GM Adds Wind Energy to Power Factories in Mexico

Source: By Leon Kaye, Triple Pundit • Posted: Wednesday, February 18, 2015

Yesterday General Motors (GM) announced it will add wind power to its energy portfolio for the first time in the history of the company. The construction of the 34 megawatt wind farm in Palo Alto, 325 miles (526 km) from Mexico City, will begin during the second quarter of this year

When complete, 75 percent of the wind farm’s energy will power GM’s 104 acre factory and plant facilities in Toluca, an hour’s drive west of Mexico City. The wind energy will also provide some electricity for other GM plants in Silao, San Luis Petosi and Ramos Arizpe. Enel Green Power, the US$2.3 billion dollar renewable energy company based in Italy, has designed and will build the plant as directed in a purchase power agreement signed with GM.

According to GM, the Palo Alto wind farm will increase the amount of its energy derived from renewables to 12 percent from its current nine percent. GM claims that its facilities in Mexico benefiting from the new source of wind power will avoid the emissions of 40,000 tons of carbon dioxide annually. The project will also help GM meet its 2020 renewable energy goals four years early: the company set a target for 125 MW of clean energy by 2020—before the Palo Alto plant is switched on, GM’s total renewables portfolio currently stands at about 104 MW.

But in addition to its improved environmental credentials, GM will score a long term financial benefit. In an email to Triple Pundit, a GM communications representative explained that the company expects to save about US$2 million annually once the Palo Alto wind farm operates at full capacity. Electricity costs are often a thorn in the side of manufacturers conducting business in Mexico. Despite its substantial oil reserves, Reuters has estimated that Mexico has the eighth-most expensive electricity prices within the 34-nation Organization for Economic Cooperation and Development (OECD). The nation’s federal government has grappled with a controversial energy reform program, and while some changes have been made, they have not helped with energy costs. GM says conventional power prices in Mexico are one-third higher than they are north of the border in the U.S. So even with the current low prices of oil, GM’s investment in this wind farm makes financial sense.

GM has been working on the Palo Alto wind farm plant since April 2014. When asked if this was a sign whether the company will green-light more renewable energy projects in the near future, GM representatives were noncommittal, but said it is always on the lookout for ways to diversify its energy portfolio. Meanwhile, the company has slowly made progress: organizations including CDP have given the automaker high scores for its climate change data disclosures.