Aiming for 100 Percent Renewable Energy Supply in Mexico

In a market where the regulatory reshuffle places new barriers for private renewable energy developers, it has become more challenging for commercial and industrial players to switch to 100 percent renewable energy. Driven by global decarbonization initiatives, several companies have shown there are plenty of options available despite these challenges.

PepsiCo reported last month that its Mexican operation achieved its goal of running entirely on renewable energy. The company had already achieved that in the US, considered its biggest market. Since Mexico represents the company’s second-biggest market, this is considered a significant step for PepsiCo’s general net-zero goals.

Though PepsiCo is ahead among many of its competitors, its progress is coming none too soon. Climate experts such as Mexico’s nobel-prize winning visionary Mario Molina, who passed away in October 2020, have attempted to raise awareness surrounding climate change for decades. As images of floods and fires fill the public consciousness, a UN report calls for as much direct action as possible. “Today’s IPCC Working Group 1 Report is a 'Code Red' for humanity ... This report must sound a death knell for coal and fossil fuels, before they destroy our planet,” said UN Secretary General Antonio Guterres.

Such widespread alarm-raising will only have a stronger effect on investors and consumers, industry insiders agree And whereas some believe that in Mexico cost concerns could still beat climate anxiety, renewable power’s levelized cost of energy (LCOE) speaks for itself.

PepsiCo is far from being the only company looking to switch to a fully renewable portfolio. In 2020, Heineken completed a deal with Enel Green Power to power its plant in Meoqui, Chihuahua with 100 percent renewable energy. FEMSA, owner of the OXXO brand of stores reached 85 percent of renewable energy supply in 2020. Grupo Bimbo is also advancing rapidly on its goals, aiming to reach 95 percent renewable energy by 2023.

A myriad of options is available for companies looking to enhance the sustainability of their operations. Long-term power purchasing agreements (PPAs) remain popular, although on-site energy solutions are growing in importance. Nevertheless, the government’s efforts to bring back power to the sate within the energy sector is eroding the faith needed in these commitments. As a result, energy providers are adapting their approaches to facilitate partnerships. “A sense of fear in the uncertain energy market has changed how clients approach these contracts… Five years ago, it was simple enough to sign a 20-plus year PPA. Now, we need to alter our contracts to ensure the terms remain solid no matter the changes in the sector by building in more provisions that support legal certainty. However, foreign companies entering Mexico have already committed to sustainability goals and will therefore look for a clean energy supply regardless of whether Mexico is boosting renewables or not,” said Sofia Perez, Vice President of Strategic Relations to Pardgen.