Álvaro Lentz Herrera
National Solar Energy Association (ANES)
View from the Top

Breaking Down Barriers for Solar Energy

Wed, 02/19/2014 - 12:16

Q: How has the solar energy industry evolved since the new administration took over at the end of 2012?

A: Under the previous administration the solar industry experienced growth, and under the current administration that tendency has been confirmed. Conservatively speaking, 8.5MW were installed during 2012. I would not be surprised if the installed capacity had reached 16MW in 2013, but what I can confidently confirm is that the solar market is growing exponentially.

Q: What are the main challenges that ANES currently faces?

A: One of the main challenges is getting solar companies to share information. The Mexican solar industry has to learn that sharing data is beneficial for everyone. This would allow us to see what the real market situation is and that might force the government to modify the current legal framework. Financial institutions would also realize that Mexico is an important market and would be more willing to extend low interest credits to solar energy developers. ANES has to convince the solar companies working in the country that the data collected will not be given to competitors but that it will be used for the benefits of the industry. Another important objective is strengthening each regional section of ANES, which in turn will enable us to collect and exchange information more easily.

ANES’s reputation is built on 35 years of work. We are always part of energy forums and work with the government and other relevant renewable energy actors. For example, we were part of the working groups for the National Development Plan. Our role was to provide a view of the future and the path that needs to be taken to get there. We expressed the importance of promoting distributed power generation, which the plan says will be boosted, along with domestic photovoltaic systems. CFE did not previously believe in solar energy, so we suggested that it should build its own plant in order to experience the benefit of photovoltaic energy and test different technologies. That is what it did and CFE is now learning from experience how solar energy interacts with the grid. We collaborate with CFE every day because our goal is to educate and spread knowledge about renewable energy.

We are also in close contact with the Congress of the Union, where we focus most of our efforts on raising awareness about the importance of renewables. In our case, we display the benefits of solar energy and explain what has to be done in order to stimulate the industry.

Q: What has enabled the solar industry to become more established without subsidies?

A: The big thing that has propelled the industry forward has been the price drop in solar technology. Three years ago, the price per watt was US$3, compared to US$1 today. In terms of installed capacity, it is currently about US$2.5 per watt, while before it was above US$6. The DAC (high residential consumption) tariff is not a subsidized electricity tariff, making it the most expensive tariff in Mexico. By installing PV systems, users can reduce their consumption and therefore become eligible for a subsidized tariff. Return on investment can therefore be achieved in five to six years. CFE estimates that there are about 500,000 potential DAC tariff users, without counting residential Tariff 1 users. This is a market with great potential, since DAC and Tariff 1 users alone are worth millions of dollars.

Q: What is your opinion on the importance given to solar energy in the National Energy Strategy?

A: The strategy is to have 1% of the country’s energy generation coming from photovoltaic systems by 2026. This figure is too low because the estimate is based on what CFE is able to do during those years, when in reality, the private sector will drive the growth of the market. As long as CFE remains a monopoly, we are highly dependent on its will, and if it decides not to invest in solar energy then Mexico will not reach this objective. So far, CFE has done a good job and is opening up to renewable energy. However, it will stop being so open when its interests might be affected. The objective of generating 35% of the country’s energy from clean energy sources by 2024 is achievable, but we need to take immediate action to make it a reality. DAC tariff users alone form an interesting target market. Another issue that has to be added to the equation is CFE’s auctions to replace fossil-fuel power stations with PV systems. Companies are starting to install 2-3MW plants because they are realizing how profitable it is.