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Cablegate: Renewable Energy in Mexico

VZCZCXRO5868
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #2666 1441802
ZNR UUUUU ZZH
R 241802Z MAY 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 7139
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS MEXICO 002666

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/MEX, WHA/EPSC, EB/IFD/OMA
STATE FOR EB/ESC MCMANUS AND IZZO
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GWORD
USDOC FOR ITS/TD/ENERGY DIVISION
TREASURY FOR IA (ALICE FAIBISHENKO)
DOE FOR INTL AFFAIRS KDEUTSCH, ALOCKWOOD, AND GWARD
DOE FOR A/S HARBERT

E.O. 12958: N/A
TAGS: ENRG EPET ECON MX
SUBJECT: RENEWABLE ENERGY IN MEXICO

REF: A. MEXICO 589
B. MEXICO 1255

Introduction and Summary
------------------------

1. (SBU) Embassy Mexico, working through USAID under the
auspices of the ongoing Mexican Energy Network (ref A),
joined with the Autonomous University of Mexico (UNAM) and
the Autonomous Mexican Institute of Technology (ITAM) on May
15, 2007 to present a conference on identifying and
overcoming obstacles to renewable energy in Mexico. Fifty
representatives from government, industry and academia
participated in the discussion, which was also received
substantial press coverage. End Introduction and Summary

2. (SBU) The conference focused primarily on policy and
regulatory barriers to greater investment in solar, wind and
biomass energy. There were separate panels on large and small
scale energy, as well as a final panel with representatives
from governmental energy agencies who addressed public policy
challenges.

3. (SBU) Professor Jorge Islas, a senior researcher at the
Center on Energy Research at the Autonomous University of
Mexico (UNAM), noted that unlike the hydrocarbon and
electricity sectors, there are no constitutional restrictions
covering the development of renewable energy; however, Mexico
still lacks a legal framework to create the market conditions
necessary to promote development of renewable technologies.

4. (SBU) Islas called for the GOM to provide guaranteed
access to the electrical grid; long-term interconnection
contracts; and obligatory purchase contracts from the Mexican
electricity monopoly, the Federal Electricity Commission
(CFE). More controversially, Islas made a case for
guaranteed purchase rates and additional fiscal incentives,
arguing that countries with successful take-up of alternative
energies have followed that approach.

5. (SBU) Consultant and former head of the Mexican National
Commission for Energy Savings (CONAE) Odon de Buen blamed the
CFE's monopoly position for lagging adoption of renewables
technology. He also pointed to Mexican poverty and low
levels of social awareness about renewables, as well as the
weakness of Mexico's Energy Regulatory Commission (CRE). De
Buen also blamed the government for not making the benefits
of renewable energy more understandable and visible to
ordinary Mexicans.

6. (SBU) In a follow-on panel on local implementation of
renewable technologies, Rodolfo Martinez, President of the
National Solar Energy Association (ANES) claimed a potential
Mexican market of 5.1 million units for stand-alone "off
grid" photovoltaic cells. Martinez repeated the call for
specific financing mechanisms and additional Mexican funds
for R&D.

7. (SBU) Finally discussing the policy challenges, Director
General of Energy Technology and Efficiency, at the Mexican
Energy Secretariat, Diego Arjona closed the event noting that
while Mexico is improving, much more needs to be done and
that further development of renewables and the promotion of
energy efficiency hinges on overall improvement in the sector.

8. (SBU) The event received considerable media coverage in
the most important national newspapers, including Reforma, El
Universal, La Jornada, and through Notimex (the state
national news agency), in newspapers across the country
including El Siglo de Torreon, El Diario de Yucatan and El
Porvenir de Monterrey. There was also coverage on radio
through Monitor and on TV in a segment of Canal Once Noticias.


Visit Mexico City's Classified Web Site at
http://www.state.sgov.gov/p/wha/mexicocity and the North American
Partnership Blog at http://www.intelink.gov/communities/state/nap /
BASSETT

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