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Insight

The Best Incentive Is Already There

Wed, 02/19/2014 - 11:57

he former president of Mexico’s National Solar Energy Association (ANES), Vicente Estrada-Cajigal, agrees that the Mexican solar industry could benefit from subsidies, if done in the right way. Despite this, he points out that the best incentive is already here. “We have almost twice the solar resources Germany has. This is a very good incentive, provided by nature. To generate the same amount of electricity Germany draws from the sun, Mexico needs to invest only half the money,” he says. For him, the European models whereby renewable energy sources are propped up by subsidies are undesirable, arguing that when those subsidies stop, the market grinds to a halt. The Mexican solar market may be

growing at a slow pace, but this does not mean firms should look to move from being higher tariff consumers to low tariff consumers through subsidies. Estrada-Cajigal explains that ANES is calling for the elimination of all subsidies on fossil fuels. “Subsidies should be seen as an investment rather than an expense. Subsidies should not pay for gasoline or electricity but should help to finance equipment such as solar water heaters or solar PV systems. If we used the more than US$3 billion that Mexico spends every year on subsidizing electricity, in seven or eight years, every single home in Mexico could have its own PV system. After that, there would be no more need for subsidies.”