Boric Invites Mexican Players to Invest in Chile’s Renewables

At the Pacific Alliance Summit, Chilean President Gabriel Boric discussed the bilateral reinforcement of the green energy transition with Mexico. Boric invited Mexican enterprises to invest in Chile’s renewable energy projects. He furthermore said that Chile is working to become a green technology and sustainable energy hub.

Accompanied by Chile’s Minister of Economy, Boric invited green industries to support his country’s SMEs. He highlighted that Mexican Foreign Investment reached US$17 billion in 1Q22. During Boric’s visit to Mexico, he received the keys to Mexico City from Mayor Claudia Sheinbaum. He also stopped at the Mexican Senate and commented on feminicides and Mexico’s stance on broader Latin American issues. President López Obrador stated he respected Boric and how he voiced his opinions.

Chile leads BloombergNEF’s annual Climascope assessment of the most attractive markets for investment in renewable energy projects. The country ranks as the top emerging market and number 9 in the global ranking, with a score of 2.58 out of 5 points. According to the report, “Chile holds power auctions with standardized power purchase agreements (PPAs) denominated in US dollars. Developers can also sign bilateral contracts outside the regulated market with large consumers. Miners are a large portion of Chile’s corporate clean energy power purchase agreement (PPA market), and they usually sign long-term contracts.”

In contrast, Mexico ranked 63rd among 107 emerging markets, and 90th among all markets. The country registered a 1.67 rating out of 5 points. Even though Mexico is the second-largest power market in Latin America, its installed renewable power capacity accounts only for 19 percent of its total power production portfolio of 95GW. Furthermore “Since taking office, President Andres Manuel has canceled Mexico’s highly successful renewables auction program, sought to dilute the clean energy certificate (CEL) market, sidelined clean-energy targets and eliminated legacy benefits that wind and solar plants received,” said BloombergNEF. “So far during the administration of President López Obrador, investments in clean energy projects have fallen drastically, from US$4.25 billion in 2019 to US$705.9 million in 2021,” continued the report.

Mexico’s shift in energy policy has created uncertainty for foreign investors, which has fueled a conflict regarding its free trade agreement with Canada and the US. According to experts, Mexico must attract investment to further develop green and renewable energy. “What causes companies to enter an empty market are almost always incentives created by governments. Stable, clear regulation is another key factor. If the government can provide both, it will create such a market,” Manuel Garay, Country Managing Director, Power Electronics told MBN.