RENEWABLE ENERGY IN MEXICO

UNCLAS MEXICO 002666 SIPDIS SENSITIVE SIPDIS STATE FOR WHA/MEX, WHA/EPSC, EB/IFD/OMA STATE FOR EB/ESC MCMANUS AND IZZO USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GWORD USDOC FOR ITS/TD/ENERGY DIVISION TREASURY FOR IA (ALICE FAIBISHENKO) DOE FOR INTL AFFAIRS KDEUTSCH, ALOCKWOOD, AND GWARD DOE FOR A/S HARBERT E.O. 12958: N/A TAGS: ENRG EPET ECON MX SUBJECT: RENEWABLE ENERGY IN MEXICO REF: A. MEXICO 589 ¶B. MEXICO 1255 Introduction and Summary -------------- ¶1. (SBU) Embassy Mexico, working through USAID under the auspices of the ongoing Mexican Energy Network (ref A), joined with the Autonomous University of Mexico (UNAM) and the Autonomous Mexican Institute of Technology (ITAM) on May 15, 2007 to present a conference on identifying and overcoming obstacles to renewable energy in Mexico. Fifty representatives from government, industry and academia participated in the discussion, which was also received substantial press coverage. End Introduction and Summary ¶2. (SBU) The conference focused primarily on policy and regulatory barriers to greater investment in solar, wind and biomass energy. There were separate panels on large and small scale energy, as well as a final panel with representatives from governmental energy agencies who addressed public policy challenges. ¶3. (SBU) Professor Jorge Islas, a senior researcher at the Center on Energy Research at the Autonomous University of Mexico (UNAM),noted that unlike the hydrocarbon and electricity sectors, there are no constitutional restrictions covering the development of renewable energy; however, Mexico still lacks a legal framework to create the market conditions necessary to promote development of renewable technologies. ¶4. (SBU) Islas called for the GOM to provide guaranteed access to the electrical grid; long-term interconnection contracts; and obligatory purchase contracts from the Mexican electricity monopoly, the Federal Electricity Commission (CFE). More controversially, Islas made a case for guaranteed purchase rates and additional fiscal incentives, arguing that countries with successful take-up of alternative energies have followed that approach. ¶5. (SBU) Consultant and former head of the Mexican National Commission for Energy Savings (CONAE) Odon de Buen blamed the CFE's monopoly position for lagging adoption of renewables technology. He also pointed to Mexican poverty and low levels of social awareness about renewables, as well as the weakness of Mexico's Energy Regulatory Commission (CRE). De Buen also blamed the government for not making the benefits of renewable energy more understandable and visible to ordinary Mexicans. ¶6. (SBU) In a follow-on panel on local implementation of renewable technologies, Rodolfo Martinez, President of the National Solar Energy Association (ANES) claimed a potential Mexican market of 5.1 million units for stand-alone "off grid" photovoltaic cells. Martinez repeated the call for specific financing mechanisms and additional Mexican funds for R&D. ¶7. (SBU) Finally discussing the policy challenges, Director General of Energy Technology and Efficiency, at the Mexican Energy Secretariat, Diego Arjona closed the event noting that while Mexico is improving, much more needs to be done and that further development of renewables and the promotion of energy efficiency hinges on overall improvement in the sector. ¶8. (SBU) The event received considerable media coverage in the most important national newspapers, including Reforma, El Universal, La Jornada, and through Notimex (the state national news agency),in newspapers across the country including El Siglo de Torreon, El Diario de Yucatan and El Porvenir de Monterrey. There was also coverage on radio through Monitor and on TV in a segment of Canal Once Noticias. Visit Mexico City's Classified Web Site at http://www.state.sgov.gov/p/wha/mexicocity and the North American Partnership Blog at http://www.intelink.gov/communities/state/nap / BASSETT