Geothermal in Mexico: The Ring of Fire
By Paola Moreno
Mexico is located over the Ring of Fire, extracting heat from the earth can be both economic and feasible.
New pipelines have enormous potential to support increased natural gas production in Mexico and also reduce the costs of imports. Although there is already an impressive pipeline infrastructure for transporting natural gas from the U.S. into Mexico, it does not reach the entire country. Most of the less expensive piped gas goes only to the northern states of Mexico, in part to provide power for factories.
For many years, the market for clean energy was limited by unstable prices. Energy prices are generally difficult to predict, but clean energy adds the uncertainty of new technologies and the weather. Within a small area, spot prices for wind power can literally go whichever way the wind blows. However, virtual power purchase agreements (PPAs) are creating new ways to reduce price volatility and expand the market for clean energy.
A power purchase agreement sets out the terms of a bi-lateral agreement in which one organization buys energy from another. The main elements of a power purchase agreement include the price for capacity, the price for energy (basically, the marginal cost of electricity), and the number of years that it will last.
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