IIIEE Thesis 2015:01 Wind Energy Development in Mexico A case study of the potential for local socio-economic benefits in Mareña Armando Hurtado Sandoval Master Thesis 2015 Supervisor Philip Peck Thesis for the fulfillment of the Master of Science in Environmental Management and Policy, Lund, Sweden, January 2015 Table of Contents ACKNOWLEDGEMENTS ......................................................................................................................... 4 ABSTRACT .................................................................................................................................................. 5 EXECUTIVE SUMMARY ........................................................................................................................... 6 1 INTRODUCTION .............................................................................................................................. 10 1.1 BACKGROUND ........................................................................................................................................................ 10 The history of wind energy ................................................................................................................................................. 11 Energy development in Mexico .......................................................................................................................................... 11 1.2 RESEARCH PROBLEM ............................................................................................................................................. 12 1.3 RESEARCH OBJECTIVE AND RESEARCH QUESTION ........................................................................................... 13 1.4 SCOPE AND LIMITATIONS ...................................................................................................................................... 13 2 RESEARCH METHODOLOGY ........................................................................................................ 14 2.1 RESEARCH STRUCTURE .......................................................................................................................................... 14 2.2 METHODS FOR DATA COLLECTION ..................................................................................................................... 14 Literature review .............................................................................................................................................................. 14 Interviews ......................................................................................................................................................................... 15 2.3 METHODS FOR DATA ANALYSIS ........................................................................................................................... 15 The PESTLE framework ............................................................................................................................................... 15 3 WIND ENERGY DEPLOYMENT, POTENTIAL, DRIVERS AND LIMITATIONS ................... 18 3.1 NEED FOR ENERGY TRANSITION AND CURRENT POLICY SOLUTIONS ........................................................... 18 3.2 GLOBAL TRENDS IN MARKETS FOR WIND ENERGY .......................................................................................... 18 3.3 WIND ENERGY IN HIGH INCOME COUNTRIES – EARLY DEVELOPMENT, GROWTH AND CURRENT CAPACITY ................................................................................................................................................................. 20 3.4 DECLINING COSTS OF WIND POWER ................................................................................................................... 21 3.5 WIND ENERGY IN LOW AND MIDDLE INCOME COUNTRIES ............................................................................ 22 Wind energy potential in Oaxaca, Mexico ........................................................................................................................ 25 3.6 DRIVERS TO WIND ENERGY DEVELOPMENT IN MEXICO .............................................................................. 25 The benefits of wind energy to help reduce GHG ............................................................................................................... 25 The General Law for Climate Change in Mexico ............................................................................................................. 26 The Law for the Use of Renewable Energy and Finance of the Energy Transition (LAFAERTE) ................................. 26 Energy Reform 2013 in Mexico ....................................................................................................................................... 26 Mexico foreign direct investment importance and wind energy ............................................................................................. 27 Legal framework for transmission and distribution ............................................................................................................ 28 1. Self-Supply .............................................................................................................................................................. 28 Ejidos or land ownership structure reform from 1992 ........................................................................................................ 28 3.7 BARRIERS TO WIND ENERGY DEPLOYMENT IN MEXICO ............................................................................... 29 Strong activist groups ........................................................................................................................................................ 30 Resistance of communities to wind farms in Oaxaca .......................................................................................................... 31 Indigenous populations in the Isthmus of Tehuantepec ....................................................................................................... 32 Transaction costs and externalities .................................................................................................................................... 33 A FRAMEWORK for analysis of wind energy in Mexico .............................................................................................. 34 4 CASE STUDY OF MAREÑA RENOVABLES WIND PROJECTS IN OAXACA ........................... 40 4.1 ISTHMUS OF TEHUANTEPEC, OAXACA MEXICO ............................................................................................... 40 Inhabitants in Isthmus of Tehuantepec .............................................................................................................................. 40 Wind in the Isthmus of Tehuantepec ................................................................................................................................. 40 4.2 THE MAREÑA RENOVABLES PROJECTS .............................................................................................................. 43 Opposition ........................................................................................................................................................................ 45 The reasons for the failure of project .................................................................................................................................. 46 1 4.3 OTHER CASE STUDIES IN THE WORLD ................................................................................................................ 46 Case 1 - An example of potential “deal-making” with host communities, Yansa Case Study ............................................. 46 Case 2 – An example of an alternative approach to wind, Brazil ...................................................................................... 48 Case 3 Active communication with communities for wind in Sweden and Denmark ........................................................... 49 Case 4 New consultation processes with indigenous communities in Mexico ........................................................................ 51 5 ANALYSIS OF CASE STUDY MAREÑA RENOVABLES .............................................................. 54 Political category ................................................................................................................................................................ 55 Economic category ............................................................................................................................................................. 56 Social category ................................................................................................................................................................... 59 Technological category ........................................................................................................................................................ 61 Legal category ................................................................................................................................................................... 61 Environmental category ..................................................................................................................................................... 62 Answer to R/Q ..............................................................................................................................................................