CASE NUMBER: 354
CASE MNEMONIC: MEXPOWER
CASE NAME: Mexico Power
I. IDENTIFICATION
1. The Issue
Carlos Salinas created the Programa Nacional de Solidaridad
(Pronasol), or National Solidarity Program, to confront and
eradicate Mexican poverty. Pronasol has funded several rural
electrification projects. These projects are hybrids, using a
combination of wind energy, solar energy (photovoltaics), and
diesel generators. These projects were both technical
demonstrations and precommercial pilots. The use of wind and solar
energy reduce the reliance on diesel, an expensive, noisy, and
polluting fuel source. Electricity has improved the welfare of
those people and communities with access to it.
2. Description
Pronasol, the National Solidarity Program, was launched by the
Mexican government in 1989. It has three priorities:
- to improve the living conditions of the rural population,
the Indians and the urban poor;
- to promote regional development;
- to strengthen local institutions in the development process.
Pronasol aims to concentrate on extreme poverty and channel resources accordingto local demand. With the administration of many projects, the government works with and through NGOs, reducing government costs.
While it's touted intention was to eradicate poverty, this was an entirelyunrealistic goal and has not been achieved. The program had a budget of $547million in 1989, which grew to $2.54 billion in 1993. This amounts to $53 per poor person ($2.54 billion divided by 40.3 million people) in 1993.{1} A more realistic goal would have been to neutralize or compensate for the pain resulting from economic adjustment, particularly the sharp declines in real wages that have taken place.
Although there is no systematic exclusion of women and indigenous persons, they are underrepresented in Mexican politics. One of the most original features of Pronasol is the creation of more than 80,000 "solidarity committees" which put forward requests for action and follow them up. These committees are supposed to provide a new sphere of collective decision-making, open to those who have previously taken no part in the structures which control the distribution of social benefits. This is creating a new generation of communityleaders who are challenging the established authority. Increasing democratizationis an important part of Pronasol. President Salinas has said, ''Here, this is no theoretical democracy. This here is democracy with boots filled with mud in the halls of the shantytowns.''{2}
However, there is some controversy as to how well this has been carried out in practice. The NACLA Report on the Americas alleges that in Chiapas the management of Pronasol went out of its way to refrain from altering the socioeconomic relations of power.{3}
Funds are loaned to groups of individuals or a communityand have to be repaid.This is to ensure that the project is truly of value to the community. Pronasolfunds are typically used for whatever infrastructural improvements a communitydeems most pressing, be it improving irrigation systems, building schools, paving roads, or providing drinking water or electricity.
At the time of Pronasol's creation, 48% of the population was classified as poor, and 19% classified as extremely poor.{4}
There are 86,000 villages in Mexico without utility grid electricity. This translates into approximately 5.7 million people without electricity. At least 15,000 of these villages have more than 100 residents, making a centralized village mini-grid apossibility.{5} This makesMexico the closest and most active proving ground for new technologies and paradigms for decentralized electrification.
Until recently, the only realistic options for rural electrification in Mexicowere grid-extension and diesel mini-grids. PRONASOL and the private market are making renewables, particularly photovoltaics (PV), a reasonable alternative.
Since 1991, eight hybrid systems have been installed in five different Mexicanstates. The towns are Isla Guadalupe, Ignacio Allende, La Grunidora, El Junco, El Calabazal, Aguas Benditas, X- Calak, and Santa Maria Magdelena. These are inland, coastal, and island sites. These projects are a combination of technicaldemonstrations and precommercial pilots.
The basic system architecture of these installations is as follows:
- wind is the primary energy source
- modular systems
- high DC voltage (120-220VDC)
- 18-36 hours of storage
- AC output
- simple controls
Four of the installations have a diesel generator backup. All but
Isla Guadalupeuse PV.
Some information on the wind resource was available from the US NationalRenewable Energy Laboratory (NREL). The best available information was compiled,but not verified. The one exception was the X-Calak installation, where the wind speed was tested and averaged 6.5 m/s. Unfortunately, the developers found less wind than they expected, and in some sites there is very low (about 4 m/s) wind speed 3 months of the year.{6}
The largest installation is at X-Calak, a remote fishingand tourist village.X-Calak (pronounced Sha-Lac) is located in the Mexican Yucatan, across the bay from Chetumal, in the State of Quintana Roo. The village was destroyed by Hurricane Janet in 1952. When the village was rebuilt, a diesel powered minigrid was installed. Diesel operation has often provedproblematic for these types of villages, with the high maintenancerequirements and fuel supply problems. Power was only available for 4-6 hours during the evening. Celiac users historically paid a flatmonthly fee for electrical service when the diesel was operational. Even with diesel operation, fuel availability was inconsistent and would sometimes be appropriated by the village for the community fishing vessel. Prior to the hybridsystem, the typical load consisted of lights, television, and radio, since electricity was only available for a few hours. Village refrigerators and ice makers were previously propane powered.
In 1991 the State of Quintana Roo decided to augment the system with renewable energy and secured funding through Pranosol. CONDUMEX, S.A. de C.V. designed and installed the hybrid. The system is under the care of the Comision Federalde Electricidad (CFE), the Mexican national utility, Sandia National Labs (a US government national laboratory), Instituto de Investigaciones Electricas (a Mexican government agency) and Southwest Technology Development Institute (located at New Mexico State University) provided consulting services. The system began operation in August 1992.
The system includes a 11.2 kW photovoltaic array, six 10 kW wind turbines, 1738 Ah of 220-volt GNB 6-7C23 deep-cycle flooded lead- acid batteries, a 40 kW AES sine wave inverter, and a 125 kW SELMEC diesel generator. It cost$750,000 and serves approximately 300 people.{7}This amounts to $25,000 per person for electricity, plus continuing operation and maintenance expenses. Without the 35% import duty on the equipment, the total cost would have been $565,000, or $18,833 per person. This is still far too expensive (see "LessonsLearned," below). The diesel generator was the one already on-site. However, it was inoperative until mid-1995. Even now, the back-up generator is used infrequently due to high operating costs. The system was designed to supply 150 kWh/day during the low wind months. The output of the system is 220 VAC-3phase and is stepped up to 2400VAC-3 phase for distribution. The village load can be disconnected from the automated pv/wind generator and connected to the diesel generator with a manual switch.
The system has worked well technically, though a few electronics problems have occurred and one wind turbine alternator was damaged in 1993 due to a wiring fault. Salt corrosion has also been a problem. The system is performingbetter than expected, but, unfortunately, the wind/solar generators can notsatisfy the current local demand because consumption has grown to more than three times the original projection. The higher electrical demand is at least partly the result of the fact that the villagers are not currently charged for electricity. Also, the distribution wiring in the town is in poor shape.
Electricity is typically available 8-16 hours a day, depending primarily on the wind resources. This is a significant improvement from the previoussystem's 4-6 evening hours. Wind power provides ~85% of the generatedelectricity. The PV panels provide the rest. In October, when there is the least amount of wind, 140 kWh/day is provided to the village. In the high wind months, an average of 240 kWh/day is provided. A number of institutional and technical improvements (including more wind generators) are under consideration.
The system is extensively instrumented and is being monitored by the U.S.National Renewable Energy Laboratory and Sandia Labs to learn more about the real world performance of village hybrid systems. Sandia National Laboratory,Instituto de Investigaciones Electricas, Southwest Technology DevelopmentInstitute, and CONDUMEX installed a data acquisition system in March 1993 to monitor performance of the wind/pv/diesel village hybrid power system. Average hourly data is recorded via cellular phone.
Lessons learned{8}:
Education & training:
* "it is very important to make extensive education to the
people in order that they take care and maintain the system
properly."
* "People must learn that wind and PV are new sources of energy
in developmentand must grow as community needs and population
grow."
* "The users should be informed about the project and the energy
that they will have and also about the consumption per home."
* "Before the contract, the contractor should explain to the
government about the effort that they have to do with the community
to organize a Operation and Administration staff under the local
people."
* "Is necessary to train operators and technicians, but would be
better with the state university and high school."
* "Blade repair very easy."
* "Wind is easy to install, reliable."
Technical/Hardware:
* "It is hard and expensive to get accurate and reliable
wind data for project development in remote areas."
* "The system set should include tools and enough spare
parts."
* "Is better a 120 VDC system than 220 VDC"
* "Use stainless steel hardware or better painting coat to
avoidcorrosion"
* "When a hybrid system is designed the electrical components
should beselected having in mind the peak voltages (>600V)."
* "Premium Deep-Cycle Batteries are probably not required."
Administrative
* Projects should be clustered to provide regional "critical
mass",reducing costs and improving post-installation service.
* "Installed turbine in center of town, no problem with
sound."
* "Try new control designs at factory the way they will be used
in thefield."
* "Make it cheaper!"
* "The cost for past-sell service is too high. This is the most
importantproblem for the contractor and for the client."
* Continuous improvement in reducing costs is needed."
3. Related Cases
GEYSER case ATATURK case CARBON2 case JAMES case NEPPOWER case
Key words
(1): energy
(2): solar
(3): wind
Keyword Clusters
(1): Trade Product = Electrical equipment
(2): Bio-geography = N/A
(3): Environmental Problem = air pollution, global warming
4. Draft Author: Gwendolyn Andersen
II. LEGAL Cluster
The hybrid system is owned by the town.
There have been no formal treaties signed bilaterally with other nations nor have there been any legal proceedings resulting from these hybrid electricalinstallations.
The mini-grid is under the care of the CFE, as required by Mexican law.
5. Discourse and Status AGReement and COMPlete
6. Forum and Scope MEXICO, UNILATeral
7. Decision Breadth 2 (Mexico and United States)
8. Legal Standing Contract
III. GEOGRAPHIC Cluster
The major portion of the
peninsula is based oncalcareous rock, and is constituted by jungle
without rivers at surface, but with a lot of cenotes(famous big
holes with water) and subterraneous rivers connecting those
cenotes. The average altitude is 100 meters from sea level, the 90%
of the territory has pluvial precipitationof 150 millimeters, and
the humidity is 70% average. The average temperature is 80
Fahrenheit / 28 Centigrade with 240 days of sunshine.{9} (Graphic
from YucatanWeb.)
a. Geographic Domain: North America [NAMERI]
b. Geographic Site: Southern North America
c. Geographic Impact: Mexico
10. Sub-National Factors: No
11. Type of Habitat: Ocean
IV. TRADE Cluster
Prior to NAFTA there was a 35% duty on the imported machinery. This dramatically increased the cost. One of the lessons learned from these installations is that costs must be reduced.Eliminating the tariff was an excellent way to reduce costs without reducingquality or safety. Tariffs on all the imported equipment have either beeneliminated or will be to be eliminated in five equal annual stages, beginningJanuary 1, 1994 and ending January 1, 1998. The removal of this high tariffshould encourage more imports of renewable energy equipment.
The NAFTA trade agreement reads:
Chapter SixEnergy and Basic Petrochemicals
ANNEX 602.3
5. Electricity
(a) In Mexico the supply of electricity as a public service is a strategicarea reserved to the State. Except as provided in subparagraph (b) belowthe activities encompassed by the supply of electricity as a public servicein Mexico include the generation, transmission, transformation, distributionand sale of electricity.
(b) The opportunities for private investment in Mexico in electricity generatingfacilities include:
(i) Production for Own Use
Enterprises of the other Parties may acquire, establish, and/or operate anelectrical generating facility to meet its own supply needs. Electricitygenerated in excess of the enterprise's own supply requirements must be soldto CFE and CFE shall purchase such electricity under terms and conditionsagreed to by CFE and the enterprise.
(iii) Independent Power Production
Enterprises of the other Parties may acquire, establish, and/or operateelectricity generating facilities for independent power production (IPP)in Mexico. Electricity generated by IPP facilities for sale in Mexico shallbe sold to CFE and CFE shall purchase such electricity under terms and conditionsagreed to by CFE and the enterprise.
Where an IPP located in Mexico and an electric utility of another Party considerthat cross- border trade in electricity may be in their interest, the Partiesagree that these entities and CFE shall have the right to negotiate the termsand conditions of power purchase and power sale contracts. The modalitiesof implementing such supply arrangements is left to the end-users, suppliersand CFE and may take the form of individual contracts between the stateenterprise and each of the other entities. Such contracts shall be subjectto regulatory approval.
7. Pursuant to Article 1101(3), private investment is not permitted in reservedactivities listed above in paragraphs 1, 5(a) and 6. Chapter Twelve (CrossBorder Trade in Services) shall only apply to activities involving the provisionof services covered in paragraphs 1, 5(a) and 6 when Mexico permits a contractto be granted in respect of such activities and only to the extent of thatcontract.
12. Type of Measure: IMTAX
13. Direct vs. Indirect Impacts: DIRect
14. Relation of Trade Measure to Resource Impact
a. Directly Related: YES
b. Indirectly Related: NO
c. Not Related: NO
d. Related to Process: YES
15. Trade Product Identification: Electrical Equipment
235 Siemens M75 photovoltaic panels; six 10 kW Bergey wind turbines; 1738 Ah of 220-volt GNB 6-7C23 deep-cycle flooded lead- acid batteries, and a 40 kW AES sinewave inverter.
16. Economic Data
The equipment cost $465,000 before the 35% tariff. This does not include the 125 kW SELMEC diesel generator, which was already on site, or two years of system maintenance and support. Transportation and installation costs were $100,000. The total cost was $750,000. The nominal cost per daily kWh is $3,800. While this cost is quite high, grid extension would cost over $3 million.
Although the village had paid electrical service fees in the past with the diesel service, no tariff structure was in place when the hybrid system cameon-line, and no tariffs are collected now. The tariff structure is supposed to be managed by the State Public Works Commission and the local municipality.Tariffs collected would not pay for the overall system, but were expected to pay for upkeep. The money would pay for operation and maintenance, futurereplacement of the battery bank, and for diesel fuel. (The diesel has not been used since the installation, even though the system cannot support 24-houroperation.) The project plan called for tariffs to be collected by three local individuals who would also operate and maintain the system.
The contract with end users called for them to be charged U.S. $.34 /kWh for the first 36 kWh consumed per month. Above this level, the tariff was to double to U.S. $.68/kWh. It was expected that the fee structure would curtail the load growth and impose user discipline in energy conservation. Perhaps if the users were being charged, as they were supposed to be, they would be satisfied with the amount of power being supplied.
17. Impact of Trade Restriction: High
18. Industry Sector: [EMACH]
19. Exporters and Importers: Many and MEXICO
V. ENVIRONMENT Cluster
20. Environmental Problem Type
-Air pollution [POLA]
-Global warming [GWARM]
Wind and solar electricity provide an environmental benefit chiefly by offsettingthe use of fossil fuels. Gas or diesel generators are not only less reliable but create air and noise pollution and contribute to global warming.
There have been no reported problems with noise from the turbines or with bird kills. There is a widespread misperception that wind generators areinvariably linked with avian destruction.
"News reports originating from California may alarm criticsthatwind turbines produce more dead birds than electricity... It is truethat wind power plants in California's Altamont Pass, which has the mostsevere problem of this kind anywhere in the world, are known to have killedbirds, including raptors...Based on the sketchy data available, onewind turbine in the Altamont Pass will kill a bird every 20-40 years... Despite the problem in the Altamont Pass, there's little evidence thatsingle turbines or small clusters of machines kill birds in any significant number.{10}"
21. Number of Species None impacted.
Botanists have identified around 8,000 species of flowering plant;
600 bird species, more than in all
Europe; and approximately
1,200 kinds of butterfly. This abundance can befound in an area
half the size of Texas in USA. For almost 100 million yearsthe
Yucatan peninsula developed inisolation, leading to the evolution
of endemic life forms, different to thosefound in neighboring
regions. It was also a land bridge between North and South America,
and, to this day, temperature andtropical plants and animals from
both subcontinents are found in the area.{11}
22. Resource Impact None
23. Urgency of Problem Low
24. Substitutes
X-Calak could have continued using the diesel mini-grid despite its inadequatereliability and electricity generation, or the grid could have extended. A power line extension to X-Calak would follow the 150 km road from Chetumal and was estimated to cost $3.2 million
VI. OTHER Factors
25. Culture
For most of Mexico's history, Quintana Roo was unsettled, a haven
for outlaws,pirates and Maya. Tourism brought highways and
townships in the 1970s. QuintanaRoo became a full state (as
opposed to an externally administered Federal Territory) in 1974.{12} Most of
the state remains very sparsely populated and much of the jungle-
covered interior is relatively inaccessible.
For the ancient Mayas the land was sacred. They worshipped the gods
of nature, building temples in their
honor, making offerings in
caves and cenotes (deep holes of water) and reveringthe birds and
animals they saw around them.{13}
Xcalak is typical of remote fishing villages in LatinAmerica. The communityrelies on fishing and tourism. Because of the reliance on fishing, a largeportion of the population will be away for months.
The village was destroyed by Hurricane Janet in 1952. When it was rebuilt, a diesel powered minigrid was installed. Since the hybrid, with its greaterreliability, was installed in 1992, the village has grown nearly 10%. Formerresidents who had left for other electrified areas have returned home. Additionalpeople have moved to the village.
The town has three types of electrical consumers: residential, commercial, and public. Public electrical uses include public lighting, schools, churches,hotels, telecommunications, potable water, a health clinic, and a naval outpost.
There are not many commercial consumers, but their aggregate load is significant.They consist of restaurants and stores and use large refrigerators, ice makers, color televisions, satellite dishes, and fans.
Residential consumers can be grouped into two categories. One group has very low electrical demand. The average residential consumer uses two or three lights, a radio, and occasionally, a small black and white television. The other group has a variety of appliances, including refrigerators, freezers, and washing machines. This group uses ten times more energy than the average residential consumer.
26. Trans-Boundary Issues NA
27. Human Rights NA
28. Relevant Literature
Presentation: "Lessons Learned from Hybrid Wind/PV Village Power SystemInstallations in Mexico", ASME Wind Energy Symposium, Jan. 30 1995, MichaelBergey, Bergey Windpower Co.; Enrique Barrios, Qual S.A.; Art Lilley; EduardoMachuca, Entec S.A.; Arturo Romero, Entec S.A.
"First-Year Monitoring Results of the Wind/PV Hybrid Power System in Xcalak,Quintana Roo, Mexico" Proceedings, Wind Power 1994 available from the AmericanWind Energy Association.
Moguel, Julio. "Salinas' Failed War on Poverty." NACLA Report on
theAmericasXXVII.1 (1994): 38-41.
Iredale, Paul. "Mexican President Tackles Aid Project With Campaign
Zeal."UNESCO Courier. September 16 UNESCO, 1991.
ENDNOTES********************************
{1} Moguel, Julio. "Salinas' Failed War on Poverty." NACLA Report on the Americas XXVII.1 (1994) p. 38. Return
{2} Iredale, Paul. "Mexican President Tackles Aid Project With Campaign Zeal." UNESCO Courier. September 16 UNESCO, 1991.Return
{5} Presentation: "Lessons Learned from Hybrid Wind/PV Village Power System Installations in Mexico", ASME Wind Energy Symposium, Jan. 30 1995, MichaelBergey, Bergey Windpower Co.; Enrique Barrios, Qual S.A.; Art Lilley; EduardoMachuca, Entec S.A.; Arturo Romero, Entec S.A..Return
{6} ASME Wind Energy Symposium.Return
{7} "First-Year Monitoring Results of the Wind/PV Hybrid Power System in Xcalak, Quintana Roo, Mexico" Proceedings, Wind Power 1994, p. 716.Return
{8} ASME Wind Energy Symposium.Return
{9} Yucatan Web, http://www.yucatanweb.com/, June 10, 1996. Return
{10} Gipe, Paul. Wind Power for Home & Business: Renewable Energy for the 1990s and Beyond. Post Mills, VT: Chelsea Green Publishing Company,1993.p. 276. Return
{12} Hot Wired, http://www.hotwired.com/rough/mexico/the.yucatan/regions/quintana /index.html, June 10, 1996. Return