AND THE NORTHERN COUNTRIES INVESTMENT OPPORTUNITIES ON RENEWABLE ENERGY TECHNOLOGIES

by DANIEL GUERRA DHEMING

Company: ProMéxico

Fco. Javier Sánchez Alejo, School Advisor Gabriela Cárdenas Hernández, Company Tutor

A thesis submitted in partial fulfillment of the requirements for the Degree of Master of Science in :

Management and Engineering for Energy and Environment (ME3)

ECOLE DES MINES DE NANTES (Nantes, France)

KTH ROYAL INSTITUTE OF TECHNOLOGY (Stockholm, Sweden)

Academic Year 2011 – 2013 Submitted June 2012 Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

ABSTRACT

ProMéxico is the Mexican Government institution in charge of strengthening Mexico’s participation in the international economy by supporting trade, direct investment in Mexico and the internationalization of Mexican Companies abroad. Funded by the Mexican Ministry of Economy with direct collaboration with the Mexican Foreign Embassy’s, there are 27 offices around the world. ProMéxico Stockholm oversees both the Nordic Countries and the Baltic Regions.

ProMéxico consulting services are mainly focused in promoting benefits and incentives of investment in Mexico, aiding in the decision-making with industry information, business plans, establishing Business-to-Business (B2B) partners, creating joint ventures, assessing in the soft-landing for establishing the company and finally reviewing the satisfaction as a after-care for future re- investments.

According to the 2013–2027 National Energy Strategy published by the Federal Government Ministry of Energy, renewable energies are going to play a major role to achieve their main objectives: Energetic sustainability, environmental and energetic efficiency and Energy Security. Additionally national private companies have adopted renewable energy sources for either economic benefits or social-environmental awareness. For these reasons, ProMéxico Stockholm has developed a strategy to take advantage of the lower manufacturing cost of Mexico, the technological development of Scandinavia and the Mexican demand for Renewable Energies to create investment opportunities. The basic strategy includes:

• Review of the current energy sector and their roadmaps. • Identify possible renewable energy projects plans both for private and public sectors with the aid of different local and foreign government branches leaders, industry associations, representatives chambers of commerce and clients. • Establish B2B partners by promoting, attending or creating renewable energy seminars, conferences, trade fairs or direct contact. • Give a consultancy on technology and considerations to achieve project objectives. • Follow the development of the opportunity until its formalized. • Assess and inform the impediments found to create investment to policy makers for future reviews of incentives.

The major challenge is to identify and coordinate all the different participants of the sector due to the lack of information of investment opportunities to foreign companies and the lack of communication between different Government Branches with the private sector

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Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

INDEX NOTES

Report Title Mexico and Scandinavia Investment Opportunities on Renewable Energy Technologies Curriculum Master in Management and Engineering of Energy and Environment (ME3) Placement title Intern Year 2013 Author Daniel Guerra Dheming Company ProMéxico Number of employees 4 Address Riddargatan 11B, 11451, Stockholm, Sweden Company tutor Gabriela Cardenas Hernandez Function/Position Deputy Trade Commissioner School tutor Fco. Javier Sanchez Alejo Keywords Investment Opportunities, Trade, Renewable Energies Summary ProMéxico Stockholm has developed a strategy to take advantage of the lower manufacturing cost of Mexico, the technological development of Scandinavia and the Mexican demand for Renewable Energies to create investment opportunities from Scandinavia to Mexico. Through seminars, fairs and events, companies are met and matchmaking is done with possible projects and interested Mexican Companies to attract foreign investment to Mexico. ProMéxico aids in the promotion, decision- making and soft-landing to achieve this.

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Table of Contents WHAT IS PROMÉXICO ...... 4 OBJECTIVES OF PROMÉXICO: ...... 4 STRUCTURE OF PROMÉXICO: ...... 5 CORPORATE STRUCTURE ...... 5 INVESTMENT PIPELINE AND CRM ...... 6 INTERNSHIP ON RENEWABLE ENERGIES: ...... 8 MEXICO ...... 9 ADVANTAGES OF INVESTMENT IN MEXICO ...... 10 INVESTMENT SUCCES STORIES ...... 11 ELECTRICITY MARKET IN MEXICO ...... 12 RENEWABLE ENERGY ...... 14 REGULATIONS ...... 15 ELECTRICITY SALES AND PRICES: ...... 17 SCANDINAVIAN MARKET ...... 18 SWEDEN ...... 18 SWEDISH ENERGY MARKET OVERVIEW: ...... 19 BIOGAS IN SWEDEN: ...... 19 DENMARK ...... 19 DANISH ENERGY MARKET OVERVIEW: ...... 20 OPPORTUNITIES AND PROSPECTS FOR INVESTING ...... 20 CANDIDATES AND NEGOTIATIONS ...... 23 SWEDISH ENERGY EFFICIENCY: ...... 23 MEXICAN STATE GOVERNMENT SUSTAINABILITY PROJECTS: ...... 24 SYNTES, WASTE TO ENERGY ...... 25 BIOGAS PROJECT ...... 25 COMPETITION ...... 26 COMPETITIVE DIFFERENTIATION ...... 26 ENVIROMENTAL BENEFITS ...... 27 PRODUCTION AND FINANCIAL OVERVIEW ...... 27 PROMÉXICO PARTICIPATION ...... 28 CHALLENGES ...... 28 CONCLUSIONS ...... 28 REFERENCES ...... 29

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Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

WHAT IS PROMÉXICO

ProMéxico is the Mexican Government Institution in charge of strengthening Mexico’s participation in the international economy by supporting the export activity of companies established in the country helping them to become international and coordinate actions to attract foreign direct investment to national territory.

Established in 2007 by presidential decree as a public trust subdivision of the Ministry of Economy, ProMéxico offers some of its services free of charge to its client’s willing to invest in Mexico through its main offices in Mexico City, 28 offices in different states of the Mexican Republic and 31 offices abroad in 22 countries with the aid of its diplomatic body. For all the international offices, ProMéxico works with the Foreign Ministry and its Foreign Embassy’s.

OBJECTIVES OF PROMÉXICO: ProMéxico services focus on attracting foreign direct investment and exporting goods. ProMéxico offers consultancy services to companies on the advantages to invest on Mexico, the necessary steps to setup a company, finding suppliers and clients, the process on how to export and establishing connections with local government and industry representatives. The main objectives are:

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Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

• To support state governments to identify new investment niches that could lead to regional development. • Aid, coordinate and execute actions of the offices of the Public Federal Administrations on promotion, foreign trade and investment. • Promote and support exporting activities and the globalization of Mexican small and medium size companies to make them more competitive worldwide. • Offer consultancy to small and medium companies on the benefits on international treaties and commercial agreements, as well as promoting their products and services in the international market. • Organize and support the involvement of companies in seminars, fairs and international business missions to promote products or attract investment.

ProMéxico focuses on several strategic Industries for Mexico that have a strong participation in Mexican economy, are key industries for national interests or they have a strong potential for the future development of the country. The industries covered are:

Aerospace Fashion and Decoration Agriculture and Food Automotive Appliances Industry Electronics Renewable Energy Food Innovation Mining Medical Devices Health IT and Software Processed Foods Generation & Distribution of Electricity Equipment

STRUCTURE OF PROMÉXICO:

Coordinating all national and international offices of ProMéxico with hundred of thousands of companies worldwide with so many different and complicated sectors is a huge task. Adding to the complexity of the problem, some projects are for private companies, others for public companies, state governments, federal governments, research institutions or a mixture of them.

For this reason, ProMéxico was set up with a defined structure, processes and tools to manage, coordinate and document all the activities made.

CORPORATE STRUCTURE

ProMéxico is set up several main structures that interact with each other to maximize the information flow, knowledge and relationships between all the different areas of ProMéxico in the world.

• National Structure The 28 state offices are in charge of creating strategic relationships with the local governments and industries. to promote regional products that 5 2013 Master in Management for École des Mines de Nantes Energy and Environment KTH Royal Institute of Technology

Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

have export capacity, inform on industrial investments that might require specialized suppliers, contact governments in the case where there is a potential foreign investment, identify companies that have products or services with the specification according to the request of foreign companies and aid in the promotion of trade and investment.

The headquarters in Mexico City are in charge of the relationship with the federal government and all their institutions and secretariats. They coordinate the information between the state offices and the international offices. In addition they supply legal, marketing and business intelligence information to all other offices. Coordinates all the regional offices bringing them closer to the companies in each state and to local economic development offices,

• International Structure All international offices are arranged into four areas: NAFTA (North American Free Trade Agreement), Europe, and Asia. Each area has several offices that are in charge of an area, a country or several countries. ProMéxico does not reach all countries in the world. In accordance with Mexican foreign affairs policy, all representations abroad must comply and be supervised by the Mexican Embassy in that country. With this policy, Trade Commissioners abroad have a diplomatic status just below the Ambassador. The offices abroad should strengthen relationships with the local governments, industry associations, educational institutes, research institutes and key companies. Their objective is to attract foreign investment into Mexico, help foreign companies to establish in Mexico and to help Mexican companies to export and place their product within their regions.

INVESTMENT PIPELINE AND CRM

Attracting foreign direct investment to a country is complex and time consuming. The needs for of a company to invest on a foreign country might change due to the evolution of the market trends, economic factors, government regulations, demand and supply, raw material availability or simply to expand to growing markets. Mexico on the other hand has also been subject to many changes over the last years. With the aid of several government policies, it has changed from an unstable economy with unskilled workers to a stable middle class economy with a cheap but skilled labor force. These changes have made possible the development of several industries thus being more attractive for foreign direct investment. Keeping track on all the companies contacted, their status on investment, the changing contacts details and all the information solicited is perplexing.

For these reasons, ProMéxico created a structured pipeline with the help of a Customer Relationship Management (CRM) software that keeps track of all the companies and opportunities to develop trade or investment.

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Opportunities Prospects Candidates

Conirmation Closure Negotiation

Softlanding Execution Aftercare

As seen in the diagram above, the investment process follows a traditional project management methodology of initiating, planning, execution and monitoring. During the aftercare process, reinvestments should occur in a optimal scenario and a cycle would be formed towards new negotiations.

• Opportunities are the case when it is identified that a company might have the potential to invest in a particular sector. Opportunities are created when a specialized product or service is found that can attend or solve an identified problem that can make a company more profitable or competitive. Basic information of the company and contacts are required.

• Prospects is the case when a meeting is arranged with a company that is seen as an opportunity and states its interest to invest in Mexico with a rough estimate of the investment that will be made.

• Candidate is the step where a prospect has a more defined investment proposition. A letter of intention is supplied and they define regions of the country where they would establish. A detailed description of the project is supplied and the States Governments are contacted so they can prepare incentives.

• Negotiation is the step where the different states or government institutions offer the company their proposals, national and international finance agencies or funds are submitted for the projects at hand.

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• Closure is when the foreign company states that negotiations are concluded and it will make a decision.

• Confirmation is when the company submits a confirmation letter stating that they have taken the decision to invest in Mexico.

• Softlanding is the step when ProMéxico aids the companies to establish themselves legally and physically in Mexico.

• Execution is the step when they are established and operating in Mexico.

• Aftercare is a follow-up of their experience in Mexico and to search for reinvestments.

The success rate of obtaining an investment grows as the company advances each stage of the pipeline. Almost all desertions occur before they are prospects. After reaching the stage of candidates it is very rare that the companies decides not to invest in Mexico.

INTERNSHIP ON RENEWABLE ENERGIES:

Renewable energies are playing a major role in Mexican politics, economy and lifestyle. With the set target of reaching 35% of the electricity provided from renewables by 2026 (Secretaria de Energia, 2013), several laws concerning environmental issues passed and some others on the agenda for this year, Mexico has developed a strong interest towards renewable energies.

ProMéxico is aiding in this process by attracting foreign investment, technological transfer and knowledge transfer in this field towards Mexico. The foreign representation office (OREX) in Stockholm is seeking the most suitable technologies available in Scandinavia (Norway, Denmark, Sweden, Finland), the Baltics (Estonia, Latvia and Lithuania) and Iceland.

The strategy of the Mexican Government as well as ProMéxico’s to attract foreign investment in renewable energies, rather than to simply import it, is based on a the National Development Plan (Secretaria de Gobernacion, 2013). Energy costs are considered strategic for the continuous development of the economy and a matter of national security. Almost all of the transport depends on oil and the electricity generation for industry and services on gas. The volatile prices of oil and gas make it very difficult to keep inflation under control. With a diversified energy mix, constant energy prices can be ensured; inflation can be controlled, thus having a more stable economy. (SECRETARIA DE ENERGIA, 2013)

Foreign investments implies that the foreign company will establish themselves in Mexico to produce their products with the necessity to search for qualified local suppliers of raw materials and suppliers of specialized parts. Then the company will hire workers and invest on training and might use Mexico as a 8 2013 Master in Management for École des Mines de Nantes Energy and Environment KTH Royal Institute of Technology

Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico production hub to export to the Latin America market as it has historically been. If the technologies were to be imported instead of attracting investment there would be less incentives to produce locally and there would not be a regional development on that renewable technology.

To be able to achieve this goals a program was created that involves young professionals that have an academic background or experience in Renewable Energies. A study of the situation of the energy markets both in Mexico and Scandinavia is necessary to define what technologies are the most suitable for Mexico and if the Scandinavian markets have the supply of them. After this review is made, a database of companies that can become targeted as opportunities is created (supply). At the same time, investment projects in Mexico are contacted (demand) through government offices or local companies.

Matchmaking of both supply and demand is realized, both parties are contacted (prospects) and if real intentions of investment are noticed they are introduced (candidates) and aided in the process of making the investment and making real offerings (negotiation). If the project is accepted (closure and confirmation) the project is handed to the Headquarters in Mexico City for the Softlanding, Execution and Aftercare stages.

MEXICO

Mexico is a federal constitutional republic, ranking 11 in world population with 116 million habitants and number 14 in size with almost 2 million square kilometers. It borders in the north with United States, in the south with and Belize, in the west with the Pacific Ocean and to the east with the Gulf of Mexico and the Caribbean. It has a annual population growth rate of 1.07%, ranks No. 12 in world economy with a GDP of 1.8 trillion USD and it has the world 12 largest labor force with 50.7 million workers, Its GDP is composed by 62% services, 23% Industry and 4% agriculture. (Central Inteligence Agency, 2013)

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In Economic activities the main compositions of the GDP per sector in 2011 are:

Manufacturing: 18% Commerce: 16.2% Real Estate Services: 9.8% Mining: 9.6% Transport: 6.8% Construction: 6.8% Education: 4.9% (Instituto Nacional de Estadistica y Geografia, 2011) ADVANTAGES OF INVESTMENT IN MEXICO

Attracting foreign investment into a country, whether it is Renewable Energy or any other industry is not only based on the intentions of a country or the incentives that they offer. It is based on the stability of the economy, a legal framework that ensures the obligations and the responsibilities are upheld, a non corrupt secure state, education and the availability of resources among other factors.

There have been many groups or lists that have identified countries that have large, fast growing economies and regional influences (BRIMCK, N-11). From an investment point of view these countries represent a huge potential for investment. Mexico has to prove constantly that it is a better option than any of these other countries. The promotion of Mexico as a place to invest on Renewable Energies highly depends on the perception of the companies towards Mexico. The following are examples of the world media.

• Perceptions on the Conditions for Investment In recent years, news on drug cartels played a major role in the perception of Mexico in the world media. Nowadays, US media and policymaking elites started noticing that their perception couldn’t be further from the truth.

As seen in Bloomberg BusinessWeek column, “Mexico: The Stranger Next Door,” (BLOOMBERG BUSINESSWEEK) years of effective economic policies and an embrace of free trade are turning Mexico into a solidly middle-class society. They reference NY Times, Thomas Friedman “How Mexico Got Back in the Game” (THE NEW YORK TIMES, 2013) where it states that Mexico will be a more dominant economic power than China and India.

The Wall Street Journal also published “The Rise of the Aztec Tiger” (THE WALL STREET JOURNAL, 2013) where it states that the rate of undocumented emigration to the US is nearing zero, that the economy is expected to grow by 7% in the near future, how foreign investors pumped 57 billion USD to stocks and bonds in 2012 (5 times more than what they invested in Brazil) and how Mexico has lower wages and transportation costs

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to the US compared to China. All this is due not only by the good economic prospects but also by the confidence in the Government.

• Struggle for Leadership in Latin America The CNBC published “Why Mexico's Become a Hotter Investment Than Brazil” (CNBC, 2013) where the director of Frontier Strategy Group, Clinton Carter, is setting Mexico a priority over Brazil. Most of this is due to the Mexican deregulation of key industries, the approval of labor educational and telecommunication reforms, as well as the expectations of the upcoming financial and energy reforms.

Even though Brazil it considered to be attractive, Mexico has a better profit profile with higher profitability and better margin. This is partly attributed to the 2012 data of Brazil’s economy low growth (1% vs 4% in Mexico) and its higher inflation (6% vs 4.5% in Mexico). Long Term Investors in Brazil are looking for a significant correction and weakening of the Brazilian real, with all its implied implications.

• Investments currents shift back from China to Mexico In the US Today article, “Some manufacturers say 'adios' to China,” (USA TODAY, 2013) by keeping their currency low, a decade ago, Mexican companies were sending their production to china to take advantage of cheaper wages and prices. Nowadays, salaries in China are climbing, the Yuan has raised its value, industrial and intellectual properties are problematic, there is a lost in interest for small orders and shipping costs have risen. Mexico on the other hand has had a more stable currency, a privileged position next to the US that cuts shipping costs and weariness of time difference business, the NAFTA free trade agreement, recognized skilled labor force that produces from figurines to flat screens, aerospace parts and automobiles, as well as suppliers benefits for both sides of the border.

Additionally the BBC issued “Why US firms are turning to Mexico, leaving China behind” (BBC, 2013) where they consider the rising costs of china vs the flat tendency in Mexican prices. They state that there is parity in costs but in a Mexico has an advantage with the perspective that shorter supply chains are better. They also state how the Mexican cheap labor turned to cost competitive highly skilled labor. These reasons are why Mexico exports as many goods as all of Latin America combined. Companies that target US market and Latin America are taking another look at Mexico.

INVESTMENT SUCCES STORIES

• In 2011, Mexico’s total investment in this sector reached 200 million USD mainly in projects

• From 2007 to 2011 Acciona has installed four wind farms in the state of Oaxaca with a total of 556 MW of installed capacity and almost 1,200

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million USD investments. Eurus, one of its plants supplies 25% of CEMEX’s electric energy. • ABENGOA it is building the first hybrid electric generation plant in Agua Prieta, Sonora with an installed capacity of 12 MW by solar power and 466.4 MW by combined cycle.

• CANNON Power Group with an investment of 2,500 million USD, this company is developing three wind power farms Baja California, and Quintana Roo. These projects will have an installed capacity of more than 1,000 MW in total.

• SANYO has 75 MW of production capacity of photovoltaic modules. This plant is located in Montrerrey city, Nuevo Leon.

• Mexico has research centers focused on renewable energy. The most important centers are: the Center for Energy Research at UNAM (CIE), the Institute of Electrical Research (IIE) and the Center for Sustainable Growth Policy, AC.

• According to estimations from Alix Partners in 2012, Mexico is the most competitive country worldwide in terms of manufacturing costs, with approximately 21% less than USA, 11% less than China and 3% less than India.

• Only 9 days and 6 procedures are required to start a new business, which makes this process much easier than in the BRICs

• In the past decade, the average annual growth rate of engineering graduates in Mexico was 7% which places it above the population growth rate.14 In 2010, the number of engineering graduates in the country totaled approximately 114,000

ELECTRICITY MARKET IN MEXICO

According to the National Sustainable plan, the electric availability in the country must reach all the population (96% actual coverage), thus the Secretariat of Energy includes the proposal of diversifying the portfolio of electricity generation with a higher percentage of non-fossil sources. These bases are defined in the National Energy Strategy 2013- 2027 and are in accordance with the National Program Plan for the Use of Sustainable Energy (PRONASE) (PRESIDENCIA DE LA REPUBLICA, 2009) to reach 35% of Renewable Energy Sources by 2026.

In 2011 the consumption of Electricity in Mexico grew to 229,318 GWh, 7.2% higher than 2010 and 11.2% higher than 2009, year when electricity demand decreased due to a world economic crisis. In 2011 there were half a million subscribers incorporated to the National grid, being agricultural pumping and

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Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico the big industry the ones with the highest growth of 27.2% and 11.6% respectively (Secretaria de Energia, 2013). By 2026 there is an expected demand of 479,650 GWh

Public and Private sectors make up the National Electric System (SEN). The public sector is made up of the Federal Electricity Commission (CFE) and the Independent Producers of Energy (PIE). Additionally the private sector is made up of cogeneration, self-sufficiency, small production import or exports. Self- sufficiency is the most important in this area and has shown the most significant growth with a share of 48.5% in the private scheme just after cogeneration with 31.8% and Exports with 14.7%.

Only the CFE is authorized by the government to sell directly to end-users. The PIE sector is granted a special permission by the CFE and has to sell all the electricity generated to the CFE. By the end of 2011 the installed capacity was 61, 570 MW for which 63.8% were from CFE, 19.3% from PIE and 14% from the private sector. Over 30% of the installed capacity has over 25 years of operation, thus retirement plans must be taken into account.

In terms of type of technology in the public sector the most dominant is Combined Cycle with 34%, Conventional Thermo-Electric 24% and Hydroelectric 22%. In relative terms 26.4% of the installed capacity corresponds to Non-Fossil energy sources but only 16.4% of the total electricity generated.

Besides CFE there are 670 licenses to generate electricity with a capacity of 28,893 MW. Even though self-supply has the biggest number of licenses 491, it has only 7,925 MW of installed capacity. In the contrast, the Independent Production has only 28 permits with 14,290 MW. Of these 28 permits five correspond to Wind with an installed capacity of 511 MW that start operations in 2011 and the rest from combined cycle.

In production, taking into account all production types, 20.3% are from non fossil fuels and 79.7% from fossil fuels.

Natural gas represents the biggest share with 50.4% in 2011 whereas in 2000 it only represented 17.1%. This means there was an increase of 13% average increase per year mostly from the PIE. In contrast Fuel Oil decreased in the last 12 years by 7.1% annually, to reach 15.9% of the share in 2011.

Carbon in the year 2000 represented 9.6% of the electricity share and in 2011 it reached 12.9%. Nuclear, Geothermal and Wind passed from a share of 8.2% in 2000 to 7% in 2011 due to the large increase of CC.

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Electricity Generation by Fuel 2000 – 2011 GWh

RENEWABLE ENERGY

Of the 14,324 MW of renewable installed capacity at the end of 2011, 81% is represented by Hydroelectric with a total of 11,603 MW, Wind represents 8.5% with 1,215 MW, Geothermal 6.7% with 958 MW and Biomass with 548 MW with 3.8%.

For 2025, it is estimated that renewable power generation installed capacity will increase by 18,716 MW, mainly on wind (60.3%) and hydro power (24.3%). This is based on the actions of the National Development Plan that states that the installed capacity should reach 83,048 MW meaning that there would be an added capacity of 44,532 MW including retirements and rehabilitation programs. This means that renewable energy projects included in the following years will have a share of over 40% of the new installed capacity.

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Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

Wind: Wind power potential in Mexico is estimated at 71,000 MW, which is equivalent to cover the 2010 household electricity demand more than three times. For 2020 there are 13 projects defined with an installed capacity of 2,408 MW. The rest of the developments will have to come for self-sufficiency. Even though the country has done general wind atlas to identify potentials, there is still the need to do more precise state and regional atlas due to microclimates. Some states have already started with this while others are in the urge for them. It is expected to be the most growing renewable energy technology for the next two decades.

Geothermal: The energy potential in Mexico is greater than 40,000 MW for electrical and heat applications of geothermal energy. There are only four projects with a capacity of 254 MW defined until 2026.

Hydro: There is an energy potential of 53,000 MW for hydroelectric plants. For 2024 there are 13 projects with an installed capacity of 3,800 MW reaching only a 30% of the established potential.

Solar: Mexico is the main supplier of photovoltaic solar modules in Latin America, with an annual production capacity of over 276 MW. The Mexican territory has an average solar radiation above 5 kWh per meter per day, which ranks it as one of the highest level of irradiance region in the world. Projects include a 46.8 power plant under construction in Sonora and a 14 MW in the same state. Additional there is a 450 MW concentrated solar photovoltaic in Baja California.

Some suppliers and project developer companies for renewable power generation in Mexico are: Acciona, Iberdrola, Gamesa, , EDF Electricite de France, Cannon Power Group, Abengoa, Industrial Power, Sanyo, Kyocera and Vientek.

REGULATIONS

In Mexico the principal legal regulations governing the provision of utility power in Mexico are:

• Political : It states that it is entirely up to the Nation to generate, conduct, transform, distribute and supply electricity for the provision of public service. In this matter no concessions will be granted to individuals and the Nation will use its assets and natural resources necessary for such purposes.

• Public Electricity Service Act: The Secretariat of Energy with the CFE will issue permits for self-supply, cogeneration, independent production, small production or import or export of electricity, as applicable, for each case. Also with the aid of the Ministry of Finance they will set tariffs to cover the financial needs, the development of the sector and rational energy consumption. Finally the lowest cost technology should be used taking into 15 2013 Master in Management for École des Mines de Nantes Energy and Environment KTH Royal Institute of Technology

Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

account environmental externalities, quality, security and intermittence.

• Law for the Use of Renewable Energy and Financing of Energy Transition: Its objective is to regulate the use of renewable energy sources and clean technologies to generate electricity for the purpose other than the provision of the public service of electricity, as well as the national strategy and instruments for financing the energy transition. It also states a target maximum participation of 65% percent of fossil fuels in electricity generation by 2024, 60% in 2035 and 50% in 2050.

• Law on Sustainable Energy: It states that there must be strategies, objectives and goals for the optimal use of energy

• General Law on Climate Change: States that the Secretariat of Finance and the Secretariat of Energy must have by 2020 an incentive system to promote and make profitable the power generation through renewable energy such as wind, solar and small hydro for the Federal Electricity Commission. Finally by 2018 there must be the development of infrastructure of MSW to not discharge methane into the atmosphere in urban areas over 50,000 people and implement technology to create electricity with that methane.

According to the Public Electricity Service Act, the only the modalities under which individuals can apply and obtain permits for the generation of electricity, are self-supply, cogeneration, independent production, small production, export and import. Self-Supply and Cogeneration are made to benefit form unexploited capacities, such as increasing the thermal efficiency of industrial processes, optimize fuel use, reduce emissions, ensure stability in frequency and voltage, among others. In the case of renewable energy sources for Self Supply, it is possible to insert exceeding electricity into the grid that might compensate for shortages on other months in an annual basis.

Independent Producers (PIE) are plants with more than 30 MW capacity that are in accordance with the strategies of the CFE but has granted the building and operation of a plant with private funds since CFE does not have the funds or proven technology or knowledge to create it.

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Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

ELECTRICITY SALES AND PRICES:

Electricity final users in Mexico are distributed by the following:

Electricity Sales per Sector 2011 5.40% 6.80% 4% Residencial Big Industry 26% 21.30% Medium Industry Comercial Services 36.50%

As seen, Industries are the biggest consumers of electricity, and they follow a trend with GDP. The lower the activity the less electricity consumed. Also parallel the higher the price of electricity, the lower the GDP of that sector is expected.

As seen on the graph, prices for electricity change according to the use. Agriculture has the highest subsidies, followed by the residential ones. In Industrial and commercial sectors, electricity supply is priced on a rational cost basis. Restructuration of these subsidies and tariffs is greatly needed since there is a 1% GDP cost annually to maintain these prices.

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Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

SCANDINAVIAN MARKET

Even though the representation office of Stockholm supervises all the countries of Scandinavia, the Baltics and Iceland, for purposes of the report only the countries of Sweden and Denmark will be covered since they are the most representative of the work done. SWEDEN

Sweden is a country that borders Norway, Finland, the Baltic Sea and the Gulf of Bothnia. It is part of the European Union since 1995 but rejected the introduction of the Euro. Sweden has a surface of 450 thousand square kilometers and a population of 9 million habitants with a growth rate of 0.18%. Its economy has a mixed system of high-tech capitalism and extensive welfare benefits. It has a modern distribution system, excellent internal and external communications, and a highly skilled labor force.

Timber, hydropower, and iron ore constitute the resource of an economy oriented toward foreign trade. Privately owned firms account for the majority of industrial output, being the engineering sector the one that accounts for about 50% of output. Its GDP in 2012 reached $395.8 billion USD ranking 35 in the world but ranking No. 25 in GDP per capita. Industry represents 27% of the GDP while services accounts for 71%. Its labor force is estimated to be around 5 million persons. (Central Inteligence Agency, 2013)

In trade their principal market is Europe (55%), Norway (9%), United States (6%) and China (3%). Between Mexico and Sweden, Sweden ranks No. 31 commercial trade with Mexico, and 8th in the European Community. The main products imported and exported between both countries are:

Mexico to Sweden Sweden to Mexico Turboreactors and gas turbines 31% Telephone parts 18% Telephone parts 18% Medicine 12% Coffee 14% Heavy Machinery 10% Auto parts 6% Vehicle chasis 8% Beer 5% Niquel and Aluminum products 4%

The most important Swedish companies established in Mexico that are in the top 500 most important companies by CNN Expansion are: (CNN Cable News Network, 2013): Autoliv (auto parts), ABB (electric equipment), SCA (Personal Care), AstraZeneca (pharmaceutical), Sandvik (mining and construction tools), SKF (automotive), Assa Abloy (locks) and Securitas (professional services).

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Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

SWEDISH ENERGY MARKET OVERVIEW:

Sweden produces around 150,000 MWh and consumes 127,000 MWh with an installed capacity of 35,000 MW ranking 25 in the world. 47% of its installed capacity is from Hydro, 25% for Nuclear, 13% from fossil fuels (oil, coal and natural gas) and 15% from Renewable Sources. (Central Inteligence Agency, 2013)

BIOGAS IN SWEDEN:

A key driver of this development has been the investments into renewable energy of which biogas represents a significant share.

Already in the 1930’s, the first industrial scale biogas plants were built in Sweden and today the country has over 80 years of experience from biogas production. For the past 30 years, government and municipalities have sponsored R&D and investments in the sector. Sweden currently has around 250 biogas plants in operation with a combined annual production of 1.3 TWh and has the world’s highest number of installed gas upgrading units.

In Sweden, more than 50% of the biogas is used as vehicle fuel and more than 60% of the gas used in vehicles is biogas today. In the Stockholm area, biogas is becoming a strategic asset for bus, taxi and municipal vehicle fleet owners, as they are unable to win tenders or successfully compete without access to this fuel. Competition for raw material is intense.

Central to the rapid development of the biogas sector in Sweden has been the ability to produce biogas from different raw materials co-digested at the plants. Today most plants use a variety of raw materials ranging from sewage sludge to food waste to industrial organic waste. This allows for improved economies of scale and higher production efficiency. DENMARK

Denmark is a country of the European community that borders with Germany, the North Sea and the Baltic Sea. It has a surface of 43 thousand square kilometers and a population of 5.5 million habitants with a population growth rate of 0.23%. Its economy is dependent on its high-tech agricultural sector, state-of-the-art industry with world- leading firms in pharmaceuticals, maritime shipping and renewable energy, and a high dependence on foreign trade. Denmark has not embraced the EURO but its Danish Krone is pegged to the euro. Denmark has a GDP of $208 billion USD ranked 54 in the world with almost no growth rate in the last year, a 2.8 million workforce dedicated mostly to services (72%), and industry (20.3%). 19 2013 Master in Management for École des Mines de Nantes Energy and Environment KTH Royal Institute of Technology

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For Mexico, Denmark trade ranked 50 but it grew more than 200% between 2002 and 2012. Denmark’s most representative commercial partners are Europe (64%), Norway (6%), United States (6%) and China (2%).

The main products imported and exported between both countries are:

Mexico to Denmark Denmark to Mexico Pumps 16% Toys 18% Turbo reactors and turbines 16% Medicine 10% Data processing machines 15% Metal Foundry 6% Liquid and Gas filtering systems 8% Bottling machinery 4% Electric motors 7% Control Instruments 4%

The most important Danish companies established in Mexico that are in the top 500 most important companies by CNN Expansion (CNN Cable News Network, 2013) is: ISS (Facility Services). Other established Danish companies in Mexico include Alra Foods, Vestas Wind Systems, Lego, Danfoss, Moller-Maersk and Grundfos.

DANISH ENERGY MARKET OVERVIEW:

Denmark has a production of 122,000 MWh and a consumption of 110,800 MWh in 2010 with an installed capacity of 31,000 MW. An outstanding 91% of its installed capacity is from Hydroelectric plants, 2.6% from fossil fuels and 2% from renewable sources mostly biomass and then wind. (Central Inteligence Agency, 2013)

OPPORTUNITIES AND PROSPECTS FOR INVESTING

As stated before this is the stage where supply and demand must be created. It is the stage of a project where the most time and resources are invested.

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Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

Databases for matchmaking should be created. The first step involved is to identify chambers of commerce and industry clusters form the host country. All of their members should be inserted into databases and a meeting with the head of the industries and clusters should be arranged to open communication paths for future projects. Additionally major events that these members would attend should be identified and an invitation to either attend or participate should be achieved. Databases from government institutions where certain certification standards should be met are also be searched in order to classify and further develop the Databases. Chambers, Associations, Clusters and Educational Institutes should be classified as Strategic Relationships while the others as possible opportunities. Additionally there must be a great link between our counterparts in the host countries. Our database includes more than 500 companies in the Renewable Energy fields.

On the other hand, ProMéxico has a series of specialists on various fields, contacts of most of the chambers and clusters in Mexico as well as calendar of various events in those fields. For Renewable Energies there is no actual specialist on the field but there is access to many government institutions that have experts on the field that can aid on the process. A database of all the companies is created individually by each representation office according to the needs of the market of the different countries.

The counterparts of ProMéxico are:

• The Swedish Trade and Investment Council: Busines Sweeden

• Danish Ministry of Foreigns Affairs Trade Council: Eksportrådet

Major Industry Associations that have been contacted include:

State of Green: a public-private partnership founded by the Danish Government, the Confederation of Danish Industry, the Danish Energy Association, part of Copenhagen Cleantech Clusterand and the Danish Wind Industry Association in partnership with Dong Energy, Danfoss. State of green is the official green brand for Denmark, State of Green gathers all leading players in the fields of energy, climate, water and environment and fosters relations with international stakeholders interested in learning from the Danish experience.

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Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

Offshore Energy Renewables: is the official national competence and innovation center for the Danish renewable offshore industry with 270+ member companies and institutions in offshore wind, the offshore maritime area and wave energy.

Business Region Göteborg : is a non-profit company that works to strengthen and develop trade and industry in the Gothenburg region. The company represents the thirteen municipalities that form the Gothenburg region and work closely together with municipal trade and industry leaders and companies in the region.

Confederation of Danish Industry (DI) is a private organization funded, owned and managed entirely by 10,000 companies within manufacturing, trade and service industry.

The Association of Swedish Regional Energy Agencies (FSEK) is the coordinating agency of the Swedish regional energy agencies and similar that work for an increasing use of renewable energy and an efficient use of energy in their region

In the Mexican counterpart we have direct access to the state governments, and governments agencies in charge of Renewable Energies and Climate change. In case of general associations and clusters our main allies contacted are:

National Association of Solar Power (ANES) is the UN-accredited membership NGO advisor on renewable energy that Informs and connects researchers, academics, professionals, practitioners, businesses, decision makers, and advocates. ANES is the Mexican representation of International Solar Energy Society.

Mexican Association of RE Suppliers (AMPER) is a non profit organization that promotes the use of renewable technologies and helps in the creation of quality standards for the use of renewable equipment as well as realize and promote conferences and seminars on Renewable Energy.

Mexican Geothermal Association (AMDEE) is an association that represents the main representatives of the wind industry in Mexico. It cooperates with the Mexican government to promote policies and regulation necessary for sustainable development of wind power in Mexico.

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Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

Mexican Bioenergy Network (REMBIO) is a non-governmental non-profit organization that promotes the sustainable and efficient use of biomass for energy purposes in Mexico.

In order to promote both sides we have participated in the following seminars:

Renewable Energy Seminar: One-day seminar organized by ProMéxico and the Embassy of Mexico in Denmark with the participation of 15 companies. The trade commissioner of Mexico promoted the Mexican Energy Potential, three Mexican State representatives detailed their prospect Energy Projects and the Legal Framework was detailed.

Energy Europe: Renewable Energy fair at Copenhagen that reunited 200 participants from 19 countries. This is the first Energy Fair of this magnitude in Denmark and the first to have a Mexican Pavilion represented by ProMéxico in Scandinavia.

CANDIDATES AND NEGOTIATIONS

As a result of the company’s databases created, the industry representatives contacted, the inquiry of projects by the Mexican authorities and the events attended, various matchmakings were created and the following have been successful candidates for investment opportunities.

SWEDISH ENERGY EFFICIENCY:

A Swedish company provides energy-efficient components for:

• High-efficiency Water heaters & boilers • Heat-driven Air Conditioning for Trucks & Vehicles • Solar Cooling &

Their components are based on a proprietary sorption technology. The basic principle is a chemical heat-pump technology with integrated energy storage in a dry salt. It is closely related to conventional absorption with no crystallization issues, no need for control of temperatures and flow rates, integrated energy storage and no moving parts in the sorption core.

The components are powered by a heat source. When releasing the energy you 23 2013 Master in Management for École des Mines de Nantes Energy and Environment KTH Royal Institute of Technology

Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico get a cold side (for Air Conditioning) and a hot side (for heating). No compressor is used for this. It is a purely heat-driven process.

This Swedish company has proven to be a serious player in the world since it is been making a prototype together with the Swedish Energy Agency and two major Swedish truck companies. In its efforts to internationalize it has been presented with top companies on boilers and thermal collectors in Mexico for a joint venture. The initial phase includes as phase one the licensing to distribute their products locally and the second phase to manufacture the systems for the American market. Interest from Mexican companies has been established but negotiations are still pending and expected to be confirmed by the end of the third quarter or beginning of the fourth quarter of this year.

MEXICAN STATE GOVERNMENT SUSTAINABILITY PROJECTS:

A Mexican state in order to achieve its goals for renewable energies is in the process of making an international bid to cover certain defined projects. ProMéxico contacted them and offered consulting and guidance of experts in the field in order to be able to ensure that the best alternatives were taken into account.

The projects included the following.

• Technical Study of the potential of Renewable Energies o Wind atlas o Solar Irradiation Map o Annual rainfall and Runoff Distribution Map o Consultation System with potential locations fro Wind Farms, Photovoltaic Farms, Concentrated Solar Plants and Small Hydroelectric Plants • Municipal Solid Waste to Energy o Treatment of 200,000 tons waste year o Power capacity of 7.5 MW • Landfill Methane Recovery feasibility Study

For the technical studies of potential energy rather than a service, ProMéxico introduced a scheme where a company would offer technological transfer to the State Government and an Educational-Research Institution in order to be able to create these maps. Both software and technology (anemometers and pyranometers) will be supplied.

For Both the MSW to Energy and Landfill Methane a specialized company has been contacted and has been aiding in creating a feasibility study and present a business case to construct and operate the MSW incineration plant and a methane recovery plant.

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Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

For all the cases the costs have already been submitted to the Mexican State Government, negotiations were handled and are in the waiting period for the closure (acceptance) and disposal of National funds to start the projects.

SYNTES, WASTE TO ENERGY

Syntes is a Danish company that designs and builds gasification units plants. The plant’s equipment is tested for work with the following types of raw materials: Coal (including lignite), high-ash coal waste & peat; Used tires, plastics, chemical and plastics industry waste; Biomass, including wood, old wooden sleepers, light and pulp and paper industry waste; Sludge and oils waste; Municipal solid waste and hospital waste.

The final products are Combustible gas "syngas"; Heat energy (superheated steam, hot water); Liquid hydrocarbon fuel (similar to heating fuel).

The units are estimated to process unsorted MSW up to 350 tons a day and have an average production of the following: • Syngas: 21 m3/h • Fuel Oil: 33 tons/day • Electricity: 15 MW/h • Less 5% ash content without carbon

A general estimate of the cost would be $30 million euros. The advantage of this project is the modular structure that is installed vertically saving space and installation time. Additionally it is capacity and it size is suitable for small municipalities with the option of adding additional modules to increase capacity. Finally it is designed for industries or markets where unsorted MSW with high content of carbon is available.

Funding of the Danish Investment Fund for Developing Countries (IFU) and Eksport Kredit Fonden (EFK) is being submitted for a pilot project in Mexico.

ProMéxico contacted Syntes through Energy Europe and latter was presented to a delegation of representatives of the Government of Coahuila State.

This project is under negotiations with the Coahuila State while at the same time there Syntes awaits the response for the funding to be able to prove and demonstrate in Mexico his product to other state governments.

BIOGAS PROJECT

There is a business model of a Swedish company BP to build, operate and optimize industrial scale biogas plants to treat organic waste and to produce biogas. The biogas is used to substitute the customer’s energy use and the waste is used as fertilizer on the customer’s land.

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Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

Biogas is formed by the biological breakdown of organic matter in an oxygen deficient environment. Raw biogas contains around 60% methane and 40% carbon dioxide and can be upgraded to at least 97% methane in which case it can be used to substitute natural gas or as vehicle fuel. It can also be employed for generating heat and electricity.

The successful implementation of the projects in Mexico will depend on strong ties to the local stakeholders. BP has developed the required network with target customers, local partners and key influencers.

The project aim is to transform the solid waste from spirits production (baggase) into biogas and use it as fuel for the boilers to create the spirit. The supply of the bagasse will be from the same spirit company and smaller nearby producers. BP has made an alliance with the current bagasse treatment plant to make it a co-owner of the biogas plant and lease land for the plant since it still has the properties to become a fertilizer.

The process has been approved by the Regulatory Council of Spirits that is complies with standards applicable to the industry.

COMPETITION

The biogas industry value chain traditionally consists of equipment manufacturers, engineering consulting firms, turnkey suppliers, plant owners and in some cases contract operators. The turnkey suppliers typically hand over the plant to the plant owner shortly after production start and do not take responsibility for operations. The plant owner typically owns only one plant and therefore has limited opportunity to develop in depth process expertise and benchmark operations between multiple plants

COMPETITIVE DIFFERENTIATION

Operating multiple plants leads to synergies in plant operations allowing for reduced operational and administrative cost. Replicating plant design and process concepts across the target industries significantly reduces investment cost and allows for best practice benchmarking. Pre-existing agreements with EPC companies and sub- contractors and construction drawings that only need to be modified will significantly reduce construction time.

Being an independent owner and operator of the biogas plant, allows the decoupling of the biogas production from the customer’s production facility in turn allowing for sourcing of substrate from multiple plants and economies of scale

PROCESS AND DESIGN OPTIMIZATION

BP has core knowledge of the optimization of biogas production through the co- digestion of multiple substrates in one integrated process. Co-digestion increases optimization complexity but when managed properly, has the potential to improve yield, enable scale and ultimately improve profitability.

• Substrate mixing and nutritional balancing to ensure an adequate nutrient supply for the microorganisms for a stable biogas production with concomitant high

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Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

organic loading rate, high biogas yield and degradation efficiency on added substrates.

• Dewatering (thickening) of the substrate: By mechanical thickening of the substrate, hydraulic retention time of the system is increased and, hence, gives space to increased organic loading rate of the digester

• Digester Feeding and Mixing: Computer simulation and computational fluid dynamics is used to predict mixing efficiency and predict the viscosity, which is an important parameter in the mixing efficiency simulation to give digesting microbes the best possible environment

• Digester Heating : Temperature is important in determining the potential rate of digestion, particularly the rates of hydrolysis and methanogenesis. Higher temperatures generally correspond to faster volatile solids reduction, but are more sensitive and can give rise to unstable microbial populations.

• Chemical Balancing: Anaerobic digestion is a biological gasification process where organic substrates are converted to biogas by several microorganisms. If one organism underperforms the whole food web is interrupted which result in process failure. The anaerobic digestion process therefore requires tight control of a wide range of trace substances to keep the micro and macro (nutrient) environment optimized.

ENVIROMENTAL BENEFITS

By using organic waste for biogas production the volume of waste being disposed in landfills can be minimized, reducing the harmful leakage of methane to the atmosphere. When used as vehicle fuel, biogas results in lower emissions of nitrogen oxide (“NOx”) and particles compared to all other vehicle fuels

Producing biogas from wet organic waste instead of sending it to incineration will result in improved efficiency and reduced air pollution at the incineration plant. The water content in the organic waste will lower incineration temperature which may trigger in increased emissions of dioxins and NOx. The energy efficiency of the incineration plant will be reduced as much of the energy is lost as steam in the flue gas resulting in a net energy loss.

Unlike ethanol and biodiesel, biogas does not compete with land usage for food production as biogas can be produced using waste materials.

PRODUCTION AND FINANCIAL OVERVIEW

The plant has a planned capacity of 110 000 ton bagasse per year. The plant will produce 3,7 million Nm3 raw biogas annually. The residual from the biogas production, the digestate, is made up of a liquid and solid fraction. Both fractions will be collected free of charge by local farmers and will be utilized for and as fertilizer. Time to completion from construction start is estimated to 12 months.

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Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico

The total financing need of the project is estimated to 8 MUSD and the project is expected to deliver 48% IRR. The project will be cash flow positive within one year. Gate fees for bagasse, chemicals electricity, water, personnel, land lease, license fee, and maintenance costs as well as gas sales price are taken into account.

10 investment projects are expected by 2016. The first project is expected to start construction during the last quarter of 2013.

PROMÉXICO PARTICIPATION

ProMéxico aided PG from the initial stages to promote Mexico over Brazil as a better place for investment. The spirit companies and the bagasse treatment plant which are now their clients and partners were introduced through the matchmaking. ProMéxico also granted a trip to several locations in Mexico in order to meet with several potential clients and suppliers. Guidance was offered in the legal framework on business framework as well as obtaining the required permits.

CHALLENGES

Attracting foreign investment in Renewable Energies towards Mexico from Scandinavia is a challenge by itself. First the Nordic countries have the perception of Mexico as a undeveloped country with security, economic and political problems. Secondly, most companies are medium size and are afraid to expand their business overseas to a different culture with a different language and culture they prefer to try out in closer countries in order to grow in to bigger markets. Other companies do not know of the fast growing industry with a huge potential on both the private and public sectors. Then we have the legal framework that does not incentive international companies to develop projects by their own initiative since the utility services are state owned and most of the tendering’s are offered to Mexican companies. Finally some companies have tried exporting their products to Mexico but have found that there is a competitive industry, transportation costs do not make them competitive, but are unaware of the high skilled labor force that if investment is realized they could offer their products at competitive prices to Mexico and the American market.

CONCLUSIONS

Investing in a foreign country presents many challenges since it involves dealing with different laws, cultures, languages, business habits, economy and authorities.

First, a company must identify that the new country can guarantee stable political, economic and security conditions to be able to invest. Also it is essential to know how to contact suppliers or partners, receive legal and tax advisory, 28 2013 Master in Management for École des Mines de Nantes Energy and Environment KTH Royal Institute of Technology

Mexico and the Northern Countries Investment Daniel Guerra Dheming Opportunities on Renewable Energy Technologies ProMéxico fulfill requirements and formalities, obtain labor and material costs and realize other activities involved in starting up a business. These issues might discourage an investor if the information is not clear and available. ProMéxico has addressed most of these issues by being a unique gateway between Mexican Industries, Mexican Government Agencies, International Governments and Foreign Industries. It is a one stop shop where an Investor can fulfill all of its inquiries towards a country, its market and regulations either by providing the information directly or by directing the investor towards where it can be obtained.

Second, the lack of deregulation of the Energy Sector and the Monopoly on Electricity by the Government makes it difficult for an investor to participate in investment opportunities. ProMéxico also has solved most of these issues by being in constant contact with the management of leading international companies in renewable energies and the responsible to create renewable energy projects in Mexico.

Third, due that renewable energy is a vast industry with many different fields and technologies, it challenge is to identify the strength and weakness of the Renewable Industry in Mexico and identify which of the Renewable Industries abroad can compliment its weakness.

In summary, taking out of consideration the deregulation of the energy sector in México which is expected to be considered at the congress by the end of the year, the main challenges is to create a more dynamic link between policy makers, all the different government institutions in charge of developing projects and industry associations all in the renewable energies fields. Finally also create a link between National and International Renewable Energy Association and their suppliers industry associations so they can specialize and develop on the technologies or areas where they are competitive locally and internationally.

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BBC. (2013, MAY 2). Why US firms are turning to Mexico, leaving China behind. Retrieved from BBC: http://www.bbc.co.uk/news/world-latin-america- 22372163

BLOOMBERG BUSINESSWEEK. (n.d.). MEXICO THE STRANGER NEXT DOOR. (A. Martinez, Ed.) Retrieved from BLOOMBERG BUSINESSWEEK GLOBAL ECONOMICS: http://www.businessweek.com/articles/2013-05-01/mexico-the- stranger-next-door

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Central Inteligence Agency. (2013). The World Factbook. Retrieved from Central Inteligence Agency: https://www.cia.gov/library/publications/the- world-factbook/

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CNN Cable News Network. (2013). CNN Expansion. Retrieved from CNN Expansion Corporate Website: http://www.cnnexpansion.com/

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PRESIDENCIA DE LA REPUBLICA. (2009). PLAN NACIONAL DE ENERGIA 2009 - 2012. Retrieved from NATIONAL ENERGY PLAN 2009 - 2012: http://www.conuee.gob.mx/work/files/pronase_09_12.pdf

Secretaria de Energia. (2013). Electricity Sector Outlook. Retrieved from Energy Secretariat: http://www.sener.gob.mx/

SECRETARIA DE ENERGIA. (2013). MEXICAN NATIONAL ENERGY STRATEGY 2013 - 2027. Retrieved from MEXICAN ENERGY SECRETARIAT: http://www.sener.gob.mx/res/PE_y_DT/pub/2013/ENE_2013-2027.pdf

Secretaria de Gobernacion. (2013). National Development Plan 2013 - 2018. Retrieved from Diario Oficial de la Federacion: http://www.dof.gob.mx/nota_detalle.php?codigo=5299465&fecha=20/05/2013

THE NEW YORK TIMES. (2013, February 23). How Mexico Got Back in the Game. (T. L. FRIEDMAN, Ed.) Retrieved from SUNDAY REVIEW, THE OPINION PAGES: http://www.nytimes.com/2013/02/24/opinion/sunday/friedman-how- mexico-got-back-in-the-game.html

THE WALL STREET JOURNAL. (2013, April 26). The Rise of the Aztec Tiger. (NICOLAS BERGGRUEN AND NATHAN GARDELS, Ed.) Retrieved from THE WALL STREET JOURNAL: http://online.wsj.com/article/SB100014241278873244740045784432726285 71346.html

USA TODAY. (2013, MARCH 18). SOME MANUFACTURERS SAY ADIOS TO CHINA. Retrieved from USA TODAY: http://www.usatoday.com/story/news/world/2013/03/18/manufacturing- mexico-china/1997883/

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