Renewable energy from south of the border is beginning to make a big impact on the American side.
Looming over the dry desert scrub, as high as a 25-story building, the giant turbines of the Energía Sierra Juárez wind farm punctuate the horizon just south of the California border, an otherworldly array of white tubular towers each topped with three, 12-ton blades.
Mexico has some of the finest wind in the world, and the Sierra de Juarez mountain range has some of the best in Mexico—a bit turbulent but strong and relatively steady, even in the daytime. It’s ideal wind power country, but not a single kilowatt of the electricity produced here stays in Mexico. Instead, San Diego’s Sempra Energy, through its Mexican subsidiary, IEnova, ships 100 percent of its electricity back into the United States, enough to power some 65,000 homes.
The 47-turbine wind farm, whose long-range plan calls for up to seven times as many turbines ultimately producing a sizeable 1.2 gigawatts of power, is a first in the growing cross-border energy trade. And the Mexican export, which flows though a 1.7-mile transmission line, is helping San Diego Gas & Electric (also a subsidiary of Sempra), meet the state’s stringent renewable energy requirements—and do it faster and build it at lower cost than if it the turbines had been sited in the U.S.
The Energía Sierra Juárez project, which began producing power in June 2015, was launched in the mid-2000s, a time when the state of California had just expanded its already rigorous renewable energy goals. Utilities like San Diego Gas & Electric were scrambling, recalls former California Public Utilities Commission Commissioner Mike Florio, who voted against the agreement. “Utilities were desperate to get renewables as fast as they could, and there weren’t a lot of bidders, as I recall.”
Now, Energy analysts say, this cross-border trend is being fueled by the extraordinary growth in U.S. natural gas production and the seminal 2013 reform of the Mexican energy market that opened the country’s former electricity monopoly to outside investors. “Sempra is making money like a bandit,” says Nicolas Puga, an energy analyst at the economic consulting firm Bates White and a former employee of CFE, Mexico’s state-owned electric utility.
While attention in Washington is focused on jobs heading south and undocumented workers coming north, one of the largest economic relationships between Mexico and the U.S. involves a product more or less invisible to the public.
“The 800-pound gorilla in the room is that we’re exporting between 4 and 5 billion cubic feet of gas into Mexico,” says Puga. “I assume any wall will have many beautiful doors to let the gas through.”
Overall, the value of U.S. energy exports to Mexico in 2016 was $20.2 billion, according to the U.S. Energy Information Administration, just under 10 percent of total U.S. exports to Mexico last year. That’s more than double the $8.7 billion of energy imports from Mexico, a reversal from 2010, when the value of Mexico’s energy exports to the U.S. was two to three times larger than what the U.S. shipped south.
“In the last 2½ years, there’s been quite a lot of investment coming into Mexico on the renewable side, solar and wind,” notes Robert Downing, an expert on the Mexican energy market and a partner in the Miami office of the law firm, Greenberg Traurig. “Mexico has tremendous wind resources,” he says. And over the next few years, “we think the growth in wind and solar will be substantial.”
Sempra’s Mexican subsidiary, IEnova, late last year finalized the purchase of Mexico’s largest wind farm—an 84-turbine array just south of the Texas border that already serves Mexico’s domestic market. “We’re looking at renewable energy as a growth opportunity,” says Sempra spokesperson JC Thomas.
President Donald Trump’s threats to impose tariffs on products coming in from Mexico have unnerved businesses on both sides of the border, but the real danger to cross-border energy projects, especially those that involve placing wind turbines and transmission lines in environmentally sensitive areas, is coming from local homeowners and conservationists.
In January, opponents of the Energía Sierra Juárez project won what could be a significant victory when a U.S. federal judge in California ruled that the Department of Energy’s required environmental impact study was flawed because it failed to assess the project’s impact on Mexico, focusing only on the U.S. portion of the power line that brings electricity into the United States. Judge M. James Lorenz ordered the DOE and Sempra to work out a remedy with the plaintiff, Backcountry Against Dumps, the small but feisty California nonprofit that has battled the project for years.
“I live 20 miles from the turbines,” says Backcountry President Donna Tisdale. “You can see them skylined on the ridge line. At night you see a long line of blinking red lights, visible from dozens of miles away, where there used to be a black sky.” Opponents also say the wind turbine blades pose a danger to bats and local raptors such as golden eagles and California condors, while newly built service roads that slice up once pristine terrain could affect the genetic diversity and long-term viability of animals like the Quino checkerspot butterfly and Peninsular
bighorn sheep, both endangered species in the United States.
The turbines were installed on land leased from one of Mexico’s communal villages or ejidos, most of which date back to the government’s agrarian land reform movement in the 1930s. In this case, the turbines, power line and some 25 miles of newly built supply and maintenance roads were set up on the Ejido Jacumé, a village of a couple of hundred people in an ecologically sensitive area of the Mexican state of Baja California. In exchange for leasing some 12,000 acres to Energía Sierra Juárez, Ejido Jacumé members signed a revenue-sharing agreement of 4 percent, a potentially sizable sum of future earnings for a modest farming community.
The mountain range runs the length of the Baja peninsula, and, “with various names, all the way up into California,” says Jerre Ann Stallcup, the chief resources officer at the Conservation Biology Institute and a board member of Terra Peninsula, the Mexican nonprofit that originally—and unsuccessfully—sued Mexico’s Environmental Protection Ministry to stop the project. “It’s all the same ecosystem.”
If the January 30 decision by Judge Lorenz stands, there may yet be an assessment of the environmental impact in Mexico from the Energía Sierra Juárez wind farm and the mile-long transmission line to the U.S. border. Or worse, at least for Sempra, whose lucrative power purchase agreement with the Energía Sierra Juárez could disappear if the judge orders the wind farm shut down while a new environmental impact statement is drafted.
Backcountry’s lawyer, Stephan Volker, says he believes there’s a 50-percent chance Lorenz will order the project shuttered while DOE carries out an environmental assessment of the wind farm and the one mile of transmission line that is in Mexico.
It’s far from clear whether Sempra will want to risk appealing—and losing—to the relatively liberal U.S. Court of Appeals for the 9th Circuit, and Sempra declined to comment, other than through a spokesperson to say it was “disappointed” in the ruling.
“If he orders them to disconnect, it is extremely significant,” says Parker Moore, a lawyer at Beveridge & Diamond who specializes in the National Environmental Policy Act, the nearly 50-year-old federal statute that mandates environmental assessments. Moore, who is not working for either side, says NEPA analyses “take a really long time to do and cost a lot of money.”
Renewable energy has made huge strides in the past 10 years; prices have fallen sharply and there’s far more supply. Closing the Energía Sierra Juárez would leave Sempra with a “significant stranded investment” that would face far more price competition when it restarted than it originally had, says Puga, the energy analyst.
And it would add another potential first to the wind farm’s title: not only as a trailblazing cross-border exporter of wind power into the United States, but as a precedent-setting legal case that forced all cross-border projects to include costly environmental assessments of Mexico or Canada, and not just the United States.