The Clear Advantages of Mexican Solar PanelsBy Cas Biekmann | Mon, 10/19/2020 - 12:33
Q: How has the association faced the challenges from recent developments in the solar sector?
A: It has been quite a challenging year. Nonetheless, there is some good news. When AMFEF was created, it consisted of three Mexican solar panel manufacturers: ISUASOL, SOLARTEC and ERDM. Every year, AMFEF incorporates new manufacturers under its belt. Now, we have at least 10 members that represent all Mexican manufacturers. One of the issues we face is that all of our business needs to take place in the distributed generation segment because none of our manufacturers have been able to sell in the Wholesale Electricity Market (WEM). The pandemic and the current atmosphere have not been easy to navigate. Nonetheless, our members are still operational and selling in the local market. We are striving to evolve and look for further opportunities. One of our members, Enersis, has partnered with Chinese manufacturer Yingli Solar, for instance. I see that as good news for the industry. Nevertheless, we know from ANES that we can expect 40 percent fewer projects than last year. This means that it will be a tough year for installers and producers.
Q: Where are AMFEF and its members identifying the major challenges and opportunities in DG for this year?
A: The panorama does look good for DG, even though we are experiencing less favorable policy changes. Regardless, we have hope for the continued development of DG that we have seen for the past five years. The biggest current challenge is financing, which is what most DG projects require. In the current atmosphere, finding financing from traditional institutions such as banks is quite difficult. The biggest opportunity lies in solar-plus-storage and smart grids. I believe these are the future of the industry. AMFEF’s members need to focus on survival for the coming period, so that those who do survive the crisis can see a significant increase in sales. But overall, this year will be difficult. We expect some companies to shut down their businesses.
Q: How is AMFEF advancing with its work on an official Mexican norm for manufacturing standards?
A: It is still in progress but we have seen significant developments over the past year. Unfortunately, CRE and SENER are not very interested in having this norm for solar panels. Instead, they want this for the whole industry, including inverters and other equipment. It has evolved into a larger norm. Whether this expansion will benefit the norm remains to be seen. In any case, having a local norm is a great guarantee for security and quality. The norm will benefit manufacturers, the industry itself and the final consumer. After all, a norm does not result in an increased cost in the panels themselves. First, we need to finish our work on the norm, and soon after we will start the political lobbying process.
Q: How does AMFEF assess the increasingly arduous task for Mexican manufacturers to reach Bloomberg’s Tier 1 list?
A: The famous Tier 1 list as published by Bloomberg is indeed completely based on bankability. When we started AMFEF seven years ago, you needed to have around five projects in three different countries, consisting of 2MW or more. Back then, it was easy to join the ranks, and Mexican manufacturers could realistically be part of Tier 1 under those requirements. But every year since, Bloomberg has increased the requirements so that only around 10 to 15 manufacturers pass the bar. As a result, it has become an exclusive club for Chinese manufacturers. It is important to note that Tier 1 does not refer to quality. This has been a main issue of confusion for the sector. Sometimes, project developers will not use Mexican panels because they mistakenly believe them to be of lesser quality. But this is not true. Many Mexican panels are both nationally and internationally certified.
Q: What are the added benefits Mexican manufacturers can offer the Mexican context?
A: A main added benefit from local manufacturers is related to the extensive warranty they can provide. For some Tier 1 companies, it is difficult to validate warranties in Mexico. Sometimes, they do not have a physical representation in the country. Returning a faulty panel is both difficult and expensive. In this case, going to a local manufacturer that respects Mexican quality norms with a local warranty is much easier. The problem with warranties is rarely the duration. Making use of it is the real challenge. In our experience, Chinese manufacturers facilitate the sale in Spanish quite easily. When you want to return a panel, this communication suddenly becomes more bothersome. Mexican manufacturers have to honor quality and warranty standards or risk a local lawsuit.
New technologies are no problem for Mexican manufacturers. We work with all the latest trends and manufacture most other company’s panels, except for the very few that are generating their own patents. At the end of the day, Mexican manufacturers might be 10 to 15 percent more expensive than their Chinese counterparts but if you examine what happens when you need to return panels from an order, the benefits become clear. Going through an importer, sending an official claim to the Chinese manufacturer and paying the cost to send back the panels can be problematic. In fact, sometimes the cost of sending a panel back costs more than the panel itself. This is especially important considering that in every order, one or two percent of the panels do not function. Even when the manufacturer delivered perfect work, they could still be damaged during shipping. For utility-scale projects, this is less of an issue. They often order excess panels and simply ship back a container with the faulty panels.
Q: How is AMFEF working to communicate awareness about DG’s benefits?
A: In past interviews, I have repeated often that the market needs to be educated about the benefits of DG. Let us be honest: Mexicans are not very understanding of what there is to be gained. As an industry, we need to boost this knowledge by creating as many success stories as we can to demonstrate that the technology works. Fortunately, each day we can implement more panels so that new clients can see how well they work, what the financial benefits are and the significant savings it will generate on their CFE bill. We have to continue our work and spread the successes of DG.
Q: What objectives is AMFEF striving to achieve for 2020 and 2021?
A: We always aim to increase local consumption. This is supported in many countries, but in Mexico it is sometimes overlooked. Our local manufacturers have the necessary quality, certifications and competitive prices. The extra 10 to 15 percent that clients pay translates to a wealth of benefits in the end. In the next two to three years, federal and local governments will attempt to ignite the DG market. This will be the future: to have smaller solar solutions on every rooftop. Mexican producers are very well-equipped to make use of these opportunities. Mexico City also has its Ciudad Solar project. This is an excellent opportunity to complete such programs with a supply chain that consists of panels made in Mexico. This is what the government is seeking to encourage. We aim to participate in such projects as well.
The Mexican Association of Photovoltaic Equipment Manufacturers (AMFEF) was founded in 2014 by the three main PV manufacturers in Mexico to promote solar energy projects.