Episode 4:Emmanuel Moctezuma

 

 

At COP 27, Mexico announced its intention to deploy a further 30 GW of solar PV, wind,  geothermal and hydropower by 2030. How important energy storage will be to provide higher value to installed renewable capacity and facilitate higher penetrations of variable renewable electricity in Mexico energy system? 


Mexico’s intentions presented at COP 27 are quite ambitious, considering the lack of renewable growth during the last 3-4 years, however, energy storage assets will play a key role fostering new renewable capacity. The main challenge to successfully achieve Mexico’s goal is the current congested electric system, which has not growth at the same speed of the existing installed capacity of Mexico. The latest versions of The Transmission Expansion Plan (PRODESEN) published by the Minster of Energy (SENER) identify the top congested links of our electric system and the forecasted high-voltage infrastructure required to solve this issue during peak-demand hours. Of course, the deployment of a government-owned conventional transmission lines may not be as fast as the development of a solar or wind farm, having consequently a limited acceptance of renewable generation. Energy Storage Systems could help tackling this challenge either through co-located systems with renewable assets to manage the energy delivered at peak-demand times, or through a virtual-transmission approach which basically helps releasing capacity of the lines reserved for contingency issues and admitting new renewable injection while new infrastructure is developed. Both approaches will follow the latest energy storage trends in Latin-American countries, such as Chile and Colombia.

 

 

Which storage technologies do you expect to play a major role for both short and longer timescales in the context of Mexico, Central America and the Caribbean? 


Lithium-ion technology should continue leading the integration of utility scale deployments in the region. During the last 5 years, this technology has been accounting for above 90% of the global market share in utility scale BESS projects deployments and this trend will continue in the short-medium term. There are several drivers for the before mentioned preference for this technology. The first one is related to its “matureness” against other technologies, that since late 2000’s, has successfully shown its technical benefits in terms of energy density, degradation, among others, which leads the conversation to its second driver: bankability. Almost every utility scale project is leveraged, and the cost of capital could be hindered if the storage technology proposed has not reached a proven learning curve. I have had the opportunity to participate in different panel discussions with Development Banks, that have been very clear stating that the only chemical storage technology approved for their participation is lithium-ion. Finally, the drop in costs for this technology will continue playing a major role in future deployments. Even though that 2022 did not reflect cost reductions against 2021 (because of the existing supply chain issues and commodities price increase), prices are expected to reach some stability by the second half of 2023.

 

 

Are there any regulatory, market design or other factors that still limit or hinder energy storage projects in your target markets?


Both local and regional market regulators are aware of the track record of energy storage assets in different geographies and see the technology as an ally in the decarbonization path. Of course, each electrical system has its own challenges (especially in the Caribbean) and there must be a safe and reliable strategy of utility energy storage assets integration to the system. There is still some preference to start working with pilot projects to see the tangible benefits of the technology before deploying bigger assets into each electric system.


Having identified the technology as an ally is just the first step, the next biggest challenge our region faces is to define a clear revenue stream for energy storage assets. There are good lessons learned from worldwide standalone tenders that we are presenting to the regional authorities and the idea is to promote the most convenient and reliable approach for each country in our region.

 

 

AES is a world leader in lithium-ion-based energy storage. Are there any energy storage projects that you have been working on recently that you would like to briefly introduce to us?


US land is still the leading geography of our energy storage deployments, being followed by Chile which has a consolidated market for energy storage assets coupled to solar projects. Nevertheless, we are making strong efforts in the markets in which AES has operation at Central America and The Caribbean. Our closest energy storage project to be commissioned (Q1-23) is the “Meanguera Solar” PV+BESS facility which will be located at the Meanguera island at the Fonseca Gulf, El Salvador. This 4 MWh DC-coupled storage asset will fulfill the energy demand of the Zacatillo, Conchaguita and Meanguera islands, which are interconnected via subsea cable to the main land distribution grid. These islands have historically suffered from blackouts because of consistent trips from the main subsea cable and on a yearly average, they have been without electricity for a 10–day period. Providing clean and reliable energy to almost 5000 individuals is the main objective of our project and our goal is to replicate this 24X7 clean energy solution on different islands of the Caribbean in the upcoming years.

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