Irradiation
Source: International Energy Administration, 2003.
2
Solar Energy Potential in Mexico’s Northern Border States
households for a multitude of purposes. comparison, the same technology would
Mexico’s total territory lies between the require twice the area and therefore double
latitudes 14° and 33°N and the longitudes the investment to deliver the same amount
86° and 119°W, making it one of the few of energy (184 TWh).4
countries that lie 100% within the most
favorable sun belt on the planet. The Northern Border
Mexico has a high level of solar Mexico’s six northern border states cover
radiation. It receives, for example, twice as nearly half of the country’s total surface. The
much solar radiation as Germany. Across six states have a predominantly arid desert
Mexico, daily radiation varies between 4.4 climate with a high level of solar irradiation.
kWh/m2 and 6.3 kWh/m2 of solar energy, According to the CONUEE database of 2008,
which is comparable to regions in Africa, in this northern half of the country there is
the Andes and parts of Oceania.3 This an average daily solar irradiation of 5.853
means that crystalline photovoltaic panels kWh/m2. Baja California has a higher rate of
would require an area of approximately irradiation, with an average rate of 6.4 kWh/
100,000 hectares, or one thousand m2.5 The largest Mexican state, Chihuahua, is
square kilometers, to meet all of Mexico’s recognized as having one of the highest solar
energy needs. In Germany or Canada, by irradiation levels of the world. The president
Figure 1: Solar Radiation Levels in Border States
Source: La Comisión Nacional para el Uso Eficiente de la Energía (2008).
3
RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
of Mexico’s national Solar Energy Association and contracts for the sale of surplus energy
has predicted that the state could become the are provided by the CRE.8 In the case of
largest global reserve for the solar industry: solar-electric (PV or Concentrated Solar
“We could become the Saudi Arabia of Latin Power, CSP), systems can be connected to
America due to our solar potential and total the grid and the surplus sold to CFE through
surface area.”6 the permit. The price paid to individuals
As shown in the chart above, all six states by CFE has been at or below conventional
have a large potential for solar development. electricity costs.
These numbers are among the highest in the The most important step taken
world and far exceed those present in many to promote Mexico’s market for clean
countries that have invested heavily in solar energy was the Congressional approval
power development. For example, the average of November 2008’s, Law on the Use of
radiation levels in Germany (the global Renewable Energy and Financing the Energy
leader in solar development with 4.88 GW Transition (LAERFTE). This legislation
of installed solar capacity) range from 2.6 to establishes the goal of having 8% of total
3.7 kWh/m2, just over half the levels found in electricity generation from renewable
Mexico’s border states. sources (excluding large hydro) by 2012.
The installed capacity of renewable non-
Legal Environment hydro would have to grow 2.13 times in four
and Barriers to Solar years (2008 to 2012) in order to achieve the
Development LAERFTE goal.9
Mexico’s legal and regulatory framework Of direct relevance for solar power
regarding renewable energies has evolved is the provision in the LAERFTE for the
in recent years. Mexico’s National provision of financial resources that during
Development Plan 2007–20127 goal is: the first year dedicates 55% of its budget to
“To promote efficiency and clean the creation of a Green Fund to encourage
technologies (including renewable mature technologies such as photovoltaics,
energy) for power generation. To 10% for a Rural Electrification Fund in
achieve this, it is essential to promote which PV systems are the main solution,
low carbon intensity energy sources and 15% for the Fund for Research and
such as wind, geothermal and solar. Technological Development of Renewable
In turn, it is essential to integrate Energy (FIDTER). The remaining 20%
policies to promote low-emission can be used to promote non-mature
public transport, provision for tax technologies, biofuels and non-electrical
incentives to promote sustainable applications. The government will allocate
energy projects, conduct an economic 600 million pesos annually to encourage
assessment of the benefits of this type public and private investment in mature
of energy and, ultimately, encourage technology renewable projects, and another
research into technologies of lesser 400 million a year for investment in R&D
energy intensity.” and non-mature renewable technologies.10
These targets are set under the Law of Moreover, the Interconnection
the Public Electricity Service (LSPEE), which Agreement for Renewable Energy Sources
allows individuals to generate electricity of the Energy Regulatory Commission
exclusively for self-supply, cogeneration or (CRE) determines the requirements,
for sale to the CFE. Cogeneration permits terms and conditions for interconnection
4Solar Energy Potential in Mexico’s Northern Border States
of renewable energy sources to the project is currently in; steps, that have
national grid applicable for intermittent specific financial parameters. From the
sources of energy (such as solar energy) in beginning to the conclusion of a project,
facilities with storage capacities less than it is uncertain how much it will cost. Flow
those that are required independently. analyses are not exact, adding to this, that
Thus, the excess energy can be sent the number and capacity of government and
to the network for use when needed. private financing programs are very limited.
SEMARNAT and the Finance Ministry There are no mechanisms for “soft” loans
(Hacienda) have a program for accelerated or feed in tariffs to promote the use of solar
depreciation of investments that benefit systems in Mexico despite their successful
the environment. This is, however, a one- application in other nations.
time charge that can be made against tax
payments, and is only a minor incentive Technical
for solar development. Although this legal According to several installers consulted
framework is a step towards development, within ANES; in autonomous off-the-grid
some other incentives should be PV systems, lack of maintenance has caused
considered that have proven successful in failures to the PV systems after just a few
other parts of the world, including feed-in years of operation. There is a need to train
tariffs (above-market pricing for renewable technicians to install and maintain systems
energy sales), subsidies to investment, and provide greater customer satisfaction,
soft credits on capital investment or other furthering development of the market.
mechanisms to help overcome the extra Finally, low level legislation (operating
cost of using solar systems. procedures) is needed to have minimum
standards of quality and performance of
Barriers to Solar Development photovoltaic products and solar projects.
in Mexico An important barrier to the
development of the solar industry in Mexico
Institutional with regards to manufacturing solar
There are no specific targets for increased panels is that solar panel manufacturers
solar capacity by the government. in Mexico currently have to source most
Although there are significant subsidies of their inputs from abroad. According to
for conventional energy, the tax incentives the manufacturers, the Mexican industry
for investment in solar energy are not does not have the sufficient know-how or
sufficient to promote market growth. In technology to meet the specific quality
addition, environmental externalities are requirements and characteristics used in
not considered in the economic analysis of solar panel manufacturing. Some of the
energy projects. unmet requirements include low panel
efficiency outputs, low cover glass quality
Financial with low useful life expectancy, and
In general knowledge, there is little inadequate design and dimensions of the
understanding of the life cycle of a solar panel frames.
project. It is not clear how a project can
be developed, for it does not follow any Social
established local pattern of construction The lack of knowledge and information
or investment. The development steps are about PV Solar Energy in Mexico means
taken according to the situations that the that many rural consumers do not
5RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
understand its potential benefits. With Existing and Potential
respect to energy consumption and Projects in the Northern
costs, households rarely take a long- Border Region
term perspective and consequently fail In recent years, the number of solar projects
to identify the potential savings small- under development in the northern border
scale solar system would in some cases states has grown dramatically. From the
provide. Moreover, the rural community west to the east coasts, the Government
remembers the failures of the Solidaridad of Mexico, CFE, and international private
program, which was developed by the investment firms and energy companies
administration of former Mexican have been working together to exploit
president Carlos Salinas de Gortari in Mexico’s solar reserves. Solar investments
the late 1980s. The program’s objective from Mexican, Spanish, U.S., and Chinese
was poverty alleviation, and one of the firms have been nourishing the state and
proposals was to install PV Solar Panels national economies, creating employment
in rural communities. The program failed, and growth.
partially because the solar systems were This activity comes as no surprise as the
using car batteries that died just after a region is well endowed with solar radiation
few months and were rarely replaced. Still throughout the year. The table below
remembered by the rural population, this presents the solar potential of each state:
experience left many rural residents with
the impression that PV and other solar Baja California
solutions are useless and with a strong A solar project at the CFE’s geothermal field
preference for a grid connection. in Cierro Prieto, Baja California is expected
to start operating by the end of 2012,
Political
generating 5 MW of peak power in order to
Unfortunately, decision makers are often
produce an annual average of 10,000 MWh.
uninformed about solar energy as well.
The photovoltaic cells have an estimated
This has greater consequences because
useful lifetime of 25 years.11
policymakers have made decisions and
Another planned solar project
declarations that have restricted the
(still not under construction) in Baja
development and growth of solar energy in
California would be the first integrated
the country and given it a negative public
solar energy plant (one company makes
image. For instance, when the electric taxi
the whole system) in Mexico. Baja Sun
fleet for Mexico City was first announced,
Energy has announced it will establish
the government stated that the energy for
a plant in the “Silicon Border” solar
recharging the cars would come from solar
and clean technologies park in the city
panels installed in the recharging stations,
of Mexicali.12 Based on calculations of
clearly an overstatement since the stations
energy employment rates and analysis on
have an area of only 100 m2.
expected energy generation, the solar plant
As a result of public policy blunders
is expected to generate around 1,071.93
and a lack of effective educational
GWh per year and will create around
campaigns, most of the population is not
87 jobs.
aware that, when properly applied, solar
In Tijuana, a public-private project
systems can generate substantial financial
resulting from an agreement between
and energy savings.
6Solar Energy Potential in Mexico’s Northern Border States
Figure 2: Average Monthly Irradiation per State in Border States
Source: Comisión Nacional para el Uso Eficiente de la Energía. CONUEE 2008.
the city of Tijuana and the Maquiladora Grupo Musa is a land and real estate
Industry and Export Association developer and will use the energy produced
(Asociación de la Industria Maquiladora y from the first phase of generation in
de Exportación) seeks to create a sustainable its plants. The project is expected to
city that would be ranked within one of eventually reach a 450-megawatt capacity,
the first 20 green sustainable cities in Latin making it one of the largest CPV solar
America.13 Sixty-thousand middle-income farms in the world. Construction will
houses would be built with solar technology start in late 2012, and the first 50 MW of
infrastructure, generating thousands of generation are expected to come online
jobs. Plans have also been put in place to in late 2013. The investment for the first
potentially build up to an additional 1 MW four 50MW stages totals $720 million
in solar capacity to provide extra energy to dollars, and as noted by SolFocus CEO
the community.14 Mark Crowley, “this project in Mexico
In March 2012, solar energy company will turn dormant land into jobs and low-
SolFocus announced that it will help build cost, reliable electricity.”15 The application
a 50-megawatt Concentrator Photovoltaic of CPV equipment is key in this instance
(CPV) power plant near Tecate, Mexico. because it overcomes one of the major
The project will be developed in phases local impediments to using solar power,
by SolMex Energy S.A. de C.V., a company the extreme heat in the Mexicali Valley,
formed by the Mexican Grupo Musa and which greatly reduced both the efficiency
Synergy Technologies of the United States. and lifespan of regular solar panels.
7RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
The Spanish firm Siliken has plans to so that Freescale Semiconductor (one of the
build a solar farm for photovoltaic energy leading manufacturers of integrated circuits
near Tijuana. The objective of the firm is to in the world) established an R & D center
establish business relationships in Mexico in Guadalajara and is hiring hundreds of
at a local level in order to consolidate Mexican engineers. Furthermore, there is
operations of strategic future projects. In a strong glass industry and diversification
May 2011, the firm invested $25 million in the plastics sector. There are already
dollars to create five production lines and up Japanese, German and American companies
to 500 jobs.16 that manufacture PV modules in Mexico,
The Kyocera solar panel manufacturing but other actors are expected to enter the
plant in Baja California highlights the national market since the country is well-
employment benefits that can come not only equipped to meet their demand for labor
from the installation of solar panels and and knowledge. Mexico should draw on the
the construction of large solar plants, but many international programs that exist for
also from the production of solar panels for financing renewable energy projects and R &
residential applications. The plant at present D facilities.
has a maximum capacity of 300 MW in
panels every year (although it produces, on Chihuahua
average, 10–12 MW per month), for export Chihuahua, the largest state in Mexico, has
to the United States. During a site visit, shown great interest in solar projects, with
Kyocera executives noted that the possibility a large number already under development,
to double maximum capacity at the plant mainly in households and commercial
exists, but due to current lack of demand buildings. In fact, Chihuahua is emerging
from the Mexican market, expansion does as the leading state in Mexico in the use of
not make economic sense. The factory solar panels for residential applications and
employs 350 people directly, but it is thus serves as a useful case for explaining
estimated that distribution and installation how solar panels may be able to establish
activities result in the creation of a further a foothold in the Mexican market. The use
35 jobs per MW installed. of solar panels in these locations could
The Kyocera plant also highlights save up to 50% in electricity consumption
another challenge in Mexico’s solar and at the same time provide significant
sector. The factory is largely devoted to environmental benefits. In the event that
the assembly of solar panels, with most residential energy production surpasses
components imported from abroad. Kyocera local consumption, the surplus would be
executives commented that it is extremely kept by the CFE. This works by discounting
difficult or impossible to find suppliers in the amount of surplus produced from the
Mexico for most of the components due to own household electricity meter.
factors including cost, quality and technical Currently, the CFE has two rates: the
specifications. A national policy to promote first, denominated 1B, is for households
the solar industry in Mexico is required in that consume less than 800 kWh each
order to drive investment in not only solar two-month period, which is subsidized
panels but also the production of parts and by the government at a rate of $2 pesos
components. per kWh; the second rate, denominated
Electronic engineering already has a HDC (High Domestic Consumption), is
strong reputation in the country, so much for households that consume more than
8Solar Energy Potential in Mexico’s Northern Border States
800 kWh bimonthly, and is $4 pesos per from the national grid this would provide
kWh consumed. Over the past few years a range of other benefits. In Mexico, as
the number of households with HDC- in many developing countries, the public
level consumption has grown by 10%. It utility is infamous for errors in billing,
is normally in these households that solar the resolution of which requires a visit (or
systems are installed. For example, if in a sometimes multiple visits) to the company’s
certain household the consumption level offices. This can be a frustrating experience.
is 1,300 kWh every two months, a solar Second, the CFE supply in many parts of
system could be installed to generate 600 Mexico is unreliable, with power outages
kWh or more so that the resident will only and spikes that can damage sophisticated
have to pay CFE for the remaining 700 kWh electronics. Partial independence of supply
and, importantly, would pay at the lower 1B by installing an on-grid solar PV can
rate. This would mean that a customer will eliminate that problem. Nonetheless, total
pay only $1,400 pesos every two months in independence, when the grid is available,
electricity costs, as opposed to $5,200 pesos is not a good idea since batteries or a
at the higher rate, producing overall savings generator would be required to have power
of $3,800 pesos every two months. at night. Lastly, it should be mentioned that
Sigma Comercio y Consultoria, an the prospect of encouraging residential
energy company, has established the goal solar PV applications to not only satisfy
of installing a solar panel system in every individual demand, but also feed back into
residence in the state.17 In order to achieve the national grid using a generous feed-in
their goal Sigma made a business alliance tariff (the rate the company pays to any
with EFM-Solar (a firm in Chihuahua). producer of energy big or small that saves
The solar systems will be produced them any energy consumption), could
and installed by Sigma and they will be provide extra income for families and serve
leased by EFM-Solar, who will offer client as a significant source of new capacity. At
financing plans from five to eight years. The the time of writing, however, neither a feed-
projections of energy saving are expected in tariff, nor a truly “smart-grid” that would
to be around 300% of the original energy allow for this kind of development are
expenses (previous to installing the solar within sight in Mexico.
system) and by the time the financing is
paid off the system will be owned by the Sonora
client. Currently, the price is $1,500 USD In Sonora, the second largest state in the
per solar panel, including installation. It is country, CFE is developing the solar field
calculated that households consuming 800 Agua Prieta II. The objective is to include
to 900 kWh per bimester would require the solar field in a CFE combined cycle
systems with two to three panels. This is central project called CCC Agua Prieta II
a substantial upfront cost for residential First Phase which is being developed in
customers, but the availability of financing a joint venture between the CFE and the
and considerable savings in electricity bills consortium of firms formed by Abener
should encourage them. Energy, Abengoa Solar and TEYMA, a
Beyond the direct economic impact Uruguayan subsidiary of Abengoa that is
of residential applications of solar PV, we specialized in sustainable development
should also point out that if a customer projects. It will be the first hybrid solar-gas
were to acquire a partial independence plant in Mexico.
9RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
The project consists of the development, amendment to the state Law for the
design, construction and testing of a field Promotion of Rational Energy Use, which
with the capacity to generate 14 MW, and seeks to promote solar and wind projects.
it is expected to avoid the emission of more His proposal is to create an economic fund
than 19 thousand tons of CO2 per year. to finance renewable energies in the state,
The Mexican government has received promoting the clean generation of electricity
$49.35 million dollars for the acquisition, while prioritizing small and medium
installation and management of the field companies.21
from the Global Environment Fund (GEF) of Japanese companies have shown great
the World Bank.18 interest in investing in Coahuila due to the
The Los Alisos wastewater treatment state’s geographical position near the United
plant in Nogales is expected to be completed States (in order to produce and export
in May 2012, with an investment of $407 across the border); they are also aware of
million pesos distributed among federal the state’s high solar irradiation levels and
resources through Conagua, the state skilled workforce. Therefore, even though
government of Sonora, the Environmental they are primarily interested in gas mining
Protection Agency (EPA) and OOMAPAS, and automobile production, they are also
the Nogales municipal water provider.19 focusing on producing solar power, hoping
It will use photovoltaic panels to generate to sell energy to both the United States and
electricity to be used for the treatment Mexico. During Governor Rubén Moreira
plant. The EPA has offered to invest Valdez’s recent tour of Japan and Korea
$700,000 dollars as well as the National and he met with Japanese companies who are
State Water Commissions who have offered interested in investing in Mexican solar
an equal co-investment, both subject to energy, including technology giant Sharp
CONAGUA’s approval in order to develop Corporation. The companies were mainly
the solar plant. No specific data could be interested in the possible installation of
found on the size or planning of the solar solar parks in the Northern part of the state,
plant. Based on the size of the investment especially La Laguna and Piedras Negras.22
and taking into account current installation
prices for PV, we estimate that the capacity Nuevo León
of this system will be in the order of 350 In the state’s main city, Monterrey, a solar
KWp. The Los Alisos project sets an energy cluster is being developed by the
important precedent for the use of solar Energy Research Center of the UNAM, the
power in water treatment, both in terms of University of Monterrey, the University
reducing carbon emissions and of producing of the Isthmus, the Advanced Studies
savings for the local authority, as the solar Investigation Center of the National
power will be cheaper than electricity Polytechnic Institute, the enterprise Peñoles
provided by the CFE.20 and the Science and Technology State
Council of Coahuila. Furthermore, Sanyo
Coahuila Energy produces solar panels at a plant in
Although there has been little development the city for export to the U.S. market.
of solar power in the state of Coahuila, Despite consulting several sources
the conditions within the state make it an among newspapers, industry reports and
intriguing prospect. State Congressman government data, no large solar projects
Carlos Orta Canales has proposed an could be found in Nuevo León.
10Solar Energy Potential in Mexico’s Northern Border States
There are several micro projects for The project consists of a solar plant that
rural electrification in the state, some being will be ready to operate by the end of 2012.
in the order of dozens of watts and the Durango Governor Jorge Herrera Caldera
largest on the order of kW, however it is stated: “We will have to prepare ourselves to
not a well extended practice and the actual become the solar capital of the world.”24
number could not be computed. There are
also a number of small projects for local Employment
solar lighting, including one on the access Opportunities from
road to a waste transfer facility others in Solar Power
public parks. The development of clean energy creates
many local jobs. In fact, according to the
Durango – A non-border state United Nations Environment Programme
with potential report on green jobs, non-fossil fuel
Although not a border state, Durango technologies create more jobs per unit of
offers us a vision of what could be possible capacity installed than coal and natural
for northern Mexico in general. The gas.25 Green jobs, which are jobs that
municipality of Canatlán has drawn the play a direct role in reducing the negative
interest of entrepreneurs from all over the environmental impact of enterprises and
world due to its excellent solar resources. economic sectors, can also protect the
It is one of the locations in the Americas economy from the political and economic
with the highest levels of solar irradiation, risks associated with over-reliance on a
registering 60% more hours of sunlight per limited array of energy technologies and
year than the European average. Durango fuels. Because Solar Energy Projects are
receives, on average, 5kWh/m2 of solar new to Mexico, they are hard to establish,
radiation for 295 days a year and has an finance and develop. Accurate calculations
average temperature of 17°C.24 In the of the potential of these projects for
municipality of Canatlán, an agreement has job creation can help overcome these
been established between ejido farmers and obstacles since reducing poverty levels
the Spanish company Siliken, which will and raising employment rates is a major
invest 350 million dollars. The solar plant goal throughout Mexico. Government and
project is expected to produce 1000 MWh private companies are equally interested in
per year and to reduce emissions equivalent fulfilling this objective, along with raising
to the amount produced by 4,000 cars per GDP and income. The development of a
year. This project will not only provide solar industry can be analyzed from three
electricity to the 31,401 inhabitants of the perspectives: 1) the manufacturing of the
entity and its surroundings, but will also equipment (either thermal or photovoltaic),
generate around 600 jobs. The plant will also 2) their suppliers, and, 3) the installation
be connected to the national electricity grid, and use of the solar solutions. These three
operated by the CFE and surplus electricity are generally assumed to be independent
generated by the plant will be sold at a fixed systems, each with their own supply chain,
price for the first twenty years.23 suppliers, workforce, logistics, etc. For
Another important project is owned by instance, the copper provider making
the French company EOSOL, which will the strips in a PV panel is different from
invest $100 million dollars in the Industrial the copper provider who manufactures
and Logistics Center of Durango (CLID). connecting wires. Another example is a
11RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
photovoltaic manufacturing plant that to cover the area of management,
produces several models of panels and contracting, design and marketing.
uses local manpower and energy sources. ■■ Installation: Qualified and certified
Their suppliers provide the required goods “solar installers,” including
to produce the panel and its packaging electricians, roofers, plumbers and
(cells, copper strips, chemicals, EVA, glass, other construction workers, are
electronics, aluminum profiles for the frame, needed for effective installation.
cardboard, packaging supplies, etc.). While ■■ Operation and maintenance.
some of these suppliers will be located in ■■ Recycling of PV modules: Staff with
the vicinity of the manufacturing plant, a background in chemistry, physics
the selection of suppliers cannot be based or related academic are needed
solely on the proximity to the plant or the to ensure environmentally safe
cost; there are other important dimensions recycling.
to be taken into account. In a specialized ■■ Research and development:
product such as PVs, quality is of paramount Scientists and engineers are needed
importance since the products are made to to move technological development
be long-lasting, with warranties in the order forward.
of 20–25 years.
According to a Greenpeace-EPIA Calculating Solar PV Job
report,26 there are multiple areas of Creation Potential:
employment that will benefit from large- Among the common RPS technologies
scale solar development: (Renewable Portfolio Standard), solar
■■ Solar module production: Requires a photovoltaic creates the most jobs per unit
skilled workforce with a background of electricity output, with an employment
in chemistry, physics or related multiplier for solar PV of 0.87 with a range
academic disciplines of 0.23 to 1.42 job years per GWh. The
■■ PV system integrators: Technicians difference between PV and Thermal is
and engineers are required for the that PV converts directly solar energy into
integration of solar systems (panels, electricity and thermal uses an indirect
infrastructure, controllers, inverters, approach by heating a fluid and then using it
batteries, wiring, etc). Furthermore, to power a conventional turbine-generator.
white collar employees are needed The correlation between capacity factors,
Definitions:
■■ JOB YEARS: one job year is full-time employment for one person for one year.
■■ DIRECT JOBS: includes those jobs created in the design, manufacture, delivery,
construction/installation, project management and operation maintenance of the
different components of the technology or power plant under consideration.
■■ INDIRECT JOBS: refers to the upstream and downstream
■■ INDUCED JOBS: accounts for the expenditure-induced effects in the general
economy due to the economic activity and spending of direct and indirect employees.
12Solar Energy Potential in Mexico’s Northern Border States
equipment lifetime, energy production and have concluded that the creation of jobs is
job creation for solar PV and thermal can be greater than an equivalent investment in
analyzed in the table below.27 conventional technologies. For example,
Solar Thermal Energy has thus far been an analysis led by the U.S. Public Interest
mainly applied to residential projects and Research Group shows that a renewable
private initiatives, such as the so-called energy investment program that would
new “Green Mortgages.”29 Solar PV is much generate 20% of the energy required by the
more advanced in terms of technology, U.S. would create three to five times more
installation and production, but the main jobs than a similar investment in fossil
problem with PV is the maintenance and fuels.30 Meanwhile, the U.S. Worldwatch
expected lifetime of the glasses and copper Institute has conducted a study that
tubes needed for each PV cell. PV has an concludes that solar energy investment
expected capacity factor of 25 years, but would generate between 100% and 150%
many of the polymers and glasses that are more jobs than using coal or nuclear
used (for example, EVA polymer) do not last power. This helps justify public investment
that long. in these new energy sources because job
creation increases the wealth available for
Employment Development investment and consumption, which results
Several studies that have been carried out to in a multiplier effect of spending while
determine the effect of investment in solar simultaneously reducing the marginal costs
energy technologies on the labor market of electricity generation (Aitken, 2003).31
Table 1: Energy Production and Job Creation Correlation for Solar28
Direct jobs Indirect jobs Total jobs/ Total jobs/
Energy Technology Capacity Equipment Total Job-Yrs/
(in job yrs/ (in job yrs/ MWp MWa
& Source Factor Lifetime GWh
MWp) MWp) (MW peak) (MW avg)
PV1 EPIA
20% 25 Years 37 1 2.48 12.4 1.42
Greenpeace ‘06
PV2 REPP ‘06 20% 25 Years 32.34 0.37 1.66 8.32 0.95
PV3 EPRI ‘01 20% 25 Years 7.14 0.12 0.41 2.03 0.23
Solar PV Average 20% 25 Years 25.49 0.50 1.52 7.58 0.87
Thermal1
40% 25 Years 10.31 1 1.41 3.53 0.4
NREL ‘09
Thermal2
40% 25 Years 4.5 0.38 0.56 1.4 0.16
NREL ‘06
Thermal3
40% 25 Years 5.71 0.33 0.45 1.12 0.13
NREL ‘01
Thermal Average 40% 25 Years 6.84 0.53 0.81 2.02 0.23
13RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
Table 2: Employment Impacts of Solar Energy in the World, 2009
Sector # Jobs Created Year Location
PV Sector 170,000 2008 Worldwide
CSP Sector 624,000 2008 Worldwide
Source: Mujgan Cetin, N. E. (2011), “Employment impacts of solar energy in Turkey,” Energy Policy. Volume 39,
Issue 11, November 2011, pp. 7184–7190
The studies predict that by 2030 around Based on the Abengoa Project in Seville,
10 million full-time jobs will be created by Spain, the numbers for CSP direct and
solar power development, meaning that indirect jobs are:33
more than 500,000 jobs will be created in ■■ 4 jobs per MW peak for
the area of solar energy production in just a manufacturing
few decades. ■■ 6 jobs per MW peak for contractors
In order to understand the concentrated and installation
solar power technology the following ■■ 0.3 jobs per MW peak for operation
example is included. The Solucar Complex and maintenance
is an Abengoa Solar Project constructed However, in order to calculate the
in 2004 in Seville, Spain. It is a 1.2 billion Employment Rates and projections for each
euro CSP solar plant that currently operates of the current solar projects in Mexico, we
at 183 MW and it will have a capacity need to focus on the employment prospects
of approximately 300 MW using tower, for solar PV. Three studies were taken into
parabolic trough and PV technologies. The account in creating the measurements for
project currently occupies 2,471 acres. It job impact:
created 1,000 jobs during manufacturing EPRI:34 the Electric Power Research
and construction, 300 operating jobs and Institute reports that construction
another 50 for R&D. The plant currently employment for solar energy is 7.14 jobs per
supplies clean electricity to approximately MWp for PV and operating employment is
94,000 households.32 0.12 jobs per MWp for PV.
Source: Abengoa Solar, S.A.
14Solar Energy Potential in Mexico’s Northern Border States
Pollin’s Analysis: 35 Pollin reports that (direct jobs, installed capacity and types
solar technologies potentially create more of panels, among others) generating a non-
jobs per million dollars of output when dimensional variable called Theoretical
compared to traditional power generation Technical Plant Factor (TTPF) which is
technologies. Solar generation creates 5.4 calculated with the following equation:38
direct jobs per million dollars of output For which:
and if indirect jobs are included the ■■ TOTAL IRRADIATION: is the
number rises to 9.8 jobs per million dollars variable that measures the amount
of output. of KWh per square meter per day
Greenpeace-EPIA:36 The EPIA and in a geographically specific region.
Greenpeace estimate that37 (KWh/m2/day).
■■ 10 jobs per MW peak are created ■■ PANEL EFFICIENCY: is the
during production efficiency reported by the panel
■■ 33 jobs per MW peak during manufacturer = η (%).
installation ■■ CELL AREA: is the total area of cells
■■ 4–6 jobs per MW peak for research in a panel module times the number
and production of modules involved in the project.
Based on the parameters laid out Generally polycrystalline cells
by these three sources, we created a are 6x6 inches, or 0.1524 x 0.1524
methodology to calculate energy generation meters. (m2).
data, solar panel manufacturer´s technical ■■ INSTALLED CAPACITY: measured
information and energy and employment in KW, this is the same as the KWp
rates for each of the potential and operating reported for each project.
projects in Mexico’s northern border. This What TTPF interprets is the fraction of
is necessary in order to compute the actual the area below the curve of total insolation
use of the planned solar projects and hence per day. It is “theoretical” because the
the jobs related to them. This methodology Daily Isolation Curve is also “in theory” a
cross-references data from each project speculative gaph.
Solar Panels
For the potential and developed projects in Mexico’s northern border, the solar panels being
used are mainly silicon polycrystalline, and typically have one of the two following sets
of specifications:
Table 3: Solar Panels Commonly Used in Mexico
Specifications Panel 1 Panel 2
Cell Dimensions 0.1524x0.1524 m 1.640x0.990 m
# Cells/Module 80 cells 60 cells
Panel Efficiency 15.5% 15.4%
15RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
The Analysis capacity. For the economic considerations,
There are currently seven plants either we used a national average price of
in construction or planned for Mexico’s electricity of $1.41 pesos per kW h (SENER,
northern states.39 Through our methodology, 2011) and an average dollar exchange rate of
it is possible to take the published data 12.83 pesos per dollar (see table 5).
and compute the rest of the project As has been shown, the computation
specifications. The jobs related to each of the social impact of solar projects
project can then be computed using each of developed in Mexico is not straightforward.
the three criteria previously described. The In recent years many politicians, local
projects and assumptions taken are outlined governments and companies have used the
below in table 4. solar projects like a “green flag” to show
The employment rate from these their environmental concern; the data
projects can be easily referenced to the they provide, however, is often incomplete,
“Sustainable City” project, due to its unitary overestimated or even non-coherent.
Table 4: Mexican Solar Projects in the Border States
Capacity
Project Location Comments
(MWp)
Cierro Prieto,
CFE Geothermal Field 5 Capacity declared as hard data
BC
Sustainable City Tijuana, BC 1 Capacity declared as hard data
Agua Prieta,
CFE Agua Prieta II 14 Capacity declared as hard data
Sonora
Integrated Solar Energy Greenpeace criteria used to
Mexicali, BC 12.2
Plant compute capacity
500 jobs declared, used
Greenpeace criteria to compute
Solar PV Farm Tijuana, BC 10.5
capacity (68 MW if EPRI criteria
is applied)
$1,400,000 USD investment
Los Alisos Nogales, Sonora 0,35 declared, used international PV
costs to compute capacity
Capacity declared as hard data.
First stage of 9 planned to reach
SolFocus Tecate, BC 50
450 MW in the future. CSP
installation
600 jobs declared, used
Canatlán, Greenpeace criteria to compute
Siliken Solar Farm 12.5
Durango capacity (82 MW if EPRI criteria
is applied)
Source: Author’s calculations based on data as cited in section five of this report.
16Solar Energy Potential in Mexico’s Northern Border States
Table 5: Jobs Calculations for the Tijuana Sustainable City Project
Methodology 2: Pollins Methodology 3: Job Rates
Methodology 1: EPRI
Capacity Factors EPIA - Greenpeace
Construction 7 Direct 1 Production 10
Operation .12 Indirect 2 Installation 33
R&D 5
Project Energy Output: $ 201,710 USD
Table 6: Jobs related to Mexican Solar Projects in the Border States
Project Location Jobs*
CFE Geothermal Field Cierro Prieto, BC 35.6
Sustainable City Tijuana, BC 7.12
CFE Agua Prieta II Agua Prieta, Sonora 99.68
Integrated Solar Energy Plant Mexicali, BC 86.86
Solar PV Farm Tijuana, BC 74.76
Los Alisos Nogales, Sonora 2.5
SolFocus Tecate, BC 356
Siliken Solar Farm Canatlán, Durango 89
Total 751.5
*Based on the EPRI study coefficients.
Source: Author’s calculations based on data as cited in section five of this report.
17RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
For instance, they may declare a large and operation factors, predict reasonable
investment that will create far too many employment rates for each project and seem
jobs, but when the investment is compared to have enough personnel for construction,
to the international cost of solar plants, the operation and management that will be
capacity results far lower than originally practical and efficient for the solar plant.
stated and hence the social impact would
not be as large as originally declared. CONCLUSIONS
In order to get a realistic and Mexico’s world-class solar resource
conservative estimate of the total amount offers the prospect of large-scale future
of jobs related to the solar projects in development of solar PV energy in the
Mexico, the EPRI criteria was considered. country, and the northern Border States
This criterion is based on technical factors appear to be the ideal geographic location
and normalized with respect to the total to drive such development. The projects
plant capacity. In the following table the that already exist highlight the potential for
jobs associated to the eight solar projects generating not only clean electricity, but also
are shown. employment and economic growth for local
The aforementioned social impact is communities.
related to a total capacity of 105.5 MW The development of a mature industry
(installed and planned) of PV and CSP in the solar sector needs to be approached
projects. The actual number of jobs will from different angles. On one side there
vary according with the size of the project is the availability of the solar radiation,
that is, the smaller the project the larger both direct and indirect. The nature of this
the amount of jobs per MW associated. In radiation will have a strong geographical
order to have an estimate of the maximum component allowing for some zones where
number of jobs related to the solar projects, photovoltaic solutions are suitable and
the Greenpeace-EPIA criteria would give others where solar collectors (solar thermal
an estimation of 5,060 jobs. (For detailed and concentrated photovoltaic) are more
energy employment rates test analysis on suitable. This usually has to do with the
the eight current operating and potential spectrum of radiation in question: high
projects in Mexico’s Northern Border, concentrations of UV radiation are more
please see Appendix 2 where project by suitable for PVs, with infrared radiation for
project, their technical specifications thermal applications.
concerning employment rates, types of jobs, For renewable energy to become a reality
energy generation and expected economic in the country and an engine of sustainable
production are explained.) development in Mexico, it will require an
After conducting a triple analysis on innovative and comprehensive approach.
the eight potential projects, it is clear that Such an approach should set specific
each specialist gives his or her own point goals, promote and conduct research and
of view. EPIA and Greenpeace forecast development, and increase the industrial
high employment rates per MW produced. competitiveness of Mexican companies.
Pollins, on the other hand, gives low, A solar industry is not composed only of
practical and cost-reduced employment the application in question, but also of
rates per millions of dollars of energy output the upstream and downstream industries
produced. EPRI forecasts are the most involved. This means that Mexico will
viable figures, which, based on construction have to develop supply chains, installation,
18Solar Energy Potential in Mexico’s Northern Border States
services, and maintenance industries to be and scientific jobs will be produced in
able to build an effective solar sector. abundance in the border states and the
It is unlikely, however, that it makes rest of the country if manufacturers insist
economic or environmental sense to on local suppliers, and if these suppliers
produce all of the components in Mexico. can match the quality and technical
To produce a truly “clean” solar PV industry, requirements of the solar PV industry.
it may make more sense to produce the The social impact of new solar PV
more energy intensive components in parts projects in the north of Mexico lies not
of the world where the energy is drawn only in the generation of new, high quality
predominantly from renewable resources employment, but also in its capacity to free
such as hydroelectric power plants. local populations from the full dependency
Norway’s Renewable Energy Corporation, on the CFE and all of the bureaucratic and
for example, is a leading manufacturer energy-delivery inefficiencies that come with
of silicon products for PV and uses it. Residential applications may also result
hydroelectric power in both its plants in in the possibility of feeding clean electricity
Norway and in Quebec, Canada. back into the system, producing an
Finally, the use of solar energy sources economic gain and providing a significant
should be maximized, taking into account base-load from clean power. This, however,
the location of the country in terms of is still a distant goal in Mexico, which lacks
solar gain. The proper implementation of either a feed-in tariff or a smart-grid that
solar PV and thermal projects to provide would allow such a system to function.
some of the base demand of the national Based on the computations showed in
electricity sector could reduce the carbon the present study, it can be seen that the
footprint associated with energy use in use of solar-based power plants designed
Mexico while increasing energy security by to provide large amounts of electricity in
basing generation on an inexhaustible and Mexico presents several difficulties. There
permanently available “fuel.” are other renewable resources that need yet
The employment prospects from solar to be fully exploited—like hydroelectricity,
PV are the highest of any readily available wind energy and geothermal systems—
energy source. Using three different before turning to solar on a massive scale.
analytical models this paper has shown Moreover, these other renewable
that the existing PV projects in the Border sources require a lower investment and
States have already created hundreds of operational cost per MW installed. The
jobs. There is huge potential, however, lowest installation cost found for a solar
to generate more jobs if both large-scale project is that of the plant in Tecate, BC,
generation and residential applications can where SolFocus invested 3,600 USD/
be encouraged. To do so, local and national kWp; by contrast, the investment cost of a
firms must participate in the PV value chain, large hydroelectric plant is in the order of
encouraging greater job creation and the 1,000 USD/kWp. Clearly, this presents a
development of local productive capacity. serious barrier for the implementation of
This paper has also argued that large solar projects. It is the opinion of the
developing the PV industry in the north authors that the technology available today
will result in the creation of high quality for solar production is not adequate to
jobs, requiring investments in human promote its implementation into a national
capital and human resources. White collar electric system for macro generation. It
19RE-Energizing the Border: Renewable Energy, Green Jobs and
Border Infrastructure Project
would require subsidies or some other us with a familiar tale. There is enormous
financial, tax or quota enforcements to be potential, it is true, but little has been done
implemented. to help realize that potential. In order
Solar energy does, however, have the to obtain the largest social benefit from
advantage of creating a high number of solar energy systems, the advantages of
jobs per unit of energy created. The bulk the solar should be emphasized instead of
of the jobs related to solar energy are those trying to force the use of solar systems in
related to the installation of the panels, macro generation where its limitations are
hence the obvious solution would be to magnified. A radical shift in Mexico’s energy
spread out these jobs by implementing a policy environment must occur before the
large number of small solar projects. The massive application of solar PV takes place,
SENER is currently assessing a program to and an integrated industrial policy must
implement small PV systems in new social match that shift if full advantage is to be
interest housing and facilities. Another taken of the sector. Putting in place a feed-
application would be the promotion of in tariff would be an important start, and
solar lighting on urban and rural roads. working towards a smart grid would also
Rural electrification in communities greatly facilitate the transition to renewable
located far away from the national grid is energies. These are pending issues for
another good use of solar solutions. Mexico’s next administration, and must be
The solar PV prospects for Mexico’s pushed forward by stakeholders in the
northern border states therefore present solar industry.
About the Authors Hernandez earned a degree in Mechanical
Engineering from the National University of
Sergio Romero-Hernandez Mexico and a Master of Science and PhD in
Professor Romero-Hernandez is a full time Advanced Mechanical Engineering PhD at
lecturer and researcher in the Instituto Imperial College of Science, Technology and
Tecnológico Autónomo de México (ITAM). Medicine, London, UK.
He previously worked for The Turbo
Genset Company Ltd as a research and Bernardo Duarte
development engineer in charge of designing Rodríguez-Granada
efficient cooling systems for high speed Bernardo is a research assistant at the
electrical generators, using CFD techniques. Center of Technological Development, in
Romero-Hernandez contributed chapters the Instituto Tecnológico Autónomo de
to two different textbooks in the field of México (ITAM). He undertook courses
Computational Fluid Dynamics and is the on Economics and Geopolitics of Energy
main author of the book Renewable Energy in France at Université Paris Dauphine.
in Mexico, published by USAID. Romero- He has a strong interest on Renewable
Hernandez is a member of the Mexican Energies and energy studies. He is
Society of Mechanical Engineers, the currently working at Banco Santander
Institution of Mechanical Engineers, UK, and in Mexico City as a Junior Analyst in
the National System of Researcher, Mexico. Corporate Credit Solutions and he is also a
He is a national advisor for the Ministry of founding member and partner of Holding
Energy on energy efficiency issues. Romero- BROS, an entrepreneur investment fund.
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