Mexico has been producing geothermal energy since 1959 and has big plans for expansion in support of a green transition over the coming decades. Geothermal energy operations − the use of heat harnessed from the earth’s core to generate energy − are growing increasingly popular, as governments worldwide look to develop a wider range of renewable energy sources to decarbonize their economies. As Mexico diversifies its energy mix, we expect geothermal energy to play a major role in its green transition.
Mexico’s Geothermal Industry
Geothermal energy currently contributes less than 2% of Mexico’s electricity generation. Mexico has an installed geothermal electricity generation capacity of around 1,000 MW. There are currently five geothermal facilities in Mexico which are located in Baja California, Michoacan, Puebla, and Baja California Sur which are all managed by the Federal Electricity Commission (CFE). There is also the privately owned Domo San Pedro in Nayarit.
In March this year, the government announced a tender for the drilling of six new geothermal wells as part of an exploratory project to expand the industry. Around $51 million in funding for the project will come from the Inter-American Development Bank (IDB). And, if successful, the IDB will provide funding for CFE to construct a geothermal plant through a credit line.
Alongside other renewable energy sources, such as solar and hydropower, geothermal energy is expected to contribute strongly to Mexico’s green transition. Under the National Strategy for Energy Transition and Sustainable Energy Use, the government hopes to have a geothermal energy capacity of at least 1,464 MW by 2050.
Mexico’s Potential for Geothermal
Mexico has a huge amount of untapped geothermal potential. Surveys carried out by CFE in the 1980s suggested that Mexico had more than 1,600 hot springs and thermal waters, in more than 900 geothermal systems, across 26 states. Around 50% of these sources had a temperature of between 62 and 100°C, 40% were between 100 and 149°C, and 10% were either cooler than 62°C or hotter than 149°C. It was estimated that if just 0.1% of these resources were developed it would provide over 40,000 MWth of installed capacity.
Although people have used geothermal heat, in the form of thermal springs, for heating and bathing for centuries, harnessing its power to generate electricity is much more recent. Innovations in the technology required to access this heat and transform it into electricity have only emerged in recent decades.
There has been a significant underinvestment in developing these technologies further, as countries worldwide continued to rely heavily on fossil fuels. But as governments around the globe aim for a green transition, there has been a recent upsurge in investment in the geothermal energy sector, which we expect to encourage greater funding into Mexico’s geothermal potential.
Our Outlook Remains Positive
While much of Mexico’s geothermal energy potential remains untapped, we expect the global shift to green to encourage greater investment in geothermal technologies worldwide and provide more financing for the development of Mexico’s geothermal resources. Mexico has the potential to produce vast amounts of clean electricity using geothermal energy, and if developed this could help solidify its position as a regional clean energy hub in the coming decades.