VZCZCXRO7972
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHTM
DE RUEHRS #0172/01 3172220
ZNR UUUUU ZZH
R 132220Z NOV 09
FM AMCONSUL MATAMOROS
TO RUEHC/SECSTATE WASHDC 4543
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHME/AMEMBASSY MEXICO 2077
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
RUEHC/DEPT OF INTERIOR WASHINGTON DC
RUEAEPA/EPA WASHINGTON DC
RUEHRS/AMCONSUL MATAMOROS 3729

UNCLAS SECTION 01 OF 02 MATAMOROS 000172 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/MEX, WHA/EPSC, EEB/EPSC 
USDOC FOR ITS/TD/ENERGY DIVISION 
TREASURY FOR IA 
DOE FOR INTERNATIONAL AFFAIRS 
NSC FOR RACHEL WALSH 
DOI FOR RENEE ORR AND KEVIN KUNKEL 
EPA FOR LISA ALMODOVAR 
 
E.O. 12958: N/A 
TAGS: ECON ENRG SENV MX
SUBJECT: THE WINDS OF (ENERGY) CHANGE ARE BLOWING IN NORTHEAST 
MEXICO 
 
MATAMOROS 00000172  001.2 OF 002 
 
 
¶1. (SBU) Summary: The state of Tamaulipas in northeast Mexico 
has several wind energy projects under development with the 
Border Environment Cooperation Commission (BECC).  The inaugural 
project, Los Vergeles, will be the first wind energy project in 
Mexico to supply public sector energy needs, with 161 megawatts 
of installed capacity.  Forty-three municipalities within the 
state of Tamaulipas are committed to the project, which is 
scheduled to break ground in November 2009.  The head of the 
Tamaulipas Environmental Agency for Sustainable Development has 
stated in local media that Los Vergeles has been certified by 
BECC for NADBANK funding.  While BECC sources confirm the 
project is currently in the development phase, they say it has 
not yet been approved for NADBANK funding.  Tamaulipas Governor 
Hernandez Flores is determined to be the first Mexican governor 
whose state has municipalities powered in part by wind energy 
and is exerting heavy political pressure to have the project 
generating electricity before the end of his term in a year and 
a half.  End Summary. 
 
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First of a kind in Mexico 
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¶2. (U) Under Mexican law, the generation, transmission, 
distribution, and marketing of electric power for public service 
purposes is exclusively reserved to the Federal Government and 
specifically to the vertically integrated state owned monopoly, 
the Federal Electricity Commission (CFE).  However, since 1992 
private participation has been allowed for self-supply, 
cogeneration, and direct sales to CFE.  These exceptions permit 
municipalities and others to form self-supply collectives.  For 
the first time in Mexico, municipalities have formed a 
collective that will benefit from wind energy. 
 
¶3. (U) According to Salvador Trevino Garza, head of the 
Tamaulipas Environmental Agency for Sustainable Development, Los 
Vergeles will be the largest capacity wind-power installation in 
Mexico and the first to supply energy to the public sector. 
(Note:  In total, the Isthmus of Tehuantepec in Oaxaca has more 
installed capacity, but the area is broken down into a series of 
individual installations.  End note)  Los Vergeles will have 70 
Siemens wind turbines on 1800 hectares, with a generative 
capacity of 2.3 megawatts (MW) per turbine for a total installed 
capacity of 161MW.  Generators will be purchased from Denmark, 
blades from the U.S., and bases from Chihuahua, Mexico.  Trevino 
Garza favorably compares the project to other wind energy sites 
in Mexico including a private 90MW installation in Oaxaca 
(CEMEX), and a 10MW project in Baja California.  Trevino Garza 
has stated the project is scheduled to break ground in November 
2009 and be completed by November 2010.  (Note:  Post had not 
seen an announcement for a groundbreaking ceremony at Los 
Vergeles as of November 13.  End note) 
 
 
¶4. (U) Renewable Energy Systems Americas (RES), of Austin, 
Texas, will oversee construction and administer provisioning of 
CFE's distribution line.  After construction RES will be 
responsible for the operation of the plant for two years. 
Tamaulipas officials have the option to renew the contract after 
the initial two-year term.  At RES's request, CFE has completed 
a preliminary study of the technical needs to provision 
interconnectivity of Los Vergeles with the Matamoros grid. 
 
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Energy and environmental savings are forecast 
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¶5. (U) The project is designed to generate 475,000 gigawatts 
(GW)/year.  According to Trevino Garza, the largest nine cities 
in Tamaulipas currently consume 442,000GW hours/year at an 
average cost of approximately 0.13 USD per KWh.  Energy from Los 
Vergeles is forecast to cost approximately 0.126 USD per KWh. 
It is unknown what the managing company, Renewable Energy 
Systems Americas, will charge per KWh. 
 
¶6. (U) Electricity generation in Tamaulipas currently produces 
 
MATAMOROS 00000172  002.2 OF 002 
 
 
170,000 tons of greenhouse gases annually.  Trevino Garza 
estimates that Los Vergeles will generate 300,000 carbon credits 
annually, based on a projected capacity of 161MW.  He hopes 
these carbon credits will generate income in the future. 
 
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Funding and BECC certification still pending 
------ 
 
¶7. (SBU) According to Trevino Garza, the total cost of Los 
Vergeles will be 318 million U.S. dollars (USD).  NADBANK 
funding will be approximately 84 million USD.  BECC`s Director 
of Planning and Technical Assistance, Mario Vasquez noted the 
size of the commercial funding package is a challenge. 
According to Vasquez, Trevino Garza is working with Mexican 
wind-energy developer Grupo Soluciones en Energias Renovables 
(GSEER) to put together commercial funding from approximately 
five different banks.  Commercial financial sources may include: 
Ecobanca (154 million USD), and Fondo Macquire (80 million USD). 
 The details are not yet finalized.  Vasquez notes NADBANK is 
missing the project's financial analysis from Tamaulipas, due to 
difficulties in creating the commercial financing package in a 
tight credit market. 
 
¶8. (SBU) In local media Trevino Garza has stated that Los 
Vergeles has been certified by BECC to be funded by NADBANK. 
BECC confirms the project is currently in the development phase 
but says it is not yet approved for NADBANK funding as Trevino 
Garza has claimed.  BECC sources believe that Trevino Garza is 
under intense pressure from Tamaulipas Governor Hernandez Flores 
to get Los Vergeles operational before Hernandez Flores leaves 
office in a year and a half.  As a result, Trevino Garza brought 
GSEER into the project to put together commercial funding and 
provide a bridge loan in order to break ground in November 2009 
before BECC certification.  BECC expects to certify the project 
in the first quarter of 2010.  GSEER has placed a 270 million 
USD order for the delivery and installation of 70 wind turbines 
with Siemens Energy, and plans to recover the investment after 
the project is certified by BECC and funded by NADBANK and 
commercial funding. 
 
¶9. (SBU) Our BECC contact also shared with EconOff that several 
items required for BECC to certify Los Vergeles have not been 
received.  In order to proceed with the technical assessment, 
BECC needs an environmental assessment study from Tamaulipas, 
approvals from the Mexican Secretary of Environment and Natural 
Resources (SEMARNAT), and agreements from CFE and the Mexican 
Regulatory Energy Commission (CRE).  In order to meet the 
Governor's accelerated time table, project technical 
specifications may change, as an opportunity to buy up recently 
cancelled European orders from Siemens could cut the normal 24 
month project lead time to 8 months.  BECC states the chance of 
the project being 100 percent completed in a year and a half is 
slim, but some turbines could be up and running in that time. 
BARKIN